Continental Restructures Powertrain Division in Line with Growing Demand for Sustainable Solutions

Regensburg/Hanover, March 27, 2008 -- Continental AG, Hanover, is restructuring its Power­train Division, which specializes in cutting-edge drive system technology. "We offer a broad range of products and we are convinced that they hold significant market potential that we will be able to fully exploit in the near future", explained Dr. Karl-Thomas Neumann, a member of Continental's Executive Board. "But to achieve this we have to ensure that we are properly structured. We will undertake a global restructuring program with the aim of optimizing pro­duction within a period of around two years and achieving a much better balance between high-cost and low-cost locations."

Highlights:
* Dr. Karl-Thomas Neumann assumes responsibility for Powertrain Division
* Broad product range with strong market potential in the near future
* Reorganization focuses on future trends and customer requirements
* Significantly leaner structures provide notable short-term efficiency gains
* Better balance between high-cost and low-cost locations for production
* Restructuring costs remain within predicted parameters

This restructuring program is the result of a thorough analysis of the strengths and weak­nesses of the Powertrain Division carried out by Continental. "The aim of this targeted pro­gram is to bring our organization, production, quality and reliability up to the same world-class level already attained by the division's high-tech products. At the same time, our com­prehensive package of measures will also ensure that we reach the earnings targets set for 2010 and that the business units acquired from Siemens VDO will deliver the level of oper­ating margins typically seen at Continental“, Dr. Neumann continued. “We will immediately set about the systematic, step-by-step implementation of this program."

As part of the reorganization, Dr. Karl-Thomas Neumann will assume operational responsi­bility for the Powertrain Division with immediate effect, in addition to his duties as a member of the Executive Board of Continental AG. At his own request, and after more than thirty years in the automotive industry, Dieter Rogge, the current head of the Powertrain Division, will be taking well-deserved retirement.

Diesel Systems, Gasoline Systems and Electronics to be merged into a single entity
The restructured Powertrain Division will combine three business units - Diesel Systems, Gasoline Systems and Electronics - into a single, more effective entity. This business unit will also be headed by Dr. Neumann. "The new Engine Systems business unit represents our commitment to focus on the future, where the trend is clearly toward a convergence of gasoline and diesel engine technologies and the associated electronics and components", explained Dr. Neumann. "At the same time we will make our organizational structure, which is currently characterized by some duplication of responsibility, significantly leaner and more efficient. The positive impact of this will become apparent very quickly."

Dr. Neumann stressed that the extent of the necessary restructuring is within expected pa­rameters. "We are talking about renovation work within a house that has sound foundations and a stable basic structure, not about knocking it down and rebuilding it! Furthermore, our division has many highly innovative products with excellent future growth potential. The greater the increase in the oil price and the cost of fuel and the stricter the environmental regulations for vehicles, the better the prospects for sales of, for example, our highly efficient fuel-injection technologies, turbochargers and hybrid systems“.

With targeted annual sales of more than €26.4 billion for 2008, the Continental Corporation is one of the top automotive suppliers worldwide. As a supplier of brake systems, systems and components for the powertrain and chassis, instrumentation, infotainment solutions, vehicle electronics, tires and technical elastomers, the corporation contributes towards enhanced driving safety and protection of the global climate. Continental is also a competent partner in networked automobile communication. Today, the corporation employs approximately 150,000 people at nearly 200 locations in 36 countries.

This boosts performance and enhances riding comfort while reducing consumption and emissions. As partner to the automotive industry, the division develops and produces a wide-ranging product portfo­lio at over sixty locations worldwide, beginning with gas and diesel injection systems and engine and transmission controls and extending through to components and systems for hybrid drives. Based on fiscal 2006 the Division posted sales of around €5 billion with a workforce of approximately 31,000 at present.

Source: Continental AG

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