Three independent companies to be formed
Dax constituent Continental is planning to spin off units and move back to being a tyre manufacturer. Following the announcement that it will list the automotive supplier business on the Frankfurt Stock Exchange later this year, the Hanover-based company also wants to sell materials division Contitech.
In future, Continental AG intends to concentrate solely on the tyre business, which is the second-largest of the three divisions with sales of 13.9 billion euros last year, but has long achieved the highest operating margins.
Three strong divisions built up
Continental shares, like other industry stocks under pressure due to speculation about the possible consequences of US tariffs policy, temporarily rose on the news, but ten fell back, and were trading around 60 euros late last week.
Over the past three decades, Continental has formed three strong divisions in its respective industries through targeted acquisitions and its growth, explained CEO Nikolai Setzer. These are now ready for their independence. At the same time, highly dynamic markets currently demand focused, agile and decisive action. „Therefore, now is the right time for the most far-reaching reorganisation in the company's history.“
The Executive Board is considering making Contitech independent by 2026. Contitech's automotive business, the Original Equipment Solutions (OESL) division, is to be sold by the end of this year.
IPO also possible
According to the responsible group CEO Philip Nelles, Contitech has a turnover of 4.5 billion euros, an operating margin of over 8% and 23,000 employees. The company is therefore well-positioned for the next step. Continental CFO Olaf Schick said that various forms of transactions, including an IPO, were being examined in addition to a sale. However, the IPO market is difficult. A spin-off like that of Automotive is currently being ruled out. More details will be provided at a capital markets day at the end of June.
Employee representatives criticised the plans for a separation from Contitech. „The capital side is taking the break-up mania that has been rampant for years to the extreme. This plan meets with our resolute opposition,“ said Francesco Grioli, member of the main executive board of the industrial union IGBCE, and member of Conti's Supervisory Board.
Heart of the Group
The tyre and Contitech divisions have formed the heart of the group for decades, and are closely interwoven. According to Grioli, the employee representatives would not agree to the demerger without an extension of employment and location guarantees.
CEO Setzer hinted at a withdrawal before his contract expires at the end of March 2029. „I will shape and drive forward the reorganisation of Continental in the interests of all our stakeholders as CEO until its successful completion,“ he said. Head of Human Resources Ariane Reinhart will step down from her Executive Board position prematurely in mid-2025. Her successor will be Ulrike Hintze, currently Head of Human Resources for the Tyre Division.
