Continental Shares and Bonds

Positive trend on the stock markets

In 2023, the stock markets were influenced in particular by solid corporate earnings as well as investor expectations regarding interest rate developments. The overall trend on the stock markets was positive in the first half of 2023, despite some global challenges. With price increases for energy and production materials having weighed heavily on global stock markets in 2022, a positive effect was felt in the first half of 2023 thanks to initial relief measures, among other factors. Nevertheless, persistently high inflation and consecutive interest rate hikes by the Federal Reserve and the European Central Bank (ECB), for example, led to repeated price losses.

Expectations of a possible recession also dampened stock market sentiment, while fears of a global banking crisis following the insolvency of Silicon Valley Bank caused share prices to fall in March in particular. However, the markets recovered more quickly than expected.

Inflation eased from the second quarter onward, first in the USA and then in the eurozone. In response to this, central banks such as the Federal Reserve and the ECB announced a pause in interest rate rises, resulting in a strong year-end rally on the stock markets.

The DAX, which reached a new all-time high of 17,003.28 points in mid-December, closed 2023 at 16,751.64 points. This represented an increase of 20.3% compared with the end of 2022, when it was quoted at 13,923.59 points. The EURO STOXX 50 rose by 19.2% in 2023 and ended the year at 4,521.65 points.

Significant rally among automotive stocks

Many automotive stocks benefited from a gradual stabilization of supply chains in 2023, together with an overall improvement in the availability of semiconductors and other electronic products. At the same time, recurring fears of a recession and the resulting purchasing restraint shown by consumers weighed on the automotive industry. Overall, however, manufacturers were able to increase car production compared with the previous year. Even the strike in the US automotive industry, which lasted several weeks, had no long-term impact on stock market values following the share price rally at the end of the year.

Despite this challenging environment, which was additionally driven by inflationary pressure and cost increases, most automotive suppliers were able to achieve solid earnings in 2023, causing the share prices of many listed suppliers to increase. The STOXX Europe 600 Automobiles & Parts rose to 627.86 points in 2023, recording growth of 19.1% compared with the end of 2022.

Price performance of Continental shares in 2023 versus selected stock indexes
(indexed to January 1, 2023; Data source: Bloomberg.)

Good performance by Continental shares

In the first quarter of 2023, Continental’s share price performance – like that of other automotive suppliers – was influenced in particular by the improvement in global supply chains and the expectation of falling production costs. However, after a strong start to the year, Continental shares underperformed in a negative market environment.

This sharp decline was followed in the second quarter by a period of stabilization at a level between €60 and €70. On April 28, 2023, the share price was marked down to reflect the dividend of €1.50 for fiscal 2022 resolved by the Annual Shareholders’ Meeting.

Continental’s share price remained relatively stable in the third quarter. In the fourth quarter, it fell initially before expectations regarding the Capital Market Day in December and the company’s announced strategy led to a sharp increase.

At the end of 2023, Continental’s shares were listed at €76.92. This represented an increase of 37.4% compared with the yearend price of €55.98 in 2022. Taking into account a reinvestment of the dividend paid out on the distribution date, the share price rose by 40.7% in 2023.

Price gains for Continental bonds

Interest rates for European corporate bonds rose sharply in the reporting period as a result of the overall increase in interest rates. With some central banks announcing a pause in interest rate rises, bond prices also increased. Continental’s outstanding bonds were quoted at a higher price at the end of 2023 compared with the end of 2022.

Successful placement of two new euro bonds

Under the Debt Issuance Programme (DIP), two new Continental AG euro bonds were successfully placed with investors in Germany and abroad at the end of May and the end of August.

The first euro bond was offered on May 24, 2023, with an interest coupon of 4.000% p.a. and a term of five years. With a nominal volume of €750.0 million, the issue price amounted to 99.445%. The bond was launched on the regulated market of the Luxembourg stock exchange on June 1, 2023. The second euro bond was offered on August 23, 2023, with an interest coupon of 4.000% p.a. and a term of three and a half years. The nominal volume of the bond was set at €500.0 million. The issue price was 99.658%. The bond was launched on the regulated market of the Luxembourg stock exchange on August 31, 2023.

Positive earnings per share

The significant rise in automotive production, combined with a gradual stabilization of supply chains, resulted in a positive overall earnings trend in the year under review. In addition, the prior year was negatively affected by impairment losses owing to higher interest rates and other valuation-related effects. Consequently, net income attributable to the shareholders of the parent increased to €1,156.4 million in fiscal 2023 (PY: €66.6 million). Earnings per share amounted to €5.78 in 2023 (PY: €0.33).

Dividend proposal of €2.20 for fiscal 2023

As announced at the 2023 Capital Market Day, Continental AG has adjusted its target range for dividend distribution to between 20% and 40% of net income attributable to the shareholders. The Executive Board and the Supervisory Board have resolved to propose to the Annual Shareholders’ Meeting, which will be held in Hanover on April 26, 2024, that a dividend of €2.20 per share be paid out for the past fiscal year and that the retained earnings for fiscal 2023 be carried forward to new account. For fiscal 2022, a dividend of €1.50 per share was paid out on May 3, 2023.

Share capital unchanged

As at the end of fiscal 2023, the share capital of Continental AG still amounted to €512,015,316.48. It is divided into 200,005,983 no-par-value shares with a notional value of €2.56 per share.

In line with Article 20 of Continental AG’s Articles of Incorporation, each share grants one vote at the Shareholders’ Meeting. The current Articles of Incorporation are available on our website at www.continental.com under Company/Corporate Governance. All shares have the same dividend and voting rights.

Free float stable at 54.0%

As in the previous year, free float as defined by Deutsche Börse AG amounted to 54.0% as at the end of 2023. The most recent change took place on September 17, 2013, when our major shareholder, the IHO Group, Herzogenaurach, Germany, announced the sale of 7.8 million Continental shares, reducing its shareholding in Continental AG from 49.9% to 46.0%.

As at the end of 2023, the market capitalization of Continental AG amounted to €15.4 billion (PY: €11.2 billion). Market capitalization on the basis of free float averaged €8.0 billion over the last 20 trading days of the reporting year (PY: €6.1 billion). Free-float market capitalization is the decisive factor for index calculation in the regulatory framework of Deutsche Börse AG. At the end of 2023, Continental AG ranked 37th in terms of free-float market capitalization on the DAX (PY: 39th).

Free-float distribution largely stable in 2023

As at the end of the year, we once again determined the distribution of free float of Continental shares by way of shareholder identification.

We were able to assign 107.9 million of the 108.0 million shares held in the form of shares or alternatively as American depositary receipts (ADRs) in the USA to more than 664 institutional investors, banks and asset managers across 43 countries. The identification ratio was 99.9% (PY: 98.5%).

The identified level of Continental shares held in Europe was slightly higher than in the previous year at 51.1% of free float (PY: 49.7%).

In particular, the identified level of shares held by investors from the UK and Ireland, at 31.5%, led to the year-on-year rise (PY: 30.0).

The identified free-float holdings of German investors increased to 6.9% in the year under review (PY: 5.9%).

The free-float holdings of Scandinavian investors fell to 3.3% in 2023 (PY: 3.6%).

French investors held 3.1% of Continental free-float shares at the end of 2023 (PY: 3.5%).

Investors in other European countries reduced their share of free float slightly to 6.3% in 2023 (PY: 6.7%).

Shareholdings of investors in North America decreased year-onyear in 2023. In total, they held 44.9% (PY: 46.0%) of the free float in the form of shares or ADRs.

The identified shareholdings of investors in Asia, Australia and Africa were at 2.4% at the end of 2023 (PY: 2.8%).

Continental share listings

Continental’s shares continue to be officially listed on the German stock exchanges in Frankfurt, Hamburg, Hanover and Stuttgart on the regulated market. They are also traded on other unofficial stock exchanges in Germany and in other countries around the world.

Continental ADR listings

In addition to being listed on European stock exchanges, Continental shares are traded in the USA as part of a sponsored ADR program on the over-the-counter (OTC) market. They are not admitted to the US stock market.

Continental Investor Relations online

For more information about Continental shares, bonds and credit ratings, please visit www.continental-ir.com.

All market prices are quotations of the Continental share in the Xetra system of Deutsche Börse AG. Data source: Bloomberg.
1 Subject to the approval of the Annual Shareholders’ Meeting on April 26, 2024.
2 Not applied.
3 Dividend per share at the annual average share price.