Continental AG says it is adjusting its financial structure to reflect the decrease in global vehicle production. The plan is to minimize overcapacities, decrease investments, reduce working capital and its labor and market costs to a tune of several hundred million euros by 2022.
Elmar Degenhart, CEO of Continental, provided the update during the annual shareholders meeting, which was held virtually.
Coming out of COVID-19
Continental says the company-wide realignment it began in 2019 continues, and offers an important opportunity for financial savings.
“Our restructuring plan is our path into the future. It is and remains our most important task,” Degenhart told shareholders. “We’re expanding our portfolio where it is growing profitably and making it even more fit for the future. We’re also speeding up our processes by introducing even leaner structures.”
Continental is planning annual savings of around 500 million euros from 2023.
The company also must realign itself to the global drop in vehicle production, Degenhart said.He cited market observers who forecast production volume of passenger cars and light commercial vehicles in 2020 to max out at 70 million vehicles. It will take until at least 2025 to return to the record 95 million units produced in 2017, he said.
“We’re building ourselves a bridge over the coming years; a ‘corona bridge’ that will make us successful once again,” Degenhart said.
Plans for growth
Degenhart outlined three growth areas for Continental, and gave a specific nod to tire technology while talking about the opportunity with software and safe and clean driving systems.
“We’re making sure almost all of our products are smart, and we’re digitalizing tires and air-spring systems, for example.
“Demand is already very high for tire data, which is transmitted via our digital services to vehicle fleet operators. We are thus expanding our business with fleets, generating sales of around 1 billion euros annually,” he said. The plan is to triple these sales by 2030.
“In our opinion, it is digitalization that offers the greatest potential for increasing efficiency in production in the years ahead. Currently, we’ve already deployed 1,600 collaborative robots in this area, which work hand-in-hand with their human colleagues,” Degenhart said.