Extract from Annual Report 2017 as published on March 20, 2018

For fiscal 2018, we anticipate an increase in global light-vehicle production (passenger cars, station wagons and light commercial vehicles) of more than 1% to 96.5 million units. We expect demand on our key replacement-passenger-tire markets – Europe and North America – to grow by a total of 12 million replacement tires or 2% in each case. Based on these market assumptions and provided that exchange rates remain constant, we anticipate an increase in consolidated sales to around €47 billion in 2018

We have set ourselves the goal for the corporation of achieving a consolidated adjusted EBIT margin of around 10.5% for fiscal 2018. With regard to the development of the adjusted EBIT margin, the lower expectation in comparison to the previous year is attributable mainly to the expected additional expenses due to the rising fixed costs in the Tire division and additionally due to rising raw material costs in the Rubber Group. The increase in fixed costs in the Tire division has resulted primarily from the considerable expansion of capacity over recent years. In 2017, this already led to an increase in depreciation and amortization of around €60 million year-on-year. This year, the startup of the tire plants in Clinton, Mississippi, U.S.A., and in Rayong, Thailand, is expected to result in a further rise in depreciation and amortization, but also other fixed costs, before these two plants generate their first sales. We estimate these costs alone at around €120 million. For the Automotive Group, assuming constant exchange rates, we anticipate sales growth of 7% to approximately €28.5 billion with an adjusted EBIT margin of around 8.5%. For the Rubber Group, assuming constant exchange rates, we expect sales growth to approximately €18.5 billion with an adjusted EBIT margin of around 15%.

For 2018, we are planning on free cash flow of approximately €2 billion before acquisitions. One reason for this year-on-year decrease is an increase in the capital expenditure ratio. In addition, we expect the rest of the warranty provisions recognized in 2016 and the provision recognized in 2016 for potential antitrust fines to flow out in full in 2018. 

The start to 2018 has confirmed our expectations for the full year.

2018E as of March 8, 2018 published in the presentation results for FY 2017

© Continental AG

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Medium-Term Forecast

In 2015, Continental compiled a medium-term forecast in addition to the targets for the current year. This comprises the corporate strategy, the incoming orders in the Automotive Group and the mediumterm targets of the Rubber Group. Accordingly, we want to generate sales of more than €50 billion and a return on capital employed (ROCE) of at least 20% in 2020. These medium-term targets were confirmed again after the review in 2017.

© Continental AG