Contl Ag S/Adr

This conference will be recorded. Good afternoon, ladies and gentlemen, and welcome to the Continental AG Analyst and Investor Call H1 Results 2025. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Max Westmeyer, Head of IR.

Thank you very much, and welcome everyone to our Q2 2025 results presentation. I'm glad that we have a strong C-level presence here today again. Our CEO, Nikolai Setsa, our CFO, Olaf Schick, as well as Philipp von Hirschheit, the future Aumovio CEO. And for the Q&A, Roland Welzbacher will join us as well. Both the press release and presentation of today's call are available for download on our investor relations website. And as always, I'd like to remind everyone that this conference call is for investors and analysts only. If you do not belong to either of these groups, please kindly disconnect now. Following the presentation, we will conduct a Q&A session for sell-side analysts. To provide a chance for all to ask questions, we would like to ask you to limit yourselves to no more than three questions each. This will help us to conclude our call on time. And before we start, Let me remind you of some accounting technicalities that are also occurring in Q2. Due to the spin-off in September, we applied for IFRS 5 accounting for continued and discontinued operations. As a result, among others, depreciation and amortization for automotive and contract manufacturing has been stopped. This has a significant positive effect on EBIT and net income. The EBIT effect amounts to 235 million euro. equal to 240 base points in automotive when looking at the Q2 adjusted EBIT. In the IR presentation, however, we are working with a like-for-like comparison, so still considering depreciation to reflect the operational performance of automotive. And of course, also KPIs like net income would have looked different if depreciation was not stopped. To make it easier for you to consider the subject of continued and discontinued operations in your models, we have provided a slide with pro forma comparative figures for all quarters of the previous year or continued operations in the appendix to the presentation. You can find it on page 26. And with this upfront, let me now finally hand over to you, Nico.

Yeah, thank you, Max. Welcome from my side. So we are looking back definitely to a very, very busy second quarter. On the one hand, the market and the operational effects which have impacted us. On the other hand, we have reported on the Quantitech independence, which we are striving for the spin-off approval at the AGM. We have followed suit on the OSL transaction. And finally, in June 24th, we had a capital markets day with lots of information. And I want to use the opportunity to thank everybody. We had a high personal participation as well many joining in a hybrid mode. We had many roadshows and conferences and clearly that shows how important the personal exchanges. We appreciate this and we appreciate as well that you took the time in order to dive deep into our transformational story and from the feedback which we got, it's now much, much better understood going forward. And with the second quarter, we want to add another piece of the puzzle going forward. Headline sums it pretty well up, we think. It's a resilient performance, which we have shown in a very highly volatile environment. Barely I've seen such a quarter with so many events on the macroeconomic base, as well as it comes to currency and operational stats. Good news is we are ready to spin off our mobile. So you see on the right side, for all other transformation projects, we only have a heads up that we are fully on track, where there is no driving our transformation forward. And in particular, for our mobile listing in Frankfurt, we have now a date, a targeted date, which we can communicate September 18th, which we are now working on. Looking on the organic sales, you could see on the left side that our sales were dropping from 10 billion to 9.6. So heavy weight by the effects of north of 3%, 3.4%. Mainly the US dollar, but you barely find any currency in the world which is not depreciating versus the Euro value. Unfortunately, as our base in particular on the tire side is mainly in Uran, we have a high cost base in Euro. So organically with minus 0.4%, we're in very weak markets. We are somehow in the market, obviously being there rather flat. Automotive, the highlight, significantly improved to the upper range of the guidance with 4%. And the profitability was driven by the commercials. and operational efforts. So Philip will give you more details later on, but in particular, you could see that the significant fixed cost reductions, which he and his team introduced already last year and the year before, they are really paying off now. And they contribute to a very reduced margin seasonality compared, not only prior, but the year before, so in the first half, With 2.8%, we are within the guidance range, 2.5 to 4, which we have not been in the years before, which is clearly a very positive, as well a positive sign and proof point for the spin to happen September 18th. Tires strongly hit by the FX, as well as strong FX headwind, same as we have on group, more than 3%, with a substantial drop through, which is the one half, which weighs on the profitability of the other half. We've communicated before other tariffs, with two months now with limited compensatory effect from Q3 onwards that will improve when we are going forward. Important to mention that operationally, we have been okay. So we had a strong price mix north of 3%. Volume was given the market as well, okayish. We could with our price because we're compensated for the raw mass headwind, but not for the FX and tariffs, which we are coming in. So as you could see here, not effective yet, but the tariffs from Europe will drop from 25% for auto and pass car tires are included in the auto category, not the truck and specialty, but we are mainly pass on our tire side. They will drop to 15%, which is good news. So this is still 15%, but it will reduce presumably our headwind in the second half by a mid double digit million amount versus what we have assumed before or still at the capital market state, what we have shown. The markets on tires, they have been muted in particular Europe, APEC, North America, or CAGE. And for all markets, it was true that we have been at least within the markets, at least if you look as well for local manufacturers. In Europe and North America and APEC, we have even slightly outperformed the market, which is a good sign going forward. Quantitech continued weak volumes on order as well as industry. However, we have seen at least, we say only, but at least gradual signs. Why only? Because we still hoped for more. Quantitech as well organically going backwards by 1.4%. Unfortunately, and Hadwin, Taris and FX, however, Philip and the team, the other Philip, will continue working strongly on fixed cost management and we could mitigate most of the impact. So 4.8% slightly below the lower point of our guidance, the lower corridor. which translates into we have improved versus first quarter, 5.4 to 5.8, and the second half, we have to further improve going forward. For the group, you see in the white box, the like for like, without EFS5, we end up with 595 million, 6.2%. And if you add the sectors, you see that we have substantial group effects, holding effects in the second quarter, which rates on the results on the group level, which have been for the separation and spin-off activities, a high amount of one-offs which we have absorbed here in the second quarter. And there might come as well then for the second half, a certain separation, one of which we will see another part, which will happen then in automotive, which will then be spun off in September, on September 18th. So net income, you see from 305 to 506, also mentioned by Max, this is a difficult to be compared number because it's not only depreciation, we have as well hypothetical tax effects. To take an out, if you do this, if you assume a flat tax rate, the effect should be an amount of 180 million. So if you deduct this, 325 is still higher than we had last year. So we move forward as well on the net income and you could see as well, bottom down on the net indebtedness, we improved as well by about 650 million. Adjusted free cash flow, we've been down in the second quarter, however, particular for last year, you have to take into account that we had in the second quarter a high working capital effect or one-off effect on contract manufacturing, which is phasing out this year. And last year, we had those very positive effects, which not come again. They have been in an amount of low to mid triple-digit millions, so very significantly getting in. If you make the math for the first half, we are 550 million ahead of prior year, which is, given the market and given where we are, a strong sign. So we are in line with the seasonal pattern on the first as well as on the second quarter, if you adjust for those effects which we had. And, of course, we had in the second quarter now, as we had in the P&L, we had restructuring effects on one end. On the other end, the spin-off related assets, which I already mentioned, which are guiding us. So, looking for equity ratio, Olaf will explain more. There are shorter technical impacts, which dilutes this, which will bounce back after spin. He will mention this more, and the leverage ratio, On top, you see we further improved, I mean, net investment is going down, EBITDA and positive development that helps. And as mentioned on the capital markets, we will further in the future use this KPI instead of equity ratio going forward, because we clearly believe that better reflects our ability to operationally finance our debt going forward. With that, let's move on to the next chart. So there you see the second quarter Figures mentioned group sales minus 0.4. So basically flatish, tie us up based on the strong price mix, 1.4%. Automotive roughly within the market, slightly a little bit lower than the sales weighted market for us with minus 1.2 and Quantitech with minus 1.4. Again, more than 80 million, which we could not on an operating leverage fully mitigate, but with the 5.8% you see on the right side, Sequential improvement, as I said, and if you look for the first half last year and this year, we are, despite being substantially down in sales, just half a percentage point lower, which, as I said, we have to recover and now further improve in the second half, with as well industry warrants come back, but further working on our cost measures. Tyres, S12.0, here clearly I've mentioned FX and Paris, we're hitting without the mitigation measures. As well here, if you do the first half comparison, we are as well here only because the first quarter, second quarter was flip flop last year. First quarter was weak, this year was strong on tires. It's as well about half a percentage point down, given the effects which we have in the second quarter, which is clearly the troughs looking for ethics and tariffs. This is a good result, resilient result, as we mentioned before. And clearly with that, I hand then over for a last time to Philipp von Hirschheit last time under the Conti flag, I have to say. And as the CEO, I'll move you next time, you will wear another jersey with really a strong second quarter. Philipp, give us the details, please.