Continental AG Model Update post earnings call

Research evidence excerpt

J P M O R G A N

Europe Equity Research

05 August 2026

Continental AG

Model Update post earnings call

Overweight

CONG.DE, CON GR

Price (05 Aug 26):€68.48

Price Target (Dec-27):€78.00

Post the earnings call, we adjust our earnings estimates to reflect the

deconsolidation of Contitech. For full-year 2026, the company expects

consolidated sales of €13.2bn-14.2bn and an adjusted EBIT margin of 12-13.5%.

Management commentary suggests profitability will likely be at the upper end of

the guidance range, while sales are expected to be around or slightly below the

midpoint. Adjusted FCF is guided at €0.7bn-1.1bn, and CapEx at 7-8% of sales,

reflecting higher investment in the tire business, particularly in Asia. The company

notes that volume headwinds are expected to persist in H2, with H1 volume effects

at -3.3% and a slightly lower negative impact anticipated in H2. Price/mix remains

a positive contributor, though sequentially lower, and FX is expected to shift from

a headwind to a slight tailwind in H2. Raw material tailwinds in H1 (triple-digitmillion euro) are expected to reverse and become a headwind of similar magnitude

in H2. The company is ramping up its Hefei plant in China from 15m to 18m tires

per year and expanding its Rayong plant in Thailand. UHP tires now account for

62% of Conti's brand sales. Overall, we believe Continental is well positioned to

achieve its guidance, with ongoing portfolio optimization, cost discipline, and

targeted investments supporting margin expansion and cash generation. We leave

our PT unchanged as we see the firm trading on ~1.5x EV/Sales FY27 delivering

a tire margin ~15%, which compares to our previous valuation method sum of the

parts which we no longer consider relevant as the firm has disposed of assets

making it a pure tire play.

European Autos & Auto Parts

Jose M Asumendi AC

(44-20) 7742-5315

J.P. Morgan Securities plc

Piyush Singla

(91-22) 6157-3324

J.P. Morgan India Private Limited

Specialist Sales contact details:

Sam Edmunds - Specialist Sales European Industrials

(44-20) 7742-8733

Key Changes (FYE Dec)

Revenue - 26E (€ mn)

Revenue - 27E (€ mn)

Adj. EBIT - 26E (€ mn)

Adj. EBIT - 27E (€ mn)

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