As at March 31, 2018 - Continental USA

Q1

Financial Report

as at March 31, 2018

2

Continental AG Financial Report as at March 31, 2018 Continental Shares and Bonds

Continental Shares and Bonds

Turbulence on stock markets worldwide At the start of the year, the positive sentiment on the U.S. stock markets held on as a result of good U.S. jobs data. The U.S. benchmark indexes continued their multi-year uptrend, setting new records nearly every day in January 2018. This was supported by the continuing weakening of the U.S. dollar against the euro and other currencies. The Dow Jones exceeded the 26,000 point mark for the first time, closing on January 26 at a new high of 26,616.71 points. This equated to a rise of nearly 8% compared with the closing price for 2017.

The rally on the U.S. stock markets led to rising indexes in Europe and Asia as well. On January 23, 2018, the DAX also marked a new all-time high of 13,596.89 points, while at the same time the EURO STOXX 50 reached an annual high of 3,687.22 points. Compared with the Dow Jones, however, the price increase was somewhat more modest at around 5% in each case, as investor sentiment in Europe was less buoyant due to the continued appreciation of the euro against the U.S. dollar.

At the end of January 2018, good U.S. economic data led to rising yields on the U.S. bond markets. This also reflected concerns about the U.S. interest-rate level increasing more quickly than anticipated. The U.S. Federal Reserve's (Fed) indication of three interest-rate hikes both this year and in 2019 exacerbated the interest-rate concerns, whereupon prices on the U.S. stock markets tumbled at the beginning of February. Prices on stock markets in Europe and Asia also saw losses as a result. By mid-February, major benchmark indexes such as the Dow Jones and the DAX had lost as much as one-tenth of their value compared to their previously achieved highs. In the second half of February, stock markets stabilized around the world. The U.S.A.'s announcement of tariffs on steel and aluminum imports, coupled with China's and other affected export nation's examination of appropriate countermeasures led, however, to a further slump in prices at the beginning of March. In addition, fears

of rising interest rates due to increasing inflation in the U.S.A. once again weighed heavily on the stock markets.

From mid-March 2018, there was another short period of stabilization. This lasted until the end of March when the U.S.A. announced import duties on products from China, arousing new fears of an imminent trade war between the two nations. This caused prices to fall on the stock markets again. At the end of March, the DAX hovered around the 12,000 point mark. It closed the first quarter of 2018 at 12,096.73 points, down 6.4% on the end of 2017. The EURO STOXX 50 declined by 4.1% to 3,361.50 points in the first quarter.

At the start of April 2018, the impending trade war between the U.S.A. and China once again put strain on the stock markets, before rapprochement between the two governments triggered a mild price recovery. The renewed escalation in the Syrian conflict led to uncertainty on the markets only for a brief time in mid-April. On April 24, 2018 ? the closing date of this report ? the DAX ceased trading at 12,550.82 points.

Automotive stocks make strong start to new fiscal year European automotive and supplier stocks benefited in January 2018 from the generally positive market sentiment and several buy recommendations for the sector from various analysts. The companies' initial business figures for the fourth quarter of 2017 also provided a boost. In addition to the general market turbulence, prices for the European automotive sector were also dragged down over the rest of the quarter by declining sales and production figures for the U.S. and European car markets as well as the threat of bans on diesel cars.

EURO STOXX Automobiles & Parts closed at 599.25 points at the end of March, having increased by around 10% to over 650 points in January 2018. This equated to a rise of 1.0% in the first quarter of 2018 compared to the end of the previous year.

Price performance of Continental shares in the reporting period versus selected stock indexes

115

110

105

100

95

90 January

EURO STOXX Automobiles & Parts

DEUARXOCSoTnOtiXnXen5ta0l

DAX

Continental

EURO STOXX 50

February EURO STOXX Automobiles & Parts

indexed to January 1, 2018 March

Continental AG Financial Report as at March 31, 2018 Continental Shares and Bonds

3

Continental shares (Xetra price) DAX EURO STOXX 50 EURO STOXX Automobiles & Parts

March 31, 2018 224.30

12,096.73 3,361.50 599.25

in % vs. December 31, 2017

-0.3 -6.4 -4.1 1.0

Continental shares reach new high in January 2018 In the first trading days of the year, Continental shares rose from 225.05 at the end of 2017 to more than 230 as a result of several buy recommendations from analysts. During the course of January 9, 2018, media reports about a major reorganization of the Continental Corporation caused the Continental share price to soar to 257.40, a new all-time high. On the same day, Continental confirmed that it was running through scenarios in an early stage of analysis of how the organization could become more flexible to face the challenges in the automotive industry. At the same time, Continental stressed that it was not possible to say at that point in time if or what changes could result from these analyses and scenarios. In subsequent trading days, Continental shares sank initially to 240, before renewed buy recommendations and price target increases by several analysts nudged the price back up to around 250.

In February and March 2018, Continental shares performed largely in line with the automotive sector, closing the first quarter of 2018 at 224.30, down 0.3% from their price of 225.05 at the end of 2017.

In April 2018, Continental shares ? like the European automotive sector ? benefited from the Chinese president's announcement that tariffs on vehicle imports would be reduced considerably and the upper limit for foreign companies' holdings in joint ventures in China would be raised. On April 18, 2018, the change of the 2018

outlook for the Continental Corporation led to a roughly 4% drop in the price of Continental shares. On the reporting date of April 24, 2018, Continental shares closed trading at 226.00.

Continental bonds at low yield level The prices of Continental bonds were hardly impacted by the slight rise in interest rates on the bond markets in the first quarter of 2018. As in the previous year, Continental bonds persisted at a low yield level during the first three months of 2018.

Over the reporting period, the price of the 3.0% euro bond maturing on July 16, 2018, declined by 83.6 basis points to 100.933% due to the reduction in its remaining maturity.

At the end of March 2018, the 0.5% euro bond maturing on February 19, 2019, was quoted at 100.571%, down 20.5 basis points compared to the end of 2017.

The price of the 0.0% euro bond maturing on February 5, 2020, moved slightly above the 100% mark over the course of the quarter. On March 31, 2018, it was quoted at 100.138%, down 8.9 basis points compared to the end of 2017.

The 3.125% euro bond maturing on September 9, 2020, fell by 87.5 basis points in the reporting period due to the reduction of its remaining maturity, and was quoted at 107.397% at the end of March 2018.

Price performance of Continental bonds in the reporting period

110

108

106

104

102

100

3.125% September 2020

0.0% 0.5%

FF3ee.0bb%rruuJaaurrlyyy222000121908

3.0% July 2018

January 0.5% February 2019

February

0.0% February 2020

3.125% September 2020

March

4

Continental AG Financial Report as at March 31, 2018 Continental Shares and Bonds

Five-year CDS premium at 13-year low in January 2018 The premiums for insuring against credit risks (credit default swap, CDS) remained largely unchanged at a relatively low level in January 2018. In parallel to the slight rise in interest rates on the capital markets and the turbulence on the stock markets, the CDS premiums for corporate bonds also increased in February and March. The Markit iTraxx Europe rose by around 15 basis points in the reporting period to 59.867 basis points on March 31, 2018 (44.776 basis points as at December 31, 2017).

Continental's credit rating unchanged The three major rating agencies each maintained their credit ratings for Continental AG during the first quarter of 2018.

March 31, 2018 Standard & Poor's1 Fitch2 Moody's3

Rating BBB+ BBB+ Baa1

Outlook stable stable stable

The five-year CDS premium for Continental fell from 32.563 basis points at the end of 2017 to below 30 basis points briefly at the end of January 2018, reaching a level last seen 13 years ago in the first quarter of 2005. Over the rest of the quarter, the premium rose again slightly in line with its reference index, the Markit iTraxx Europe. At the end of the first quarter of 2018, it was at 41.779 basis points, around nine basis points up on the end of 2017. The spread in relation to its reference index, the Markit iTraxx Europe, amounted to -18.088 basis points as at March 31, 2018 (-12.213 basis points as at December 31, 2017).

December 31, 2017 Standard & Poor's1 Fitch2 Moody's3

Rating BBB+ BBB+ Baa1

1 Contracted rating since May 19, 2000. 2 Contracted rating since November 7, 2013. 3 Non-contracted rating since February 1, 2014.

Outlook stable stable stable

Continental Investor Relations online For more information about Continental shares, bonds and credit ratings, as well as our Investor Relations app, please visit

continental-.

In addition, updates about Continental are also available on Twitter at @Continental_IR.

Continental AG Financial Report as at March 31, 2018 Key Figures for the Continental Corporation

5

Key Figures for the Continental Corporation

Due to the application of the modified retrospective approach during the first-time adoption of IFRS 9, Financial Instruments, and IFRS 15, Revenue from Contracts with Customers, as at January 1, 2018, all the following figures from comparative periods are shown unadjusted.

millions Sales EBITDA in % of sales EBIT in % of sales Net income attributable to the shareholders of the parent Basic earnings per share in Diluted earnings per share in

January 1 to March 31 2018

11,012.7 1,555.0 14.1 1,019.2 9.3 737.6 3.69 3.69

Adjusted sales1 Adjusted operating result (adjusted EBIT)2 in % of adjusted sales

10,923.4 1,058.9 9.7

Free cash flow

40.9

Net indebtedness as at March 31 Gearing ratio in %

1,983.8 11.7

Number of employees as at March 313

240,074

1 Before changes in the scope of consolidation. 2 Before amortization of intangible assets from purchase price allocation (PPA), changes in the scope of consolidation, and special effects. 3 Excluding trainees.

2017 10,999.9

1,638.5 14.9

1,135.1 10.3

749.6 3.75 3.75

10,996.7 1,163.9 10.6

133.0

2,767.6 17.6

227,565

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Continental AG Financial Report as at March 31, 2018 Key Figures for the Core Business Areas

Key Figures for the Core Business Areas

Automotive Group in millions Sales EBITDA in % of sales EBIT in % of sales Depreciation and amortization1

thereof impairment2 Capital expenditure3 in % of sales Operating assets as at March 31 Number of employees as at March 314

Adjusted sales5 Adjusted operating result (adjusted EBIT)6 in % of adjusted sales

January 1 to March 31 2018

6,813.9 847.5 12.4 536.8 7.9 310.7 5.6 276.3 4.1

13,521.3 137,362

6,812.8 562.7 8.3

2017 6,754.0

824.4 12.2

541.7 8.0

282.7 1.0

287.3 4.3

12,549.1 128,030

6,754.0 557.3 8.3

Rubber Group in millions Sales EBITDA in % of sales EBIT in % of sales Depreciation and amortization1

thereof impairment2 Capital expenditure3 in % of sales Operating assets as at March 31 Number of employees as at March 314

January 1 to March 31 2018

4,212.2 741.7 17.6 517.4 12.3 224.3 -- 179.5 4.3

9,444.6 102,294

Adjusted sales5 Adjusted operating result (adjusted EBIT)6 in % of adjusted sales

4,124.0 531.2 12.9

1 Excluding impairment on financial investments. 2 Impairment also includes necessary reversal of impairment losses. 3 Capital expenditure on property, plant and equipment, and software. 4 Excluding trainees. 5 Before changes in the scope of consolidation. 6 Before amortization of intangible assets from purchase price allocation (PPA), changes in the scope of consolidation, and special effects.

2017 4,260.4

842.6 19.8

622.2 14.6

220.4 --

215.0 5.0

9,440.6 99,110

4,257.2 635.4 14.9

Continental AG Financial Report as at March 31, 2018 Corporate Management Report

7

Corporate Management Report

Value-sharing bonus for all employees In 2018, all employees worldwide shared once again in a successful business year. The total payout for 2017 went up by approximately 15% to over 170 million, roughly 20 million more than the previous year's figure. Unlike other companies, since 2004 Continental has not restricted employee eligibility just to a certain group or country. The value-sharing program is based on the company's creation of value. The basis for calculating the amounts distributed varies from country to country, taking into account both legal and contractual regulations in addition to economic performance. Each employee will receive either 1,141 or 571 depending on the country.

Continental and NVIDIA develop artificial intelligence (AI) for self-driving cars On February 5, 2018, NVIDIA Corp., Santa Clara, California, U.S.A., and Continental announced that they would be partnering to develop systems for autonomous driving. The partnership will enable the development of AI computer systems that scale from automated features through to full level self-driving capabilities, where the vehicle has no steering wheel or pedals. With our joint technical portfolio, we will achieve new levels of safety, comfort, convenience and personalization for the vehicles of the future.

Continental and CITC establish joint venture for production of 48-volt battery systems On March 7, 2018, the Chinese automotive supplier and battery manufacturer Sichuan Chengfei Integration Technology Co., Ltd. (CITC) and Continental signed a contract establishing a joint venture to develop and produce 48-volt battery systems for the automotive industry. The joint venture, in which Continental holds a 60% stake and CITC 40%, will operate globally and also supply customers in Europe and North America, in addition to China and other Asian markets. The planned location of the company's headquarters is Changzhou, near Shanghai. Operating activities are set to start in mid-2018. The aim is to establish the joint venture as one of the leading 48-volt battery-system manufacturers on the global market.

Continental and Osram sign joint-venture contract On April 3, 2018, Osram Licht AG, Munich, and Continental successfully concluded negotiations on the Osram Continental GmbH joint venture. The joint venture, in which each of the partners has a 50% stake and which will be under the control of Osram, aims to combine Continental's and Osram's respective expertise in lighting, light control and electronics. The start is scheduled for the second half of 2018 once all the necessary merger control approvals have been granted. The joint venture will help us to establish the necessary prerequisites for the technological transformation of the light market in the automotive industry.

cooling applications in cars, a new production facility for air bellows, and a warehouse for rubber compounds. The new facilities officially went into full operation on January 23, 2018.

New plant for automotive electronics planned in Hungary To expand our production capacity for automotive electronics, we are planning to construct a new plant in Debrecen, Hungary. We currently have six plants and a tire sales and logistic center in Hungary. The groundbreaking ceremony is scheduled for the third quarter of 2018. The plan is to invest a total of 100 million, creating 450 new jobs. With this decision for a new production plant in Debrecen, we are expanding our European presence in order to satisfy the customers' growing demand for automotive electronics even better.

Summer tire range expanded further More than 210 items have been added to our range of summer tires for passenger cars and light trucks. Additions include new tire sizes for sports cars, for mid-size and premium classes, as well as for subcompact cars. We thus feature one of the world's most extensive ranges of tires for cars, SUVs and vans. In tests carried out by the trade press, Continental's products received numerous recommendations and often occupied podium positions. They came out top in tests by the ADAC, Germany's largest automobile club; "auto motor und sport"; and "Auto Zeitung." The SportContact 6 tire came first in "AUTO BILD Sportscars," and in its sister publication "AUTO BILD Allrad," the ContiSportContact 5 SUV tire was the test winner. In the major summer tire test carried out by "AUTO BILD," the ContiPremiumContact 5 tire garnered the highest ranking of "exemplary."

Commitment to sustainability in natural-rubber supply chain The German Society for International Cooperation (Deutsche Gesellschaft f?r Internationale Zusammenarbeit (GIZ) GmbH) and Continental are joining forces in a development partnership to enhance sustainability in the natural-rubber supply chain in Indonesia. The country is the world's second largest producer of natural rubber. The aim is to create a list of criteria for the sustainable production of natural rubber, to train farmers in sustainable farming practices based upon these criteria, and to ensure the traceability of the rubber from the small farmers to its use in production at Continental. The income of the rubber farmers will increase thanks to a better quality of rubber, higher yields, and optimization of the supply chain. The partnership between Continental and GIZ is supported by the "develoPPP.de program" of the German Federal Ministry for Economic Cooperation and Development (Bundesministerium f?r wirtschaftliche Zusammenarbeit und Entwicklung, BMZ). Declarations of intent have been signed with two suppliers to integrate them as supply-chain partners.

Expansion of capacity at Hungarian Ny?regyh?za location Our activities in Hungary have been expanded with a second rubber mixing line, a production line for hoses destined for heating and

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Continental AG Financial Report as at March 31, 2018 Corporate Management Report

Economic Report

Macroeconomic development The upturn in the German economy continued in the first quarter of 2018. Industrial production and companies' incoming orders increased year-on-year. The companies' good economic situation was also reflected in various sentiment indicators, which continued to pick up in January and February 2018. However, companies' forecasts declined somewhat in March, as the threat of a trade war between the U.S.A. and China put a damper on general sentiment. In its April 2018 World Economic Outlook, the International Monetary Fund (IMF) raised its estimate for economic growth in Germany by 0.2 percentage points and now projects that gross domestic product (GDP) will grow by 2.5% in 2018.

According to initial data, the eurozone economy performed similarly to that of Germany in the reporting period. Most countries recorded an increase in industrial production and especially construction activity. The drop in the unemployment rate from 8.6% in December 2017 to 8.5% in February 2018 had a positive impact on consumer spending. In addition, the economy continued to be boosted by the persistently expansive monetary policy of the European Central Bank (ECB). In April 2018, the IMF likewise increased its estimate for GDP growth in the eurozone by 0.2 percentage points to 2.3% for the current year.

The robust growth of the U.S.A. persisted in the first quarter of 2018 according to initial data. Industrial production and consumer spending continued to rise. Moreover, various sentiment indicators suggest the economy will continue to pick up in the next few months. In March 2018, the U.S. Federal Reserve (Fed) increased its key interest rate for the sixth time in total since the interest-rate reversal at the end of 2015. The rate still remained at a relatively low level with a target value of 1.5% to 1.75%. However, the Fed hinted for the first time at three interest-rate changes in 2019 in addition to the three in total for this year. In April 2018, the IMF revised its estimate for U.S. GDP growth upward by 0.2 percentage points and currently expects GDP to rise by 2.9% in 2018.

In the same forecast, the IMF also continues to project that the global economy will grow by 3.9% in 2018. This will be driven mostly by the persistently strong expansion in Asian countries, especially China and India, the increased investing activity of companies in the U.S.A. and Europe, as well as the economic recovery of various commodity-exporting countries. The IMF points out that the greater growth year-on-year is based mostly on short-term factors. The IMF sees risks including a rise in inflation, which would require many central banks to tighten their expansionary monetary policy. The IMF also continues to see risks in tendencies to put up barriers to trade and in geopolitical tensions between individual countries. At the same time, it points to ongoing structural problems in some economies in Europe, Asia, Africa and South America and urges appropriate reforms.

Development of new passenger-car registrations On the basis of preliminary data from the German Association of the Automotive Industry (Verband der Automobilindustrie, VDA), demand for passenger cars in Europe (EU-28 and EFTA) exceeded the level of the strong first quarter of 2017 by nearly 1% in the first quarter of 2018. The previous year's values benefited from a greater number of working days. In the reporting period, rising sales figures in most countries compensated for the significant decline in sales in the United Kingdom, which fell by 12% compared to the previous year. Sales volumes were also down slightly year-on-year in Italy, Ireland and several Scandinavian countries. New passenger-car registrations increased by 4% in Germany and by 3% in France. In Spain, sales volumes rose by 11%, which reflects persistently high demand for replacements.

In the U.S.A., the number of new vehicle registrations increased by 2% to 4.1 million units in the first quarter of 2018. This was due to the continued growth in demand for light commercial vehicles, especially pickup trucks, which rose by 10% year-on-year as a result of low fuel prices and persistently favorable lending rates. In contrast, demand for sedans fell by 11%.

The Japanese economy continued to grow in the reporting period. However, the appreciation of the Japanese currency over the first quarter against the currencies of the country's key trading partners is likely to have reduced the contribution from foreign trade and somewhat slowed the pace of economic growth. This is also indicated by the smaller year-on-year increase in industrial production and the data available for consumer spending. In its April forecast, the IMF left its projection for economic growth in Japan unchanged at 1.2% for 2018.

For China, which posted economic growth of 6.8% for the first quarter of 2018, the IMF still expects GDP to rise by 6.6% for 2018 as a whole. The IMF also maintained its GDP forecasts of 7.4% and 1.7% for India and Russia, respectively. On the basis of new economic data, the IMF raised its 2018 GDP forecast for Brazil by 0.4 percentage points to 2.3%. In contrast, it lowered its estimates slightly for countries in the Middle East and Africa. In its April forecast, the IMF continues to expect growth of 4.9% in 2018 for emerging and developing economies overall.

In Japan, sales volumes for passenger cars were stable at the average level of the previous three years at 1.3 million units. However, there was a slight decline of 3% in demand for passenger cars compared with the previous year's figure.

Demand for passenger cars in China continued to increase in the first quarter of 2018 due to the good economic situation. According to the VDA, passenger-car sales volumes increased by nearly 4% to 6.0 million units in the reporting period, marking another new record for a first quarter. The remaining BRIC countries saw very substantial growth in demand during the reporting period. In Russia and Brazil, demand continued to recover, with increases of 22% and 15%, respectively, compared with the weak equivalent quarter of the previous year. In India, new vehicle registrations rose by 7%.

According to preliminary data, global new passenger-car registrations increased by 3% year-on-year to around 23.6 million units in the first quarter of 2018.

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