Continental confirms ContiTech sale and sharpens mid‑term focus on tyres

At its June 24, 2025 Capital Market Day in Frankfurt, Continental announced plans to divest ContiTech by 2026, sharpened its profit guidance and established mid‑term targets. The move marks a strategic shift to become a dedicated tyre manufacturer with stronger cash flow and shareholder returns.

Sale of ContiTech aligns with reshaped corporate strategy

Continental confirmed it will sell ContiTech, the industrial rubber & plastics division, in 2026 pending supervisory board approval. This follows the planned divestment of ContiTech’s Original Equipment Solutions arm later in 2025‍.

The transaction will help complete the group's evolution into a pure‑play tyre company alongside the upcoming spin‑off of its Automotive division (to be rebranded “Aumovio”) scheduled for September.

Revised 2025 outlook reflects currency and trade headwinds

For fiscal 2025, Continental now expects:

• Group: €19.5–21 bn in sales; adjusted EBIT margin of 10.0–11.0 % (down from 10.5–11.5 %)
• Tyres: €13.5–14.5 bn; margin of 12.5–14.0 % (down from 13.3–14.3 %)
• ContiTech: €6.0–6.5 bn; margin of 6.0–7.0 % (previously based on €6.3–6.8 bn)

These adjustments reflect the impact of unfavourable exchange rates and elevated US import tariffs.

Mid‑term targets underline tyre business potential

Over the next 3–5 years, Continental sets out ambitious growth goals:

• Group: €19.5–22 bn sales; EBIT margin 12.0–14.5 %
• Tyres: €14.5–16 bn; margin 13.0–16 %
• ContiTech (ex‑OESL): €5.0–6.0 bn; margin 11.0–13 %

Despite near‑term headwinds, long‑term outlook reflects confidence in tyre and industrial segments.

Shareholder returns to benefit from strategic divestments

Following the Automotive spin‑off in September, Continental intends to raise its dividend payout range to 40–60 % of net income (up from 20–40 %). The ContiTech sale may fund a special dividend or share buybacks, enhancing returns.

Tyre division remains central to growth ambitions

The tyre business is rooted in established infrastructure—20 plants, including capacity concentrated in megafactories (~80%)—and robust brand reputation. In 2024, 77 % of tyres sold were for passenger cars; 76 % of tyre sales were in the replacement segment, with notable opportunities for further expansion across North America and Asia.

Ultra‑High Performance (UHP) tyres over 18″ account for around 39 % of total passenger tyre sales (48 % for the Continental brand), representing a premium market poised for growth.

ContiTech to refocus around industrial volume

After divesting OESL, ContiTech will largely serve industrial markets (~80 % of remaining sales) with products for sectors such as mining, off‑highway, construction, energy and home services. The 2024 sales background: €4.5 bn (ex‑OESL), with EMEA making up ~41 %, Americas ~36 %, APAC ~23 %; split evenly between OEM and replacement business.

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Continental's repositioning as a focused tyre manufacturer reflects the wider industry drive towards specialisation, digitalisation and resilient profitability. In tyres, emphasis on premium UHP and EV-compatible offerings plays to future demand; in industrial rubber, ContiTech’s refocus aligns with sector trends toward tailored IoT-enabled solutions and energy‑efficiency. The carve‑out will allow both entities to pursue targeted innovation and partnerships in their respective fields.

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Tagged with: Continental, ContiTech sale, tyre industry, mid‑term targets, EBIT margin, shareholder return, UHP tyres

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