Continental, the German car-parts supplier, announced its updated strategy on Monday, outlining its new goals for the short and medium term. The company aims to achieve annual group sales between 51 billion and 56 billion euros ($55.51 billion-$60.95 billion) over the next three to five years. In the next two to three years, Continental targets sales of EUR44 billion to EUR48 billion. Additionally, the company expects sales between EUR41 billion and EUR43 billion by 2023, while maintaining its current full-year outlook.
Continental has also adjusted its target for the tire division’s annual adjusted earnings before interest and taxes (EBIT) margin for the next three to five years. The margin is now set to be between 13% and 16%, compared to the previous range of 12% to 16%.
Moreover, the car-parts supplier has raised its dividend payout ratio target. The new target is a range of 20% to 40% of net income, as opposed to the previous range of 15% to 30%.
Furthermore, Continental has increased its targets for return on capital employed (ROCE) over the next three to five years. The company now aims for an annual group-wide ROCE of more than 20%, up from the previous range of 15% to 20%. The automotive division is expected to report a ROCE above 20%, while the tire business should achieve a ROCE of more than 23%. ContiTech’s new target is set at 22% compared to the previous target of 20%.
Continental Implements Restructuring Plan to Achieve Significant Cost Savings
Continental, a renowned global technology company, is embarking on an extensive restructuring plan. The goal of this plan is to achieve substantial cost savings totaling hundreds of millions of dollars. To further enhance its efficiency, Continental will establish organizational independence for its user-experience business.
Another key aspect of the cost-saving measures involves the consolidation of 82 research-and-development locations across the globe. By streamlining these locations, Continental aims to reduce its research and development expenses from approximately 12% in 2023 to 11% of sales over the course of the next two to three years. Ultimately, the company envisions bringing this figure down to less than 10% within the next three to five years.
Continental’s Chief Executive, Nikolai Setzer, expressed his vision for the company’s strategy. He emphasized that their primary objective is to increase value creation and transform Continental into a leading provider of safe, intelligent, and sustainable mobility and material technology solutions.
In terms of sales targets, Continental has set ambitious goals for its different business segments. Over the next three to five years, the automotive segment is projected to generate between EUR26 billion and EUR29 billion annually. The tires business aims to achieve sales figures ranging from EUR17 billion to EUR18 billion in the midterm. Additionally, the ContiTech business sets its sales target between EUR8 billion and EUR9 billion.
Continental’s commitment to optimizing operations and delivering innovative solutions underscores its drive for excellence and continuous growth.
