Dear shareholders,
In the past fiscal year, Continental became more robust and efficient, achieving its adjusted targets for 2023. Despite continuing to face major challenges due to the geopolitical situation, additional inflation-related costs, negative exchange-rate effects and high costs for special freight, we performed well and generated solid earnings. Consistently aligning the company with our strategy is clearly paying off. Continental is well positioned for the future – as the mobility and material technology group for safe, smart and sustainable solutions.
Our results in 2023 show that we are on the right track:
- At €41.4 billion, our sales were 5.1 percent higher year-on-year. We were also able to increase our adjusted EBIT margin from 4.9 percent in the previous year to 6.1 percent.
- In the Automotive group sector, we improved by adopting and rigorously implementing the right measures, significantly increasing sales and the adjusted EBIT margin to €20.3 billion and 1.9 percent. This represents a further step toward the profitability we are striving for.
- With sales of €14.0 billion and an adjusted EBIT margin of 13.5 percent, the Tires group sector once again achieved a very good result. Tires is highly profitable and excels when it comes to technology and sustainability.
- In a weak industrial environment, the ContiTech group sector demonstrated its resilience, with sales totaling €6.8 billion and an adjusted EBIT margin up significantly at 6.7 percent.
- Thanks to an improvement in operating earnings and a reduction in inventories and receivables, we significantly increased our adjusted free cash flow to €1.3 billion.
As a team, we are capable of great things. Our approximately 200,000 employees worldwide achieved a lot in 2023 despite the challenging conditions. Competition is tough, and the transformation in our industries is incredibly demanding. The entire Executive Board would therefore like to extend its thanks and appreciation to all employees at Continental. Together, we have entered a new phase: a phase of growth and increased value creation.
This is based on three key elements:
- Continental has a clear strategy to achieve its mid-term targets.
- We will invest in particular in those areas with value creation upside and continuously expand our technology position in areas where we can expect to gain an edge over the competition.
- The Automotive, Tires and ContiTech group sectors make up a balanced and resilient portfolio.
With these elements in mind, we made some key decisions in 2023:
- The Automotive group sector will pursue the strategy of becoming the preferred system integrator for software-defined vehicles. As part of this, the User Experience business area will become organizationally independent, which will open up new strategic options for this business. In addition, further business activities will be reviewed that contributed around €1.4 billion to consolidated sales in fiscal 2023.
- In the Tires group sector, we see strong growth potential in the Asia-Pacific region as well as in North and South America. Based on our strategy of being in the market for the market, we will therefore expand production capacity in these regions.
- The Original Equipment Solutions (OESL) business area within the ContiTech group sector – comprising the automotive business, with the exception of surface materials – will also become organizationally independent, allowing for options such as the entry of a strategic investor, a joint venture or a sale.
Our mid-term targets – sales of around €51 billion to €56 billion and an adjusted EBIT margin of around 8 to 11 percent – serve as a clear guide for the future, thus creating the foundation for further investment. In the short term, we hope to already reach the lower end of our profitability target.
As shareholders of Continental, you should also benefit from this increase in value. The Executive Board and Supervisory Board will therefore propose a dividend of €2.20 per share to the Annual Shareholders’ Meeting. At our Capital Market Day in December 2023, we presented an adjusted dividend payout corridor. We now intend to distribute 20 to 40 percent of net income to ensure Continental remains a worthwhile investment.
With our hardware, software and digitalization portfolio, as well as our employees’ expertise, we are uniquely positioned. Continental is on the right track – of that I am certain.
Nikolai Setzer
Chairman of the Executive Board
Nikolai Setzer
Chairman of the Executive Board
