Continental AG - Short Version in acc. with HGB

In addition to the reporting on the Continental Group as a whole, the performance of the parent company is presented separately here.

Unlike the consolidated financial statements, the annual financial statements of Continental AG are prepared in accordance with German commercial law (the German Commercial Code (Handelsgesetzbuch – HGB) and the supplementary provisions of the German Stock Corporation Act (Aktiengesetz – AktG)). The management report of Continental AG has been combined with the consolidated report of the Continental Group in accordance with Section 315 (5) HGB, as the parent company’s future risks and opportunities and its expected development are inextricably linked to that of the Continental Group as a whole. In addition, the following presentation of the parent company’s business performance, including its results, net assets and financial position, provides a basis for understanding the Executive Board’s proposal for the distribution of retained earnings.

Continental AG acts solely as a management and holding company for the Continental Group.

Upon registration in the commercial register on September 17, 2025, and by resolution of the Annual Shareholders’ Meeting on April 25, 2025, Continental AG spun off its participation in Continental Automotive Technologies GmbH, Hanover, including its direct and indirect subsidiaries and investments as well as the management and profit and loss transfer agreement of Continental Automotive Technologies GmbH, to AUMOVIO SE, Frankfurt am Main, Germany, with retroactive economic effect as of January 1, 2025.

In preparation for the spin-off of Continental Automotive Technologies GmbH, the direct investment held by Continental AG in Continental Automotive GmbH was merged into Continental AG upon registration in the commercial register on July 1, 2025, and by resolution of the Annual Shareholders’ Meeting on April 25, 2025, with retroactive economic effect as of January 1, 2025, and with recognition of hidden reserves and liabilities.

In fiscal 2025, total assets fell by €5,394 million year-on-year to €17,856 million (PY: €23,250 million). On the assets side, the change resulted primarily from the decline in receivables from affiliated companies of €5,718 million to €5,583 million (PY: €11,300 million). This was offset by an increase in investments in affiliated companies, which rose by €337 million to €11,622 million (PY: €11,285 million).

Investments rose by €244 million year-on-year to €11,622 million (PY: €11,378 million), thus corresponding to 65.1% of total assets (PY: 48.9%). As part of the merger of Continental Automotive GmbH with Continental AG with retroactive effect as of January 1, 2025, the commercial law principles for asset exchange were applied, resulting in the recognition of hidden reserves and liabilities. In the process, the carrying amount attributable to Continental Automotive GmbH of €9,137 million was derecognized. As a result of the merger, the following were added to Continental AG’s financial assets: the 100% interest in Continental Automotive Technologies GmbH, recognized at its fair value of €9,519 million; and the 51% interest in Continental Caoutchouc-Export GmbH, Hanover, recognized at its fair value of €9,474 million. The carrying amount of Continental Automotive Technologies GmbH rose to €10,663 million in fiscal 2025 due to a capital increase of €1,144 million. This investment was subsequently derecognized from Continental AG’s financial assets as part of the spin-off.

Property, plant and equipment fell by €11 million year-on-year to €250 million (PY: €261 million).

Receivables from affiliated companies fell by €5,718 million in the fiscal year to €5,583 million (PY: €11,300 million). This was due to factors such as the spin-off of Continental Automotive Technologies GmbH, including its direct and indirect subsidiaries, and an associated decline in the volume of loans and overnight deposits provided by Continental AG to subsidiaries.

At €17 million (PY: €120 million), prepaid expenses and deferred charges were down €103 million. This decline resulted mainly from lower year-on-year accruals for IT services.

On the equity and liabilities side, the change resulted primarily from the decline in total equity of €6,726 million to €6,683 million (PY: €13,409 million). This was partially offset by an increase in bonds of €1,076 million to €5,259 million (PY: €4,183 million) and an increase in liabilities to affiliated companies of €432 million to €4,639 million (PY: €4,208 million).

The increase in bonds was partly due to the issuance of two new euro bonds in fiscal 2025 with a total nominal volume of €1,350 million. An offsetting effect was attributable to the on-time repayment of a euro bond on June 27, 2025, with a nominal volume of €600 million.

Bank loans and overdrafts rose by €2 million to €712 million (PY: €710 million).

Liabilities to affiliated companies were up €432 million year-on-year to €4,639 million (PY: €4,208 million). This was primarily attributable to the higher provision of loans and overnight deposits made available to Continental AG by subsidiaries.

Provisions decreased by €71 million year-on-year to €546 million (PY: €616 million) due to the €72 million decline in pension provisions to €213 million (PY: €285 million) and the €53 million decline in tax provisions to €191 million (PY: €244 million). This was offset by an increase in other provisions of €55 million to €142 million (PY: €87 million).

The decline in pension provisions by €72 million resulted from the transfer of pension obligations for employees that moved to another group company as well as a year-on-year rise in the discount rate used for pension obligations.

Total equity fell by €6,726 million to €6,683 million (PY: €13,409 million). The dividend distribution of €500 million carried out in the fiscal year initially reduced Continental AG’s retained earnings. By resolution of the 2025 Annual Shareholders’ Meeting, the remaining retained earnings after the dividend distribution in the amount of €4,817 million were allocated to other revenue reserves. Due to the spin-off of Continental Automotive Technologies GmbH, capital reserves decreased by €2,445 million to €1,734 million (PY: €4,179 million) and revenue reserves were fully reduced by €8,218 million (PY: €3,401 million). The net income for 2025 of €4,437 million had a positive impact on equity. Due to these effects, the equity ratio declined from 57.7% in the prior year to 37.4%.

Sales for fiscal 2025 fell by €116 million to €280 million (PY: €396 million), primarily due to lower sales from corporate services.

Other operating income decreased by €271 million year-on-year to €50 million (PY: €321 million). This was primarily attributable to transfers of expenses to subsidiaries in the prior year.

Net investment income fell by €2,115 million year-on-year to €4,928 million (PY: €7,043 million). This was partly due to the decline in income from profit and loss transfers from the subsidiaries of €6,707 million to €336 million (PY: €7,043 million). The high level in the previous year was mainly attributable to preparatory measures for the spin-off of the former Automotive and Contract Manufacturing group sectors. Offsetting this decline was the income of €4,590 million recorded in fiscal 2025 arising from the merger of Continental Automotive GmbH with Continental AG with retroactive effect as of January 1, 2025.

The negative net interest result decreased by €44 million year-on-year to €249 million in fiscal 2025 (PY: €293 million).

Interest expense fell by €79 million in the fiscal year to €378 million (PY: €457 million), with interest expenses to affiliated companies decreasing by €108 million to €185 million (PY: €293 million). Furthermore, the euro bonds issued by Continental AG led to expenses of €136 million (PY: €104 million). The €32 million increase resulted from the two euro bonds issued in fiscal 2025, with nominal volumes of €750 million and €600 million and each with a fixed interest rate of 2.875% p.a. Additionally, interest expense from the euro bond issued in October 2024 with a nominal volume of €600 million was recognized for a full fiscal year for the first time in 2025, which also led to a rise in interest expense from issued bonds.

Interest income fell by €35 million in the fiscal year to €129 million (PY: €164 million). This was primarily due to interest income from affiliated companies.

Income tax expense of €8 million (PY: tax expense of €29 million) resulted mainly from income from the reversal of provisions for tax-related risks, as well as expenses from non-imputable withholding taxes for the income tax consolidation group of Continental AG.

After taking income tax expense into account, Continental AG generated net income for the year of €4,437 million (PY: €6,692 million). The after-tax return on equity was 66.4% (PY: 49.9%).

Continental AG has defined a target range for dividend distribution of 40% to 60% of net income attributable to the shareholders. Taking into account the retained earnings brought forward from the previous year of €5,317 million and the dividend distribution of €500 million, as well as the allocation of €4,817 million to revenue reserves, retained earnings amounted to €4,437 million. The Supervisory Board and Executive Board will propose to the Annual Shareholders’ Meeting the payment of a dividend of €2.70 per share entitled to dividends. The total distribution is therefore €540,016,154.10 for 200,005,983 shares entitled to dividends. The remaining retained earnings are to be carried forward to new account.

We expect further income from profit and loss transfers and investment income from the subsidiaries within the scope of the holding activities of Continental AG in fiscal 2026. Furthermore, Continental AG will continue to provide a financing function for its subsidiaries.