Contl Ag S/Adr

Ladies and gentlemen, and welcome to the Continental AG Analyst and Investor Call Q2 Results 2026. The conference will be recorded. 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 Investor Relations.

Yes, thank you very much, and welcome, everyone. Today's call is hosted by our CEO Christian Krutz and our CFO Roland Welsbacher. A quick reminder that both the press release and the presentation of today's call are available for download on our investor relations website. Before we start, 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 disconnect now. Following the presentation, we will conduct a Q&A session for the sales side analysts in this call, as usual. To give everyone the opportunity to ask questions, we kindly ask you to limit yourselves to no more than three questions. And with that, over to you, Christian, for the Q2 key messages.

Thank you, Max, and welcome everyone online also from my side. Thank you for joining us today. Let me start. This is strategic milestone we announced in July. As you know, Continental has signed the sale of its Contitech Group Sector to Lone Star on July 4th, which is fully in line with the timing that we have always indicated to the capital market. And we could still close the transaction by the end of 2026, of course, subject to regulatory approvals and other closing conditions. That does also mean that we cannot rule out that the process lasts into 2027, but please rest assured that we are working hard towards closing the deal as soon as possible. As you have probably seen, the agreed enterprise value amounts to 4 billion euros plus a potential performance-based component of up to 250 million euros. I think this is a clear testament to the attractiveness of Contitech as an industrial pure play. Based on the current transaction structure, expected net cash proceeds at closing are expected to be around 3.1 billion euros. Also here, the exact amount will of course and obviously depend on multiple factors at the time of closing. When it comes to the use of the proceeds, We intend to combine attractive shareholder returns with deleveraging, as we always communicated and announced. In line with that, we plan to use around 2.5 billion euros for shareholder returns. Our options include special dividend or a special dividend and share buybacks, as we also always explained and communicated. But these are details that we are now working on. The remaining around 600 million euros are planned to be used for deleveraging, and this supports our past thoughts. The leverage target of below one by 2029, again, fully in line with our midterm targets we've communicated and explained at various locations. So Q2 certainly kept us busy, not least with the sale of the explained and mentioned sale of Contitech. But when we did find a spare moment, the Tour de France offered an excellent alternative, to be honest, to spend that extra time. And here my warmest congratulations to Tadej Pogacar on an extraordinary fifth Tour victory, delivered with exceptional skills, but of course also supported by Continental tires. A great demonstration of what talent, teamwork, and outstanding technology can deliver. With that positive and winning momentum, let us move on to our quarterly performance in Q2. So, overall, we delivered a solid quarter with earnings and cash flow improving despite the still challenging market environment. Group sales came in at 4.4 billion euros, compared with around 4.9 billion euros in Q2 of last year. The reported sales decline was mainly driven by the sale of OESL, so the Contitech OE related, or the majority of the Contitech OE related business, which we have sold at the beginning of last year. Organically, our sales development was broadly stable at minus 0.3%, and even slightly positive on the tire side. More details to come. Our adjusted EBIT for the group increased year over year, reaching 470, 570 million euros, translating into an adjusted EBIT margin of 12.9%. That improvement was mainly supported by our tires group sector, where we saw continuous strong price mix, still lower raw material costs, and a better operational performance. Quantitech continued to operate in a subdued market environment which weighed on profitability. However, the impact was largely mitigated by portfolio measures, still favorable to raw material costs, and the ongoing execution of cost-saving measures, the self-help measures we've explained also earlier. Adjusted free cash flow improved significantly to 216 million euros, roughly 250 million euros up year on year. The strong increase was of course driven by the solid profitability improvement, but also included some cut-off date related items such as favorable working capital development and the timing of CapEx, which remains weighted towards the second half of the year. The positive cash flow also supported further organic debt reduction. However, and as always in Q2, our net debt increased sequentially versus Q1, mainly due to the dividend payment we have done in May. With the sale of Contitech that I've mentioned earlier, we have also reached a significant milestone towards becoming a tires pure play. As a result, we have already now adjusted the guidance to reflect Contitech as a discontinued business, but Roland will touch on that later on in more details. As a next step, we will also start disclosing more details on the tires business in the next quarters. We will change our segment disclosure moving forward. You will receive a call invite in the upcoming weeks for an update call on our future structure since we want to make the transition into attires pure play as smooth as possible also for you. So, looking at the group sectors on slide six, the improvement in margin was mainly driven by the strong performance at tires. As I mentioned already, our organic sales were broadly stable, while the group adjusted EBIT margin improved from 9.6% to the before already mentioned 12.9%. This includes a positive contribution from the diesel settlement as well. Tires delivered organic growth of 0.3% and increased its adjusted added margin to 15.3%, so even slightly outside our full year guidance corridor in the quarter. With that, over to you, Roland, for more details on tires, starting, I think, with insights into the markets.