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278958191494Check against delivery!Comments of the Chairman of the Executive Board of Continental Aktiengesellschaft Dr. Elmar DegenhartShanghai, April 21, 10:30 am Auto Shanghai 2015Continental Press ConferenceCorporate Performance Figures 2014 / Outlook 2015 / Expectations for 2020 Corporate Figures FY2014: (Chart #2: FY2014)In 2014, the Continental?Corporation met its annual targets and can look back on another extremely successful year: In 2014, the Continental Corporation increased its sales by 3.5 percent to €34.5 billion.EBIT improved by 2.5 percent to roughly €3.3 billion.Adjusted EBIT rose by 3.7 percent to just under €3.9 billion. This corresponds to 11.3 percent of adjusted sales compared with 11.2 percent in the previous year. At the same time, we invested more than €2 billion in property, plant and equipment, and software (€2,045.4 million/5.9 percent of sales).The driving forces were once again China and North America.Sales (2014) in China amounted to €3.7 bn.Outlook 2015 & Expectations for 2020: (Chart #3: Outlook 2015)2015 has begun on a pleasing note and has confirmed our expectations for the year as a whole.For the current fiscal year, Continental has undertaken to achieve growth in sales of almost 9 percent to approximately €37.5 billion (including a contribution of at least €1.3?billion to sales from the first-time consolidation of the acquired Veyance Technologies).At present, positive exchange rate effects are also expected to contribute around one billion Euros to sales.Our adjusted EBIT margin is expected to be higher than 10.5 percent for Continental Corporation in 2015.It is anticipated that growth impetus will be driven by Asia, and particularly by the markets in China, and as well as in North America.The largest share of global growth of production of light vehicles (with a gross weight of up to six metric tons) is again expected to be attributable to China. However, at present it is likely that the pace of growth will continue to slow down. We expect to see growth of between 6 and 8 percent in the country in 2015. However, given the size of the market achieved, this is still likely to equate to 1.4 million to 1.8 million units.For Asia as a whole, we expect to see an increase in production of 4 percent to 47.5?million units in 2015.Global production of light vehicles is expected to total around 89 million units in 2015.(Chart #4: Expectations for 2020) By 2020 it is expected to have risen to between 100 million and 105 million vehicles.Partly on this basis, we are setting our sights on profitable sales of over €50 billion in 2020.Mobility Challenges (Chart #5: Mobility Challenges)With our innovations we answer the most pressing challenges in our industry: Zero road traffic accidents. Clean air thanks to lower fuel consumption and lower emissions.More convenience, comfort, information, entertainment, and driving enjoyment thanks to intelligent systems and the interconnection of vehicles.We are hard at work systematically researching and developing the associated key technologies. We spend six percent of our annual sales worldwide on this every year. This equates to over two billion Euros – a peak value. There are only very few companies in our industry that operate at such a high level.And by doing so we want to: (Chart #6: Leading Technology Partner)Be regarded as a pioneering and leading technology partner – especially by our customers. (Chart #7: Software Expertise)Massively expand our considerable software expertise. After all, in our eyes, software is the “new wheel” of our industry. Practically nothing will turn or function without it in the future.(Chart #8: Be Preferred Employer)Finally, and above all: We want to be the preferred employer for people who want to grow and to shape future mobility by fully developing and expanding their skills and abilities together with us. In order to successfully and sustainably help shape the future of mobility, we are developing our solutions close to our customers.(Chart #9: 127 Research and Development Centers Worldwide)With this in mind, we expanded our research and development center in Singapore in 2014. Worldwide, we have a total of 127 of these centers, creating tailor-made solutions in 27 countries. “Our future with tradition” / Continental (20 years) in China (Chart #10: China Image Visual)In line with Continental’s strategy “in the market for the market”, Continental also aims to use R&D in China for China, which means having local R&D competence to support the China business growth, less dependency on Germany or other regions. Therefore Continental will keep doing investment in R&D in China.We have most of our R&D technology centers located at where our customers are, so we are actually following a customer strategy. The intention is to use the R&D resources in China for China.15 R&D centers (Heihe, Changchun, Changzhi, Qufu, Lianyungang, Nanjing, Zhangjiagang, Changshu, Wuhu, Hangzhou, Chongqing, Shanghai) Roughly 1,400 engineers in China with the number of engineers expected to increase to more than 2,000 in the coming years.Continental has achieved around 50% localization of raw material and auto parts, and we would expect to increase our localization rate to 70% by 2020 on component level. We have already more that 80% local assembly of our products.Overall, China plays a key role for the growth of Continental. We have been supporting China’s mobility and growth for more than 20 years.Today, China is already the world largest vehicle market with over 22 million vehicles in 2014. By 2020, it is expected that the Chinese market will increase to 30 million light vehicles.Continental is therefore targeting 30% of global sales by 2020 in Asia, with China as main contributor.Today, we generate already 20% of our sales in Asia (approx. €6.9 bn in 2014 / approx. €6.4 bn in 2013).Out of these €6.9 bn sales in Asia, 54% are generated in China (€3.7 bn in 2014).China is the only market directly headed by an executive board member within Continental, which already shows the importance of this market to Continental.Investments:Strong and continuous investment in ChinaApprox. 1 billion Euro investment during the past five years (2010-2014) From a today’s standpoint, investments within the next five years will be on a similar levelInvestment examples 2015: (Chart #11: Changzhou)Benecke-Kaliko plant in Changzhou:End of January 2015, the groundbreaking ceremony for Benecke-Kaliko’s new plant in Changzhou, took place. It will exclusively manufacture environment-friendly, low-emission and allergen-free automotive trim material at the new site. (Chart #12: Trim Material)This comes in response to great demand from the Chinese automotive industry for eco optimized surface solutions that ensure the stringent legislation pertaining to air quality of vehicle cockpits is achieved.Approx. €40 mn are invested in the construction of the plant for phase 1.Expansion Hefei (Tires) (Chart #13: Hefei)In 2015, approx. €35 mn are invested in order to expand the production to 8 million tires (yearly).€4.5 mn were invested in Hefei to build a test center (global evaluation). Construction has just been finished.A solar panel on the roof with the size of ten soccer fields is in use. Approx. 1 million tires can be entirely produced based on solar energy.In total, we will invest approx. €40 mn in 2015 in Hefei.Market China / Innovation example: Infotainment System: (Chart #14: Radio Multimedia Navigation System)Talking about “in the market for the market” - I am especially proud to present you our latest generation of the Radio Multimedia Navigation System for a Chinese customer. What makes this product so important to us is that the development was mainly done by experts in Shanghai and Singapore.By this we can best serve the needs and wishes of our customers. For example the touch screen allows hand-writing recognition of Chinese characters and pin-yin to ease operation. In the latest generation we could also include a cloud based parking space assist, which informs the driver of available parking spaces close to his or her destination.(Chart #15: Continental Logo) ................
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