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2017 Annual Report

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2017 Annual Report

Continental Corporation - 2017 Annual Report

Structure of the Corporation

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The structure of our corporation is geared toward sustainable value creation.

Market- and customer-oriented corporate structure
Founded as Continental-Caoutchouc- und Gutta-Percha Compagnie in 1871, Continental-Aktiengesellschaft (AG), headquartered in Hanover, Germany, is now the parent company of the Continental Corporation. The Continental Corporation comprises 527 companies, including non-controlled companies, in addition to the parent company Continental AG. The Continental team is made up of 235,473 employees at a total of 554 locations in 61 countries. Here, the postal addresses of companies under our control are defined as locations.

The Executive Board of Continental AG has overall responsibility for management. The divisions each have their own Executive Board member who represents them. With the exception of Corporate Purchasing, the central functions are represented by the chairman of the Executive Board, the chief financial officer and the Executive Board member responsible for Human Relations. They take on the functions required on a cross-divisional basis to manage the corporation. These include, in particular, finance, controlling, compliance, law, IT, sustainability, quality and environment.

The effective and efficient cooperation of divisions, business units and central functions is governed by our “Balance of Cooperation.” It defines the framework of our activities across organizational, hierarchical and geographic boundaries and promotes our corporate culture on the basis of our corporate values: Trust, For One Another, Freedom To Act and Passion To Win.

554 locations in 61 countries

554 locations in 61 countries

Our customers come primarily from the automotive industry (original equipment) – with a 72% share of our consolidated sales – as well as from various key industrial sectors (e.g. railway engineering, machine and equipment engineering, and mining) and the enduser market. We deliver high-quality, innovative and established products, systems and services around the world. Focusing on the market and on customers is a key success factor. Our global corporate structure is based upon a balance of decentralized structures and central functions. In this context, central management areas and operating activities are closely aligned. This means that we can respond quickly and flexibly to market conditions and our customers’ requirements, while ensuring that the Continental Corporation sustainably creates value.

The corporation is divided into the Automotive Group and the Rubber Group, which in the year under review comprised five divisions with 29 business units. A division or business unit is classified according to products, product groups and services or according to regions. Differences result primarily from technological product requirements, innovation and product cycles, the raw materials base, and production technology. Other factors include economic cycles, competitive structure and the resulting growth opportunities. The divisions and business units have overall responsibility for their business, including their results.

Structure of the corporation

Structure of the corporation

Automotive Group:

The Chassis & Safety division develops, produces and markets intelligent systems to improve driving safety and vehicle dynamics. The direction for the division is clear: The future of mobility leads to automated driving. Integral active and passive safety technologies and products that support vehicle dynamics provide greater safety, comfort and convenience. The Chassis & Safety division is divided into four business units:

  • Advanced Driver Assistance Systems
  • Hydraulic Brake Systems
  • Passive Safety & Sensorics
  • Vehicle Dynamics

The Powertrain division combines innovative and efficient system solutions for the powertrains of today and tomorrow. In line with the central theme of clean power, the products make driving more environmentally compatible and cost-efficient, while also enhancing comfort, convenience and driving enjoyment. The division is divided into five business units:

  • Engine Systems
  • Fuel & Exhaust Management
  • Hybrid Electric Vehicle
  • Sensors & Actuators
  • Transmission.

The Interior division specializes in information management. It develops and produces information, communication and network solutions for cars and commercial vehicles. This enables and optimizes the control of the complex flow of information between the driver, passengers and the vehicle as well as mobile devices, other vehicles and the outside world. To achieve this, the division is involved in cross-sector collaborations with leading companies. It is divided into five business units:

  • Body & Security
  • Commercial Vehicles & Aftermarket
  • Infotainment & Connectivity
  • Instrumentation & Driver HMI
  • Intelligent Transportation Systems.

Rubber Group:

The Tire division is known for maximizing safety through short braking distances and excellent grip as well as reducing fuel consumption by minimizing rolling resistance. Tires are the vehicle’s only link with the road. They have to transmit all forces onto four areas of the road surface that are roughly the size of a postcard. In critical situations, it is the technology level of the tires that determines whether a vehicle is able to stop in time or stay in the correct lane during cornering maneuvers. 29% of sales in the Tire division relates to business with vehicle manufacturers, and 71% relates to the replacement business. The division is divided into six business units:

  • Passenger and Light Truck Tire Original Equipment
  • Passenger and Light Truck Tire Replacement Business, EMEA (Europe, the Middle East and Africa)
  • Passenger and Light Truck Tire Replacement Business, The Americas (North, Central and South America)
  • Passenger and Light Truck Tire Replacement Business, APAC (Asia and Pacific region)
  • Commercial Vehicle Tires
  • Two-Wheel Tires

The ContiTech division develops, manufactures and markets functional parts, intelligent components and systems made of rubber, plastic, metal and fabric for machine and plant engineering, mining, agriculture, the automotive industry, and for other important sectors. 51% of sales in the ContiTech division relates to business with vehicle manufacturers, and 49% relates to business with other industries and in the replacement market. ContiTech has been reorganized with the goal of making its business processes faster and more interconnected. Since the beginning of 2018, ContiTech has comprised seven business units, instead of the previous nine:

  • Air Spring Systems
  • Benecke-Hornschuch Surface Group
  • Conveyor Belt Group
  • Industrial Fluid Solutions
  • Mobile Fluid Systems
  • Power Transmission Group
  • Vibration Control.

Interconnected value creation
Research and development (R&D) takes place at 78 locations, predominantly in close proximity to our customers to ensure that we can respond flexibly to their various requirements and to regional market conditions. This applies particularly to the R&D projects of the Automotive Group and the ContiTech division, both of which have a decentralized organizational structure. The product requirements governing tire business are largely similar all around the world. They are adapted according to the specific requirements of each market. In this respect, R&D has a largely centralized structure in the Tire division. Continental invests about 7% of sales in R&D each year. For more information, see the Research and Development section.

Continental processes a wide range of raw materials and semi-finished products. The purchasing volume in the reporting year was €29.6 billion in total, €20.2 billion of which was for production materials. The Automotive Group uses primarily steel, aluminum, precious metals, copper and plastics. Key areas when it comes to purchasing materials and semifinished products include electronics and electromechanical components, which together make up more than 40% of the corporation’s purchasing volume of production materials. Furthermore, mechanical components account for about a quarter of production materials. Natural rubber and oil-based chemicals such as synthetic rubber and carbon black are key raw materials for the Rubber Group. The total purchasing volume for these materials amounts to around a sixth of the total volume for production material. For more information, see the Development of Raw Materials Markets section in the Economic Report.

In line with our strategy, production and sales in the divisions of the Automotive Group and in the ContiTech division are organized across regions. Our tire production activities, in which economies of scale play a key role, are represented with major locations in the three dominant automotive markets in terms of production and vehicle numbers, namely Europe, the U.S.A. and China. Low production costs coupled with large volumes or high rates of regional growth constitute key success factors. Sales activities in the Tire division are performed worldwide via our dealer network with specialty tire outlets and franchises as well as through tire trading in general.

Globally interconnected value creation

Globally interconnected value creation

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