HANOVER (dpa-AFX) - Continental AG (CTTAY.PK), a German automotive supplier and tire manufacturer, said that its Executive Board decided to create a holding structure of Continental AG under the new 'Continental Group' umbrella brand. The Holding Structure will be supported by three pillars, the 'group sectors' Continental Rubber, Continental Automotive and Powertrain. The new names and the corresponding reporting structure will applied starting 2020.
The group sectors will be established, or adjusted where necessary, step by step. This realignment requires the approval of Continental AG's Supervisory Board, which is to be obtained on July 26, 2018.
The Supervisory Board's Approval is also required for the carve-out of the current Powertrain division into an independent entity under a new name by the beginning of 2019. Its partial public offering (IPO) is possible beginning mid-2019. Continental does not, however, plan to relinquish control of the Powertrain business in the medium or long term. Andreas Wolf is to assume responsibility for the new Powertrain company at the beginning of 2019. He is currently in charge of the Body and Security business unit in the Interior division.
The carve-out of the Powertrain group sector will lead to estimated operational costs of approximately 350 million euros. A large part of the operational costs will be incurred in 2018 and 2019. There will also be negative tax effects totaling about 100 million euros. These will be incurred primarily in 2019. The outlook for the Continental Corporation for 2018 is unaffected by this.
In addition, the current Chassis & Safety and Interior divisions will be reorganized by the beginning of 2020. They will become two business areas newly named 'Autonomous Driving Technologies' and 'Vehicle NetworkingTechnologies'. Their business results will be reported in the new group sector Continental Automotive. Both business areas will be supported by a newly created central Automotive Research and Development function.
In its new automotive business - without the Powertrain division-, the technology company expects to increase sales from about 19 billion euros in 2017 to approximately 30 billion euros in 2023.
The independent organizational structure of the two current Tires ('Tire Technologies' in the future) and ContiTech divisions will remain unchanged. Their business results will be reported under the future Continental Rubber group sector.
The creation of a central Automotive R&D function will support the realignment of the automotive business. In this new function, development activities of the current Interior and Chassis & Safety divisions as well as the R&D operations of the current central functions will be integrated, where they will play a more crucial role and be strengthened at the operational level. Approximately 12,000 to 15,000 software and hardware engineers will join together in a global Continental powerhouse for advanced development and application engineering. In addition, about 17,000 engineers will remain in the two new business areas Autonomous Driving Technologies and Vehicle Networking Technologies.
Copyright RTT News/dpa-AFX