Conti confirms ContiTech divestment plan, adjusts sales outlook

Frankfurt, Germany – Continental AG has confirmed plans to divest its materials and industrial arm ContiTech AG next year, as part of a move to become “a pure-play tire manufacturer.”

In a 24 June capital market day, the Hanover-based group said it expected the sale to take place in 2026, following the planned divestment of ContiTech’s automotive unit (Original Equipment Solutions – OESL) later this year.

With the divestment of its automotive unit set for September, Continental said it will focus on “value creation, profitability, cash flow and stable business development” within the tire sector, explained CEO Nikolai Setzer.

Under the new structure, Continental provided an updated ‘medium-term’ financial outlook.

The group now expects to deliver consolidated sales in the range of €19.5 billion to €22.0 billion and an adjusted EBIT margin of 12.0% to 14.5% over the next three to five years.

ContiTech was considered part of Continental in the mid-term projections.

For 2025, the German group revised its outlook, lowering the sales estimate for ContiTech and profitability margin for the Tires group sector.

The new figures, it said, reflect changes in exchange rates and increasing global trade barriers.

As a group overall, Continental expects sales in the range of around €19.5 billion to €21.0 billion and an adjusted EBIT margin of around 10.0% to 11.0%, down from the previous estimate of 10.5% to 11.5%.

For the Tires group sector, Continental estimates remain unchanged for sales, at €13.5 billion to €14.5 billion. The unit’s adjusted EBIT margin is expected to come in at 12.5% to 14.0%, down from the earlier estimate of 13.3% to 14.3%.

For the ContiTech group sector, Continental now expects sales of around €6.0 billion to €6.5 billion, previously at €6.3 billion to €6.8 billion, and an adjusted EBIT margin of around 6.0% to 7.0%.

Providing updates on the business performance of its divisions, Continental said its Tires group sector remained “a resilient tire champion with a strong brand.”

Despite volatile markets, Continental said its tire business has shown “stable development in recent years.”

“The company benefits from highly efficient processes, a strong customer focus and a robust technology portfolio,” said Continental, noting that with 20 plants, the tire division was “well positioned both globally and locally.”

Furthermore, the business benefits from economies of scale and scope, with around 80% of its global production capacity consolidated in so-called megafactories.

In particular, the German manufacturer said it has a strong foundation in the car tire segment.

In 2024, car tires accounted for around 77% of Tires’ total sales, with the group sector generating around 54% of its sales in the EMEA region (Europe, the Middle East and Africa).

With the replacement-tire business accounting for 76% of sales, Continental, identified North America and Asia as the greatest potential for growth.

The group added that it has the technology for “extremely high-performance tires larger than 18-inch” and that it sees further growth potential in this area.

Large tires currently represent 39% of the car tires sold by the group sector across all brands and 48% for the Continental brand.

Meanwhile, Continental said the ContiTech group sector will continue to sharpen its focus on the industrial business.

Continental expects to complete the divestment of OESL, with annual sales of €1.9 billion, by the second half of this year.

Following the sale, 80% of ContiTech revenue will be generated from industrial customers.

“There is high demand among industrial customers for solutions made of rubber and thermoplastic,” explained the German group.

Core industries currently include off-highway mobility, mining, construction and home, energy management and automotive.

In 2024, ContiTech excluding OESL achieved sales of around €4.5 billion, of which 41% was generated in the EMEA region, 36% in North and South America, and 23% in the Asia-Pacific region.

Around half of the sales are generated in the industrial OEM business and half in the replacement business.

Continental said ContiTech is focused on improving its operational performance and driving future growth.