The order of the risk categories and individual risks presented within the four risk groups reflects the current assessment of the relative risk exposure for Continental and thus provides an indication of the current significance of these risks. If no quantitative information on the amount of damage is provided, the assessment is carried out on the basis of qualitative criteria.
As a result of the completed spin-off of the former Automotive and Contract Manufacturing group sectors, the risks subject to reporting requirements have changed. The following information includes the material risks relevant to the remaining Continental Group. If a risk affects only one group sector, this is stated explicitly.
Financial Risks
Continental is exposed to risks in connection with its financing agreements and the syndicated loan.
Continental is subject to risks in connection with its financing agreements. Risks arise from the bonds that Continental AG has issued as part of the Debt Issuance Programme (DIP). These financing agreements contain covenants that could limit Continental’s capacity to take action as well as change-of-control provisions.
In order to finance current business activities as well as investments and payment obligations, a syndicated loan agreement is in place, from which risks may arise. Under the terms of the syndicated loan agreement, the lenders have the right to demand repayment of the loan in the event of a change of control at Continental AG.
The requirements for and consequences of a change in control in accordance with the terms of the bonds or the syndicated loan agreement are described in detail in the Additional Disclosures and Notes Pursuant to Sections 289a and 315a HGB section on pages 71 and 72. The loans and bonds cited here could also immediately become due and payable if other financing agreements of more than €75 million are not repaid on time or are prematurely called for repayment. Continental continuously monitors compliance with the applicable conditions.
The committed volume of the syndicated loan consists of a revolving tranche of €2.5 billion (due in December 2027). As at the end of fiscal 2025, €378 million of the revolving tranche had been utilized.
Continental is exposed to risks associated with changes in currency exchange rates and hedging.
Continental operates worldwide and is therefore exposed to financial risks that arise from changes in exchange rates. This could result in losses if assets denominated in currencies with a falling exchange rate lose value and/or liabilities denominated in currencies with a rising exchange rate appreciate. In addition, fluctuations in exchange rates could intensify or reduce fluctuations in the prices of raw materials in euros, as Continental sources a considerable portion of its raw materials in foreign currency. As a result of these factors, fluctuations in exchange rates can influence Continental’s earnings situation.
External and internal transactions involving the delivery of products and services to third parties and companies of the Continental Group can result in cash inflows and outflows that are denominated in currencies other than the functional currency of the respective subsidiary of the Continental Group (transaction risk). In operational currency management, these actual and expected foreign-currency cash flows are combined as operational foreign-exchange exposures in the form of net cash flows for each transaction currency on a rolling 12-month basis. A natural hedge approach for reducing currency risks has been pursued for several years, meaning that the difference between receipts and payments in any currency is kept as low as possible. In addition, hedging measures are implemented in individual cases by concluding derivative instruments with a term of up to 12 months. Their amount must not exceed 30% of the 12-month exposure per currency without Executive Board permission.
Moreover, Continental is exposed to exchange-rate risks arising from external and internal loan agreements that result in cash inflows and outflows denominated in currencies other than the functional currency of the respective subsidiary of the Continental Group. These exchange-rate risks are generally hedged through the use of appropriate derivative instruments, particularly currency forwards, currency swaps and combined cross-currency interest-rate swaps. Any hedging transactions executed in the form of derivative instruments can result in losses.
In order to quantify the possible effects of transaction-related exchange-rate risks from financial instruments on the earnings position of the Continental Group, transaction currencies with a significant exchange-rate risk within the next 12 months are identified based on current net exposure. If the exchange rates of these currencies all develop disadvantageously for Continental at the same time, then the hypothetical negative effect on the Continental Group’s earnings position, calculated based on a 10% change in the current closing rate, would amount to around €400 million.
Continental is exposed to default risks in connection with cash and cash equivalents, derivative instruments and interest-bearing investments.
In order to minimize the default risk for cash and cash equivalents, derivative instruments and interest-bearing investments, Continental generally uses banks that it has classified as core banks on the basis of defined criteria. As a general rule, these banks should have at least one investment-grade credit rating from one of the global rating agencies. The default risk can therefore be considered very low. The creditworthiness of the core banks – and of other banks with which investments are made, loans are granted or derivative instruments are traded in derogation from the core bank principle for operational or regulatory reasons – is continuously monitored. Not only the credit ratings but also in particular the premiums for insuring against credit default risks (credit default swaps, CDSs) are monitored, provided this information is available. In addition, Continental sets investment limits for each bank and trading limits for derivative instruments. The amount of these limits is based on the creditworthiness of the respective bank. Compliance with these limits is continuously monitored. Within the internally defined risk groups, the cash and cash equivalents, interest-bearing investments and positive (net) fair values of derivative instruments held at banks assigned to a higher risk group amount to between €100 million and €200 million.
Risks Related to the Markets in which Continental Operates
Continental could be exposed to material risks in connection with a global financial and economic crisis.
The reporting year was shaped by moderate global growth as well as ongoing geopolitical tensions and a high degree of uncertainty. Should these trends continue or lead to a general economic downturn, it would likely adversely affect Continental’s sales and earnings.
Continental generated 49% of its 2025 total sales for continuing operations in Europe and 14% in Germany alone. By comparison, 29% of Continental’s total sales in 2025 were generated in North America, 16% in Asia-Pacific and 6% in other countries. Therefore, in the event of a prolonged economic downturn in Europe, particularly in Germany, for example, Continental’s business and earnings situation could be affected more extensively than that of its competitors. Furthermore, the automotive and tire markets in Europe and North America are largely saturated. To minimize this dependence, Continental is striving to diversify its regional sales balance.
Based on a scenario analysis that considers various potential causes of an economic crisis, such as ongoing geoeconomic and geopolitical conflicts as well as increasing price pressure due to competition from Asia, and assumes a possible decline in sales in the mid-single-digit percentage range compared with the planning assumptions for 2026, and taking into account measures required as a result, we anticipate a possible decline in the adjusted EBIT margin for the group sectors by around 1 percentage point.
Continental is exposed to geopolitical risks.
Current geopolitical developments such as the ongoing war in Ukraine, the conflicts in the Middle East, the conflict between China and Taiwan and the situation in Latin America could have a major impact on Continental’s sales and procurement markets. This includes sanctions and other risks in supply chains as well as unforeseeable effects on the global economy. Continental is constantly monitoring current developments and deriving possible scenarios and necessary measures.
Continental is exposed to risks associated with additional or higher tariffs.
Due to the persistently strong trend toward protectionism and the recent trade conflicts around the world, Continental sees itself at risk from additional or higher tariffs on automobiles as well as on the products, components and raw materials it supplies or purchases, both directly and indirectly. These tariffs could cause demand for Continental’s products to drop and costs to increase, which would have an adverse effect on Continental’s business and earnings situation. Continental is continuously examining the possible effects and corresponding measures to minimize risk.
Continental is exposed to fluctuations in the prices of raw materials and energy as well as the risk of rising logistics costs.
The Tires and ContiTech group sectors mainly use natural and synthetic rubber as well as oil-based raw materials. The prices for these raw materials and components are exposed to sometimes considerable fluctuations worldwide. At present, Continental does not actively hedge the risk of rising prices of raw materials or energy by using derivative instruments. Increases in logistics costs can also occur. If the company is not able to compensate for the increased costs or to pass them on to customers, these price increases could reduce Continental’s earnings by €100 million to €200 million.
Risks Related to Continental’s Business Operations
Continental depends on a limited number of key suppliers for certain raw materials and products.
Continental is subject to the potential risk of unavailability of certain raw materials and production materials. Although Continental’s general policy is to source product components from a number of different suppliers, single sourcing cannot always be avoided and, consequently, Continental is dependent on certain suppliers. Supply delays, cancellations, strikes, insufficient quantities or inadequate quality can lead to interruptions in production and therefore have a negative impact on Continental’s business operations in these areas. Continental tries to limit these risks by endeavoring to select suppliers carefully and monitor them regularly. However, if one of Continental’s suppliers is unable to meet its delivery obligations (e.g. due to insolvency, destruction of production plants as a result of natural disasters or refusal to perform following a change in control), or if corresponding deliveries are affected by sanctions due to geopolitical disputes, Continental may be unable to source input products from other suppliers on short notice at the required volume. Such developments and events can therefore cause delays in the delivery or completion of Continental products and could result in Continental having to purchase raw materials and products at higher costs, which would negatively impact its business and earnings situation.
Continental is exposed to information-technology risks.
With regard to its business and production processes, its products and its internal and external communication, Continental is highly dependent on centralized and standardized information-technology systems and networks. These systems and networks as well as the products themselves are potentially exposed to the risk of various forms of cybercrime as well as damage and disruption that can have a wide range of other causes. In hacker attacks, third parties could attempt to gain unauthorized access to confidential information and data that is stored, processed or communicated in the systems and networks, or to the systems themselves. In addition, data, products and systems could be blocked, damaged, controlled or destroyed as a result of becoming infected with viruses or malware.
Although Continental has taken appropriate precautions to manage the risks associated with system and network disruptions and corresponding attacks, a prolonged outage in a computer center or telecommunication network or a comparable incident could result in systems or networks becoming unexpectedly unavailable over an extended period. The measures taken to minimize such risks include technical and organizational precautions such as duplicated data storage and contingency plans, as well as suitable training measures that are continuously expanded, particularly to raise awareness of the growing threat from cybercrime. Furthermore, the findings from the investigation into the cyberattack in August 2022 were taken into consideration with respect to strengthening IT systems.
Should the precautions taken prove insufficient to adequately protect its systems, networks, products and information, Continental could suffer considerable damage and disadvantages as a result of outages or the knowledge and use of its information by third parties.
Continental is exposed to risks in connection with its pension commitments.
Continental provides defined benefit pension plans in Germany, the USA, the UK and certain other countries. As at December 31, 2025, the pension obligations amounted to €2,254 million. These existing obligations are financed predominantly through externally invested pension plan assets. In 2006, Continental established legally independent trust funds under contractual trust arrangements (CTAs) for the funding of pension obligations of certain subsidiaries in Germany. As at December 31, 2025, Continental’s net pension obligations (defined benefit obligations less the fair value of plan assets) amounted to €1,445 million.
Continental’s externally invested plan assets are funded by externally managed funds and insurance companies. While Continental generally prescribes the investment strategies applied by these funds and takes these into account when selecting external fund managers, it does not have any influence over their individual investment decisions. The assets are invested in different asset classes, including equity, fixed-income securities, real estate and other investment vehicles. The values attributable to the externally invested plan assets are subject to fluctuations in the capital markets that are beyond Continental’s influence. Unfavorable developments in the capital markets could result in a substantial coverage shortfall for these pension obligations, resulting in a significant increase in Continental’s net pension obligations.
Any such increase in Continental’s net pension obligations could adversely affect Continental’s financial condition due to an increased additional outflow of funds to finance the pension obligations. Also, Continental is exposed to risks associated with longevity and interest-rate changes in connection with its pension commitments, as an interest-rate decrease could have an adverse effect on Continental’s liabilities under these pension plans. Furthermore, certain US-based subsidiaries of Continental have entered into obligations to make contributions to healthcare costs of former employees and retirees. Accordingly, Continental is exposed to the potential risk that these costs may increase in the future.
If the discount rates used to calculate net pension obligations were to decrease by 0.5 percentage points at the end of the year, all other things being equal, this would lead to a rise in net pension obligations of around €300 million, which could not be reduced by taking measures to minimize risk. However, this would not affect EBIT.
Continental is exposed to risks from trade restrictions, sanctions and export controls.
Due to the global alignment of the economic activity of the Continental Group, there are business risks with respect to embargoes, sanctions and export controls. As a global company, Continental also has business relations with customers and partners based in countries that are – or may be in the future – subject to export restrictions, embargoes, economic sanctions or other forms of trade restrictions. In addition to the fundamental influence that such restrictions have on the business activity of the Continental Group, violations of relevant provisions may lead to considerable penalties, administrative sanctions, damage to the company’s reputation, as well as claims for damages. Possible risks of such violations are mitigated as part of the export control compliance management system. Furthermore, Continental may also be forced, through new trade restrictions, to limit or put an end to business activity in certain countries or regions.
Continental could be adversely affected by property loss and business interruption.
Fire, natural hazards, terrorism, power failures or other disturbances at Continental’s production facilities or within Continental’s supply chain – with customers and with suppliers – can result in severe damage and loss. Such far-reaching negative consequences can also arise from political unrest or instability. Due to climate change, the probability of natural hazards, in particular extreme weather events, is expected to continue to rise and the extent of damage to increase. The risks arising from business interruption, loss of production or the financing of facilities are insured up to levels considered economically reasonable by Continental, but its insurance coverage could prove insufficient in individual cases. Furthermore, such events could injure or damage individuals, third-party property or the environment, which could, among other things, lead to considerable financial costs for Continental.
Continental is exposed to risks in connection with its interest in MC Projects B.V.
Continental and Compagnie Financière Michelin SAS, Clermont-Ferrand, France (Michelin), each hold a 50% stake in MC Projects B.V., Maastricht, Netherlands, a company to which Michelin contributed the rights to the Uniroyal brand for Europe as well as for certain countries outside Europe. In turn, MC Projects B.V. licensed to Continental certain rights to use the Uniroyal brand on or in connection with tires in Europe and elsewhere. Under the terms of the agreement concluded in this connection, both the agreement and the Uniroyal license can be terminated if a major competitor in the tire business acquires more than 50% of the voting rights of Continental AG or of its tire business. Furthermore, in this case Michelin also has the right to acquire a majority in MC Projects B.V. and to have MC Projects B.V. increase its minority stake in the manufacturing company Continental Barum s.r.o., Otrokovice, Czech Republic – one of Continental’s largest tire plants in Europe – to 51%. These events could have an adverse effect on the business and earnings position of Continental’s Tires group sector.
Legal, Tax and Environmental Risks
As a result of the completed spin-off of the former Automotive and Contract Manufacturing group sectors, the type and scope of matters subject to reporting requirements have changed. The corporate separation agreement stipulates that, unless regulated otherwise in the agreement, financial liability for legal risks originating during the period prior to the spin-off that relate to the former Automotive and Contract Manufacturing group sectors lies with AUMOVIO SE. The disclosures provided below have been adjusted accordingly and focus on the key information and continuing operations for the remaining Continental Group.
Continental could be threatened with fines and claims for damages for alleged or actual unlawful behavior.
Despite the compliance management system in place at Continental, the global nature of the Continental Group’s business activities means there is a possibility that unlawful behavior (e.g. corruption, fraud, violations of antitrust and competition law, money laundering) could occur in individual cases or that Continental could be accused of unlawful behavior. This alleged or actual unlawful behavior could lead to fines or claims for damages. Significant proceedings in this context are outlined below.
On October 2, 2006, South African antitrust authorities received a complaint from a third party accusing several South African tire manufacturers of alleged antitrust behavior, including Continental Tyre South Africa (Pty.) Ltd., Port Elizabeth, South Africa (CTSA), a subsidiary of Continental. On August 31, 2010, the South African antitrust authorities came to the conclusion that CTSA had violated South African antitrust law and referred the matter to the responsible antitrust court for decision. CTSA denies the allegation of infringements of South African antitrust law. However, the tribunal could impose a fine of up to 10% of CTSA’s sales. In addition, third parties may also claim damages from CTSA in case of an infringement of South African competition law.
As part of industry-wide searches, the European Commission began conducting a search of the premises of Continental AG on January 30, 2024, due to alleged antitrust violations. On the same day, Germany’s Federal Cartel Office (Bundeskartellamt) searched the premises of TON Tyres Over Night Trading GmbH, Schondra-Schildeck, Germany (a subsidiary of Continental that is no longer active), also due to alleged industry-wide antitrust violations. Both proceedings are still at an early stage. In the event that any such violation is identified, and Continental proves to be responsible for said violation, the European Commission and the Bundeskartellamt could each impose substantial fines on Continental. Furthermore, customers purportedly affected by the alleged exchange of information could claim for damages. In this context, class action lawsuits have already been filed in the USA and Canada against Continental and other tire manufacturers. The lawsuits in the USA have been consolidated before the United States District Court, Northern District of Ohio. The court granted these motions filed by the defendant tire manufacturers to dismiss the lawsuits, but also allowed the claimants to amend their combined lawsuits. The claimants filed a motion requesting that amendments to the initial lawsuit be allowed. The defendant tire manufacturers filed a motion to have said request dismissed. The court has not yet reached a decision on this matter. In accordance with IAS 37.92 and GAS 20.154, no further disclosures will be made with regard to the proceedings and the related measures so as not to adversely affect the company’s interests.
Bayerische Motoren Werke AG has filed a lawsuit against Continental AG in connection with the MK C2 integrated brake system produced between 2022 and 2024, which is being partly replaced. This concerns the operating business of the former Automotive group sector, which was transferred to AUMOVIO SE as part of the spin-off. According to the provisions of the corporate separation agreement, all economic opportunities and risks arising from the transferred group sector shall be transferred to AUMOVIO SE, which is obligated to ensure that Continental AG is indemnified against liability for any resultant costs and obligations. Hence, there are currently no material effects arising from the lawsuit that would impact the earnings, financial and net assets position of the Continental Group. No related provisions have been formed. In accordance with IAS 37.92 and GAS 20.154, no further disclosures will be made.
Continental could become subject to additional burdensome environmental or safety regulations, and new regulations could adversely affect demand for the company’s products and services.
As a corporation that operates worldwide, Continental must observe a large number of different regulatory systems in numerous countries that change frequently and are continuously evolving and becoming more stringent, particularly with respect to the environment, chemicals and hazardous materials, as well as health regulations. This also applies to air, water and soil pollution regulations and to waste legislation, all of which have recently become more stringent through new laws, particularly in the European Union and the USA. Continental could be affected in particular by greater restrictions on the use of per- and polyfluoroalkyl substances (PFAS). Moreover, Continental’s locations and operations necessitate various permits, and the requirements specified therein must be complied with. In the past, adjusting to new requirements has necessitated investments, and Continental assumes that further investments in this regard will be required in the future.
Continental is exposed to risks from legal disputes.
Companies from the Continental Group are involved in a number of legal and arbitration proceedings and could become involved in other such proceedings in the future. These proceedings could involve substantial claims for damages or payments, particularly in the USA. For more information on legal disputes, see Note 36 of the notes to the consolidated financial statements.
Continental could be exposed to tax risks in connection with previous assessment periods.
Continental AG and its subsidiaries operate worldwide and are continuously audited by local tax authorities. The assessment of facts and the interpretation of tax law, and how this is applied to the annual financial statements, may differ from the interpretation of the tax authorities, for example due to changes in tax legislation and developments in case law. Tax risks arise in particular from the valuation of cross-border, intercompany deliveries and services (transfer prices). Through organizational measures, such as monitoring transfer prices and where necessary carrying out bilateral appeals procedures, Continental AG monitors and controls the development of tax risks and their impact on the consolidated financial statements. Tax processes are continuously adapted to new tax laws and changes to case law.
