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      October 22, 2019

      Continental AG to recognize non-cash impairments and restructuring expenses in the third quarter of 2019

      As part of Continental AG’s annual planning process, the Company will recognize impairments of approximately €2.5 billion in the third quarter of 2019. These non-cash impairments predominately result from the current business planning assumption that there will not be a material improvement in global light vehicle production during the upcoming five-year period (2020-2024). Based on this and other assumptions, impairments will be booked in the Divisions Chassis & Safety, Interior and Powertrain of €724 million, €1.537 billion and €244 million, respectively. The significant portion of the impairments are attributable to acquisitions made before 2008.

      Additionally, restructuring provisions that are part of the “Transformation 2019-2029” structural program announced on September 25, 2019 resulted in expenses of €97 million in the first nine months of 2019. Further expenses for restructuring provisions related to this program are expected to be recognized in the fourth quarter of 2019, though the amounts are not clarified at this time.

      The impairments and expenses for restructuring provisions will have an effect on certain financial indicators such as reported EBIT, net income attributable to shareholders, equity ratio and gearing ratio. More specifically, these impairments and expenses will result in a negative value for reported EBIT in the third quarter of 2019. These factors will also result in a negative value for net income attributable to shareholders for the third quarter of 2019 and for fiscal 2019. However, Continental expects that the indicated impairments and expenses will not have a material influence on the setting of the dividend for the 2019 fiscal year.

      The impairments and expenses for restructuring provisions will not have an effect on the main financial indicators that are used in the Continental AG’s 2019 outlook, including sales, adjusted EBIT and free cash flow before acquisitions. However, these factors will increase the expected negative figure for special effects to at least €2.8 billion including carve-out effects. Excluding the effects from impairments, the expected tax rate including carve-out effects remains at around 27%. All other elements of the previous outlook remain unchanged.

      Furthermore, preliminary key data indicate that the results of the third quarter of 2019 meet current analyst expectations. Consolidated sales were approximately €11.1 billion and the adjusted EBIT margin was approximately 5.6%. Automotive Group sales were approximately €6.6 billion and the adjusted EBIT margin was approximately 1.6%. Provisions for warranty claims of €187 million are included in this figure. Rubber Group sales were approximately €4.6 billion and the adjusted EBIT margin was approximately 12.3%. 

      "Reported EBIT", "Gearing Ratio“, "adjusted EBIT", "Free Cash Flow", "tax rate"  is defined in the Glossary of Financial Terms on page 36 and 37 of the 2018 Annual Report, which is available at

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