FRANKFURT -- Just two years ago, Continental looked like a very different company than it is today. Elmar Degenhart was CEO, a position he had held since 2009; and the company ranked fourth among the world’s largest 100 suppliers. Automotive sales in 2019 were $35.3 billion.
Since then, the 150-year-old Continental has undergone fundamental changes. Degenhart unexpectedly stepped down at the end of October 2020 "for immediately essential preventive health care" in favor of Nikolai Setzer, 50, a company veteran who was head of the tire division.
In mid-September of this year, Continental formally completed the spinoff of its powertrain division as a separately listed company, Vitesco. That will remove 40,000 employees as well as 7 billion euros in revenue from the balance sheets, or 18 percent of the company’s total revenues, according to 2020 fiscal year figures.
Taking out powertrain, Continental’s revenues last year were roughly evenly split between Automotive Technologies and Rubber Technologies, at about 15 billion euros, or 40 percent, each. But tires have been vastly more profitable.
According to preliminary third-quarter figures, sales for Rubber Technologies were 4.39 billion euros, with a margin of 11.3 percent (adjusted earnings before interest and taxes, or EBIT), compared with a 2020 third-quarter margin of 15 percent. Sales for Automotive Technologies were 3.48 billion euros, with a loss of 2.3 percent, compared with a 2020 margin of 1.9 percent. Final results will be released Nov. 10.
Setzer is counting on that changing in the future.
Free of the legacy powertrain operation, he is playing a long game by focusing on technologies with strong future growth potential: high-performance computing, software, software integration, driver assistance and autonomous driving.
"Hardware is a key competence but software is going to make the difference more and more," Setzer said last week at an event in Frankfurt to showcase Continental’s innovations and future products.
Setzer and incoming CTO Gilles Mabire said that 90 percent of future automotive innovations would be software-based.