Continental Boosts Software and System Expertise Through Acquisition of Elektrobit Automotive GmbH

Transcription

1 Continental Boosts Software and System Expertise Through Acquisition of Elektrobit Automotive GmbH Ticker: CON ADR-Ticker: CTTAY Wolfgang Schaefer CFO

2 Strengthening Continental s Software Competence Transaction Highlights Continental reached an agreement with Elektrobit Oyj to acquire its Automotive business, Elektrobit Automotive GmbH, including 51% stake in e.solutions (JV with Audi), for a total consideration of 600 mn With the transaction Continental significantly strengthens its electronic components, software and system competence in one of the fastest growing areas of the Auto industry Even more decisively Conti gains speed in software engineering processes as Elektrobit Automotive GmbH will add about 1,900 employees (incl. e.solutions) to the existing 11,000 Continental experts Acquisition will create significant top line synergies by 2020 thanks to software integration and additional component business Transaction will be financed from existing cash balance and credit lines Closing of the transaction subject to approval of Elektrobit s ESM in June 2015 and anti-trust approval; closing expected in Q Shareholders representing c. 46% of voting rights have already committed to vote for the transaction on an irrevocable basis; simple majority at Elektrobit s ESM needed in order to approve the transaction EDMR Equity and Debt Markets Relations 2

3 Strengthening Continental s Software Competence Overview of Elektrobit Automotive GmbH Specialises in embedded automotive software and hardware solutions Products / Solutions Overview Offers a broad range of solutions and R&D services for in-car embedded software development Advanced Driver Assistance Systems (ADAS) Electronic Control Units (ECU) Navigation Data & Connected Services Offices in eight countries: Germany, France, Austria, Finland, Romania, USA, China and Japan Total employees: ~1,900 Solutions installed in >100 mn cars and in >1 bn embedded devices Owns a 51% stake in e.solutions, a JV with Audi, focusing on infotainment software, systems engineering, and systems integration services Significant sales growth of 25% at gross margins exceeding 40% 111 Human Machine Interface Technologies 6,6% Key Financials ( mn) Sales CAGR: 25% ,5% Software Engineering Services A 2013A 2014A 13,1% Sales EBITDA EBITDA Margin EDMR Equity and Debt Markets Relations 3

4 Tomorrow s Car Requires High Software Content Car Driving Sub-System 1 Boeing Mars Probe "Curiosity" 3 Drone 4 Space Shuttle 5 Lines of code (mn) Own estimates 2 Boeing 3 and NASA 4 and Northrop 5 and NASA EDMR Equity and Debt Markets Relations 4

5 Tomorrow s Car Requires High Software Content Increasing Complexity In total: more than Sensors up to ECUs more than Actuators Sensor Data Link Chassis & Safety Interior Powertrain Logic/ ECU Actuator SW-Modul 3 rd Party SW Growing complexity in all domains and additionally: ECUs interact via bus systems Functions are distributed over several ECUs Different (black-box) SW-Moduls, also from 3 rd parties Vehicle system is connected to the outside world EDMR Equity and Debt Markets Relations 5

6 Multiple Sources of Synergies From The Combination Elektrobit to Strengthen Continental s Capabilities in all Relevant Areas Software Driven Component Business OEMs increasingly ask for software integration for ECUs Software Integration Business Increasing number of electronic components have to interact in the future and make software integration decisive for future success Software & hardware integration Multimedia & Infotainment Business Complexity of infotainment solutions increases through rising number of functionalities based on different operating systems; therefore highly flexible network solutions needed Software as Product Certain OEMs with lack of scale or scope increasingly ask for software solutions Synergies From Efficiency Gains High order intake in Chassis & Safety s business unit ADAS creates bottlenecks which can be better addressed by rising number of highly skilled software engineers e.g. camera e.g. radar e.g. laser sensoren EDMR Equity and Debt Markets Relations 6

7 Multiple Sources of Synergies From The Combination Significant Sales Enhancement by 2020 Software integration capabilities will be key in the coming years and will offer new sources for additional revenue: Revenues from software driven component business Integration capabilities for Multimedia and Infotainment solutions Revenues from software integration Software as a stand alone product Efficiency gains by expanding software capabilities by more than 15% Software & hardware integration e.g. camera e.g. radar e.g. laser sensoren Software driven component business Elektrobit Automotive sales Integration of MM and Infotainment solutions 1 Software integration Software as product Total 1 MM = Multimedia EDMR Equity and Debt Markets Relations 7

8 Strengthening Software Competence in ADAS World Market Forecast 1 for Driver Assistance Systems Portfolio Further Strengthened by Elektrobit Automotive GmbH Acquisition World Market for Driver Assistance Systems (USD bn) 1 Covered by Conti C&S and Interior Division Selected System Blindspot (BS) Distance Warning (DW) Lane Departure Warnings (LDWS) Parking / Reversing Drowsiness Monitor E-Call Telematics Head-Up Display (HuD) System Definition 2 Covers the blindspot between coverage offered by the central rear view mirror and the door-mounted mirrors Covers all distance warning systems that form the basis of either intelligent cruise control or collision avoidance systems Warns the driver if (s)he may be unintentionally driving out of the desired lane Uses Ultrasonic and Radar Sensors as well as camera based parking aids Warns the driver that (s)he has either fallen asleep, or is in danger of doing so Automatically transmits an emergency call in case of an accident Displays most important driver information in the windshield of the vehicle EBA CAGR 17% Market Acc. Strategy Analytics Products of Continental s Chassis & Safety Division Products of Continental s Interior Division 1 Source: Strategy Analytics, November System as defined by Strategy Analytics 3 Elektrobit Automotive GmbH EDMR Equity and Debt Markets Relations 8

9 A Step Closer Towards Automated Driving EDMR Equity and Debt Markets Relations 9

10 EBA 1 Will Strengthen Continental s Software and System Capabilities Continental will benefit from Elektrobit Automotive GmbH s strong technical competences in automotive related software offerings and proven integration capabilities Highly sophisticated engineering pool of about 1,900 employees specializes in high growth areas such as functional safety, navigation, human machine interfaces (HMIs), and driver assistance systems Combination will result in significant top line synergies by 2020 Business model transforming towards increased portion of software / licensing business Higher scalability driving attractive profitability and cash flow profile Continental s global reach and customer access will further accelerate Elektrobit Automotive GmbH growth and internationalization 1 Elektrobit Automotive GmbH EDMR Equity and Debt Markets Relations 10

11 Outlook 2015 Continental Corporation Consolidated sales & adj. EBIT 1 margin Automotive Group adj. EBIT 1 Rubber Group adj. EBIT 1 Raw material cost impact Special effects Net interest expense Tax rate Capex PPA Free cash flow before acquisitions bn 11.3% 20.9 bn 1.68 bn 13.6 bn 2.31 bn Relief of about 190 mn mn 265 mn 20% 2.0 bn 194 mn 2.1 bn To increase to > 39 bn Comfortably achieve adj. EBIT 1 margin >10.5% ~ 23.5 bn Adj. EBIT 1 margin >8.5% > 15.5 bn Adj. EBIT 1 margin >15% 150 mn tailwind expected in 2015 About mn 2015E Net interest result ~ 300 mn ~30% Capex at around 6% of sales PPA ~ 125 mn At least 1.5 bn 1 Before amortization of intangibles from PPA, consolidation (2014 in comparison to 2013) and special effects EDMR Equity and Debt Markets Relations 11

12 Thank you! Official Sponsor of the UEFA European Football Championship EDMR Equity and Debt Markets Relations 12

13 Disclaimer This presentation has been prepared by Continental Aktiengesellschaft solely in connection with the Analyst and Investor conference call on the occasion of the agreement to acquire Elektrobit Automotive GmbH on May 18/19, It has not been independently verified. It does not constitute an offer, invitation or recommendation to purchase or subscribe for any shares or other securities issued by Continental AG or any subsidiary and neither shall any part of it form the basis of, or be relied upon in connection with, any contract or commitment concerning the purchase or sale of such shares or other securities whatsoever. Neither Continental Aktiengesellschaft nor any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss that may arise from any use of this presentation or its contents or otherwise arising in connection with this presentation. This presentation includes assumptions, estimates, forecasts and other forward-looking statements, including statements about our beliefs and expectations regarding future developments as well as their effect on the results of Continental. These statements are based on plans, estimates and projections as they are currently available to the management of Continental. Therefore, these statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events. Furthermore, although the management is of the opinion that these statements, and their underlying beliefs and expectations, are realistic or of the date they are made, no guarantee can be given that the expected developments and effects will actually occur. Many factors may cause the actual development to be materially different from the expectations expressed here. Such factors include, for example and without limitation, changes in general economic and business conditions, fluctuations in currency exchange rates or interest rates, the introduction of competing products, the lack of acceptance for new products or services and changes in business strategy. All statements with regard to markets or market position(s) of Continental or any of its competitors are estimates of Continental based on data available to Continental. Such data are neither comprehensive nor independently verified. Consequently, the data used are not adequate for and the statements based on such data are not meant to be, an accurate or proper definition of regional and/or product markets or market shares of Continental and any of the participants in any market. Unless otherwise stated, all amounts are shown in millions of euro. Please note that differences may arise as a result of the use of rounded amounts and percentages. EDMR Equity and Debt Markets Relations 13

14 Contact Equity and Debt Markets Relations Vahrenwalder Str. 9 Klaus Paesler Hanover Phone: Germany klaus.paesler@conti.de Rolf Woller Sabine Reese Phone: Phone: rolf.woller@conti.de sabine.reese@conti.de Ingrid Kampf Michael Saemann Phone: Phone: Fax: michael.saemann@conti.de ir@conti.de Henry Schniewind Phone: henry.schniewind@conti.de EDMR Equity and Debt Markets Relations 14