Q2 2026 Continental AG Earnings Call

August 4, 2026

Speaker #1: Today's call is hosted by our CEO, Christian Kutz, and our CFO, Roland Welzbacher. A quick reminder that both the press release and the presentation of today's call are available for download on our investor-relations website.

Speaker #1: Before we start, I'd like to remind everyone that this conference call is for investors and analysts only. If you do not belong to either of these groups, please disconnect now.

Speaker #1: Following the presentation, we will conduct a Q&A session for the sales-side analysts in this call, as usual. To give everyone the opportunity to ask questions, we kindly ask you to limit yourselves to no more than 3 questions, and with that, over to you, Christian.

Speaker #1: For the Q2 key messages.

Speaker #2: Yeah, thank you, Max, and welcome everyone online, also from my side. Thank you for joining us today. Let me start with the strategic milestone we announced in July.

Speaker #2: As you know, Continental has signed—signed—the sale of its ContiTech group sector to Lone Star on July 4. Which is fully in line with the timing that we have always indicated to the capital market.

Speaker #2: And we could still close the transaction by the end of 2026, of course, subject to regulatory approvals and other closing conditions. That does also mean that we cannot rule out that this—that the process lasts into 2027, but please rest assured that we are working hard towards closing the deal as soon as possible.

Speaker #2: As you have probably seen, the agreed enterprise value amounts to $4 billion, plus a potential performance-based component of up to $250 million. I think this is a clear testament to the attractiveness of ContiTech as an industrial pure-play.

Speaker #2: Based on the current transaction structure, expected net cash proceeds at closing are expected to be around $3.1 billion, also here the exact amount will, of course, and obviously depend on multiple factors at the time, of closing.

Speaker #2: When it comes to the use of the proceeds, we intend to combine attractive shareholder returns with deleveraging, as we always communicated, and announced. In line with that, we plan to use around $2.5 billion for shareholder returns.

Speaker #2: Our options include special dividend or a special dividend and share buybacks, as we also always explained, and communicated. But these are details that we are now working on.

Speaker #2: The remaining around $600 million are planned to be used for deleveraging, and this supports our path towards the leverage target of below 1 by 2029, again fully in line with our midterm targets we've communicated and explained at various occasions.

Speaker #2: So, Q2 certainly kept us busy. Not least with the sale of the explained and mentioned sale of ContiTech. But when we did find a spare moment, the Tour de France offered an excellent alternative to be honest to spend that extra time.

Speaker #1: As we always communicated and announced, in line with that, we planned to use around €2.5 billion for shareholder returns. Our options include a special dividend, or a special dividend and share buybacks, as we also always explained and communicated.

Christian Kötz: As we always communicated and announced, in line with that, we plan to use around EUR 2.5 billion for shareholder returns. Our options include special dividend or a special dividend and share buybacks, as we also always explained and communicated, but these are details that we are now working on. The remaining around EUR 600 million are planned to be used for deleveraging, and this supports our path towards the leverage target of below 1 by 2029. Again, fully in line with our midterm targets we've communicated and explained at various occasions. Q2 certainly kept us busy, not least with the sale of the explained and mentioned sale of ContiTech. But when we did find a spare moment, the Tour de France offered an excellent alternative, to be honest, to spend that extra time.

Speaker #2: And here my warmest congratulations to Tadej Pogačar on an extraordinary fifth tour victory. Delivered with exceptional skills, but of course also supported by Continental tires.

Speaker #1: But these are details that we are now working on. The remaining approximately €600 million are planned to be used for deleveraging, and this supports our path toward the leverage target of below 1 by 2029—again, fully in line with our midterm targets we've communicated and explained on various occasions.

Speaker #2: A great demonstration of what talent, teamwork, and outstanding technology can deliver. With that positive and winning momentum, let us move on to our quarterly performance in Q2.

Speaker #1: So, Q2 certainly kept us busy, not least with the explained and mentioned sale of ContiTech. But when we did find a spare moment, the Tour de France offered an excellent alternative, to be honest, to spend that extra time.

Speaker #2: So, overall, we delivered a solid quarter. With earnings and cash flow improving despite a still challenging market environment, group sales came in at $4.4 billion, compared with around $4.9 billion in Q2 of last year.

Speaker #1: And here, my warmest congratulations to Tadej Pogačar on an extraordinary fifth Tour victory—delivered with exceptional skills, but of course also supported by Continental tires.

Christian Kötz: Here, my warmest congratulations to Tadej Pogačar on an extraordinary fifth Tour victory, delivered with exceptional skills, but of course, also supported by Continental tires. A great demonstration of what talent, teamwork, and outstanding technology can deliver. With that positive and winning momentum, let us move on to our quarterly performance in Q2. Overall, we delivered a solid quarter, with earnings and cash flow improving despite the still challenging market environment. Group sales came in at EUR 4.4 billion compared with around EUR 4.9 billion in Q2 of last year. The reported sales decline was mainly driven by the sale of OE SA, so the ContiTech OE related, or the majority of the ContiTech OE related business, which we have sold at the beginning of last year. Organically, our sales development was broadly stable at -0.3% and even slightly positive on the tire side. More details to come.

Speaker #2: The reported sales decline was mainly driven by the sale of OESL, so the ContiTech OE-related, or the majority of the ContiTech OE-related business, which we have sold at the beginning of last year.

Speaker #1: A great demonstration of what talent, teamwork, and outstanding technology can deliver. With that positive and winning momentum, let us move on to our quarterly performance in Q2.

Speaker #2: Organically, our sales development was broadly stable at minus 0.3%, and even slightly positive on the tire side, more details to come. Our adjusted EBIT for the group increased year over year, reaching $470, $570 million.

Speaker #1: So, overall, we delivered a solid quarter, with earnings and cash flow improving despite a still challenging market environment. Group sales came in at €4.4 billion, compared with around €4.9 billion in Q2 of last year.

Speaker #2: Translating into an adjusted EBIT margin of $12.9%. That improvement was mainly supported by our tires group sector, where we saw continuous strong price mix, still lower raw material costs, and a better operational performance.

Speaker #1: The reported sales decline was mainly driven by the sale of OESL, so the ContiTech OE-related—or the majority of the ContiTech OE-related business—which we have sold at the beginning of last year.

Speaker #2: ContiTech continued to operate in a subdued market environment, which weighed on profitability. However, the impact was largely mitigated by portfolio measures, still favorable raw material costs, and the ongoing execution of cost-saving measures.

Speaker #1: Organically, our sales development was broadly stable at minus 0.3%, and even slightly positive on the tire side—more details to come. Our adjusted EBIT for the group increased year over year, reaching €470.57 million, translating into an adjusted EBIT margin of 12.9%.

Speaker #2: The sales had measures we've explained also earlier. Adjusted free cash flow improved significantly to $216 million, roughly $250 million up year on year. The strong increase was, of course, driven by the solid profitability improvement, but also included some cut-off date-related items such as favorable working capital development and the timing of capex, which remains weighted towards the second half of the year.

Christian Kötz: Our adjusted EBIT for the group increased year over year, reaching EUR 570 million, translating into an adjusted EBIT margin of 12.9%. That improvement was mainly supported by our tires group sector, where we saw continuous strong price mix, still lower raw material costs, and a better operational performance. ContiTech continued to operate in a subdued market environment, which weighed on profitability. However, the impact was largely mitigated by portfolio measures, still favorable raw material costs, and the ongoing execution of cost-saving measures. The sales head measures we have explained also earlier. Adjusted free cash flow improved significantly to EUR 216 million, roughly EUR 250 million up year on year. The strong increase was, of course, driven by the solid profitability improvement, but also included some cut-off date related items such as favorable working capital development and the timing of CapEx, which remains weighted towards the H2 of the year.

Speaker #1: That improvement was mainly supported by our Tires group sector, where we saw continuously strong price/mix, still lower raw material costs, and better operational performance.

Speaker #1: ContiTech continued to operate in a subdued market environment, which weighed on profitability. However, the impact was largely mitigated by portfolio measures, still favorable raw material costs, and the ongoing execution of cost-saving measures.

Speaker #2: The positive cash flow also supported further organic debt reduction, however, and as always in Q2, our net debt increased sequentially versus Q1, mainly due to the dividend payment we have done in May.

Speaker #1: The sales had measures we've explained also earlier. Adjusted free cash flow improved significantly to €216 million, roughly €250 million up year on year. A strong increase was, of course, driven by the solid profitability improvement, but also included some cut-off date-related items such as favorable working capital development and the timing of capex, which remains weighted toward the second half of the year.

Speaker #2: With the sale of also reached a significant milestone towards becoming a tires pure-play. As a result, we have already now adjusted the guidance to reflect ContiTech as a discontinued business, but Roland will touch on that later on in more details.

Speaker #2: As a next step, we will also start disclosing more details on the tires business in the next quarters that means we will change our segment disclosure moving forward.

Speaker #1: The positive cash flow also supported further organic debt reduction. However, as always in Q2, our net debt increased sequentially versus Q1, mainly due to the dividend payment we made in May.

Christian Kötz: The positive cash flow also supported further organic debt reduction. However, as always in Q2, our net debt increased sequentially versus Q1 mainly and due to the dividend payment we have done in May. With the sale of ContiTech that I've mentioned earlier, we have also reached a significant milestone towards becoming a tires pure-play. As a result, we have already now adjusted the guidance to reflect ContiTech as a discontinued business. Roland will touch on that later on in more details. As a next step, we will also start disclosing more details on the tires business in the next quarters. That means we will change our segment disclosure moving forward. You will receive a call invite in the upcoming weeks for an update call on our future structure, since we want to make the transition into a tires pure-play as smooth as possible also for you.

Speaker #2: You will receive a call invite in the upcoming weeks for an update call on our future structure, since we want to make the transition into a tires pure-play as smooth as possible.

Speaker #2: Also for you. So, looking at the group sectors on slide 6, the improvement in margin was mainly driven by the strong performance at tires, as I mentioned already.

Speaker #1: With the sale of ContiTech that I mentioned earlier, we have also reached a significant milestone toward becoming a tires pure play. As a result, we have already now adjusted the guidance to reflect ContiTech as a discontinued business, but Roland will touch on that later in more detail.

Speaker #2: Our organic sales were broadly stable, while the group adjusted EBIT margin improved from $9.6% to the before already mentioned $12.9%. This includes a positive contribution from the diesel settlement as well.

Speaker #1: As a next step, we will also start disclosing more details on the Tires business in the next quarters. That means we will change our segment disclosure moving forward.

Speaker #2: Tires delivered organic growth of 0.3% and increased its adjusted EBIT margin to 15.3%, so even slightly outside our full-year guidance corridor in the quarter.

Speaker #1: You will receive a call invite in the upcoming weeks for an update call on our future structure, since we want to make the transition into a tires pure play as smooth as possible.

Speaker #2: With that, over to you, Roland, for more details on tires starting, I think, with insights into the markets.

Speaker #1: Also for you. So, looking at the group sectors on slide 6, the improvement in margin was mainly driven by the strong performance at Tires, as I mentioned already.

Christian Kötz: Looking at the group sectors on slide six. The improvement in margin was mainly driven by the strong performance at Tires. As I mentioned already, our organic sales were broadly stable, while the group-adjusted EBIT margin improved from 9.6% to the before already mentioned 12.9%. This includes a positive contribution from the diesel settlement as well. Tires delivered organic growth of 0.3% and increased its adjusted EBIT margin to 15.3%, so even slightly outside our full year guidance corridor in the quarter. With that, over to you, Roland, for more details on Tires, starting, I think, with insights into the markets.

Speaker #1: Thank you, Christian, and also welcome from my side to everyone on the call. Let me begin on chart 7 with the market environment for tires in the second quarter.

Speaker #1: Our organic sales were broadly stable, while the Group adjusted EBIT margin improved from 9.6% to the, before already mentioned, 12.9%. This includes a positive contribution from the diesel settlement as well.

Speaker #1: In OE passenger car tires, the trend of declining volumes continued. Both in Europe and China, which also resulted in a year-on-year decrease in worldwide vehicles produced.

Speaker #1: In the replacement business, we saw imports going up year on year. In our largest region, EMEA, resulting in higher volumes in lower-tier tires. And also Chinese tire volumes showed a year-on-year increase while the North American market continues to trend below last year's level.

Speaker #1: Tires delivered organic growth of 0.3% and increased its adjusted EBIT margin to 15.3%, so even slightly outside our full-year guidance corridor in the quarter.

Speaker #1: Let's turn to page 8. mixed across regions in Europe. Commercial vehicle production growth has moderated following strong prior quarters, while North America looks like it has turned the corner.

Speaker #1: With that, over to you, Roland, for more details on Tires—starting, I think, with insights into the markets.

Speaker #2: Thank you, Christian, and also welcome from my side to everyone on the call. Let me begin on chart 7 with the market environment for tires in the second quarter.

Roland Welzbacher: Thank you, Christian, and also welcome from my side to everyone on the call. Let me begin on chart seven with the market environment for Tires in Q2. In OE passenger car tires, the trend of declining volumes continued both in Europe and China, which also resulted in a year-on-year decrease in worldwide vehicles produced. In replacement business, we saw imports going up year on year in our largest region, EMEA, resulting in higher volumes in lower tier tires. Chinese tire volumes showed a year-on-year increase while the North American market continues to trend below last year's level. Let's turn to page eight and turn to truck tires. The picture remains mixed across regions. In Europe, commercial vehicle production growth has moderated following strong prior quarters, while North America looks like it has turned the corner.

Speaker #1: From silver lining here, showing signs of recovery from a low base, however. In the replacement business, demand in Europe remains supportive, with year-over-year growth.

Speaker #2: In OE passenger car tires, the trend of declining volumes continued, both in Europe and China, which also resulted in a year-on-year decrease in worldwide vehicles produced.

Speaker #1: Whereas replacement volumes in North America continue to trend below prior-year levels, driven by lower transportation. Let's turn to slide 9. Despite the continued softer volume environment, we delivered the expected margin improvement against a very weak Q2 2025, as you can see on slide 9.

Speaker #2: In the replacement business, we saw imports going up year-on-year. In our largest region, EMEA, this resulted in higher volumes in lower-tier tires. Chinese tire volumes also showed a year-on-year increase, while the North American market continues to trend below last year's level.

Speaker #1: This happened on the back of favorable raw material developments and, once more, healthy operational performance. Sales were broadly stable at 3.3 billion, one of the reasons.

Speaker #2: Let's turn to page 8 and talk about truck tires. The picture remains mixed across regions. In Europe, commercial vehicle production growth has moderated following strong prior quarters, while North America looks like it has turned the corner.

Speaker #1: FX this time had no material impact in a while, after being a drag for many quarters in a row. Volumes, however, were down minus 2.3%.

Speaker #2: There is some silver lining here, showing signs of recovery from a low base, however. In the replacement business, demand in Europe remains supportive with year-over-year growth.

Roland Welzbacher: No silver lining here, showing signs of recovery from a low base, however. In the replacement business, demand in Europe remains supportive with year-over-year growth. Whereas replacement volumes in North America continue to trend below prior year levels, driven by lower transportation demand. Let's turn to slide nine. Despite the continued softer volume environment, we delivered the expected margin improvement against a very weak Q2 2025, as you can see on slide nine. This happened on the back of favorable raw material developments and once more, healthy operational performance. Sales were broadly stable at EUR 3.3 billion. One of the reasons, FX this time had no material impact in a while after being a drag for many quarters in a row. Volumes, however, were down -2.3%.

Speaker #1: This was mainly driven by a subdued PLT OE demand in EMEA, and soft markets in the Americas, while we continue to perform well in the weak Chinese OE market.

Speaker #2: Whereas replacement volumes in North America continue to trend below prior-year levels, driven by lower transportation demand, let's turn to slide 9. Despite the continued softer volume environment, we delivered the expected margin improvement against a very weak Q2 2025, as you can see on slide 9.

Speaker #1: As in the past quarters, price mix was positive, though. At 2.6, it's more than compensated for the lower volumes, both on the sales and the EBIT side.

Speaker #1: This continues positive development, with mainly driven by product and channel mix. And despite lower overall volumes, we managed to increase UHP volumes, especially in EMEA and in APAC.

Speaker #2: This happened on the back of favorable raw material developments and, once more, healthy operational performance. Sales were broadly stable at €3.3 billion, one of the reasons.

Speaker #1: Consequently, our adjusted EBIT increased to $510 million, a margin of 15.3%. Which will presumably be the peak margin for this year. Besides price mix, the still lower raw material costs provided a mid-double-digit million euro year-on-year tailwind.

Speaker #2: FX this time had no material impact for a while, after being a drag for many quarters in a row. Volumes, however, were down 2.3%.

Speaker #2: This was mainly driven by subdued PLT OE demand in EMEA and soft markets in the Americas, while we continue to perform well in the weak Chinese OE market.

Roland Welzbacher: This was mainly driven by subdued PLT OE demand in EMEA and soft markets in the Americas, while we continue to perform well in the weak Chinese OE market. As in the past quarters, price mix was positive, though. At 2.6, it's more than compensated for the lower volumes, both on the sales and the EBIT side. This continuous positive development was mainly driven by product and channel mix. Despite lower overall volumes, we managed to increase UHP volumes, especially in EMEA and in APAC. Consequently, our adjusted EBIT increased to EUR 510 million, a margin of 15.3%, which will presumably be the peak margin for this year. Besides price mix, the still lower raw material cost provided a mid-double-digit million EUR year-on-year tailwind. Furthermore, and in addition to that, the recently increased raw material purchasing prices led to a reevaluation of our inventories.

Speaker #1: Furthermore, and in addition to that, the recently increased raw material purchasing prices led to a re-evaluation of our inventories, this resulted in an additional non-cash tailwind in a similar manner.

Speaker #2: As in past quarters, price mix was positive, though. At 2.6, it more than compensated for the lower volumes, both on the sales and EBIT side.

Speaker #1: And as I mentioned already, the prior-year comparison base was, of course, materially impacted by tariff and FX advance. If we look at the regional breakdown on slide 10, the underlying dynamics of our business become even clearer.

Speaker #2: This continued positive development was mainly driven by product and channel mix. And despite lower overall volumes, we managed to increase UHP volumes, especially in EMEA and in APAC.

Speaker #2: Consequently, our adjusted EBIT increased to €510 million, a margin of 15.3%, which will presumably be the peak margin for this year. Besides price/mix, the still lower raw material cost provided a mid-double-digit million euro year-on-year tailwind.

Speaker #1: In the Americas, organic growth was minus 3.4%. The passenger car OE volumes declined stronger than replacement in a softer market environment. Good news in terms of mix: the US-American and Canadian replacement volumes declined only slightly, while South America clearly remained under pressure due to cheap imports.

Speaker #2: Furthermore, and in addition to that, the recently increased raw material purchasing prices led to a reevaluation of our inventories. This resulted in an additional non-cash tailwind in a similar manner.

Speaker #1: On the truck side, OE volumes have finally been stabilizing, but replacement volumes continue to trend below prior-year. Nevertheless, we were able to increase price mix in North America but it could only partly offset the negative volume effects.

Roland Welzbacher: This resulted in an additional non-cash tailwind in a similar magnitude. As I mentioned already, the prior year comparison base was, of course, materially impacted by tariff and FX headwinds. If we look at the regional breakdown on slide 10, the underlying dynamics of our business become even clearer. In the Americas, organic growth was -3.4%. The passenger car OE volumes declined stronger than replacement in a softer market environment. Good news in terms of mix. The U.S. American and Canadian replacement volumes declined only slightly, while South America clearly remained under pressure due to cheap imports. On the truck side, OE volumes have finally been stabilizing, but replacement volumes continue to trend below prior year. Nevertheless, we were able to increase price mix in North America, but it could only partly offset the negative volume effects.

Speaker #2: And, as I mentioned already, the prior-year comparison base was, of course, materially impacted by tariff and FX headlines. If we look at the regional breakdown on slide 10, the underlying dynamics of our business become even clearer.

Speaker #1: In EMEA, we saw healthy organic growth of 2.4%, even though PLT OE and replacement volumes declined modestly. One of the reasons are the increased UHP volumes.

Speaker #2: In the Americas, organic growth was minus 3.4%. The passenger car OE volumes declined more strongly than replacement in a softer market environment. Good news in terms of mix: U.S.-American and Canadian replacement volumes declined only slightly, while South America clearly remained under pressure due to cheap imports.

Speaker #1: While the sale of our French retail network has started to affect reported revenues in Q2. The impact was limited in Q2, but it should become more visible in the coming quarters.

Speaker #1: In truck tires, both OE and replacement volumes increased versus prior-year. Demonstrating outperformance against the market. Consequently, price mix remained continuously positive. In APAC, we also achieved positive organic growth, driven especially by increased ultra-high performance volumes.

Speaker #2: On the truck side, OE volumes have finally been stabilizing, but replacement volumes continue to trend below prior year. Nevertheless, we were able to increase price/mix in North America, but it could only partly offset the negative volume effects.

Speaker #1: In particular, our performance in China resulted in positive OE volumes despite decreasing light vehicle production figures and in a stable replacement volume environment. Our sales price mix remained positive, while portfolio adjustment, such as the exit from our Asian truck business, provided a low double-digit million euro headwind to sales year-on-year.

Speaker #2: In EMEA, we saw healthy organic growth of 2.4%, even though PLT OE and replacement volumes declined modestly. One of the reasons is the increased UHP volumes.

Roland Welzbacher: In EMEA, we saw a healthy organic growth of 2.4%, even though PLT OE and replacement volumes declined modestly. One of the reasons are the increased UHP volumes. While the sale of our French retail network has started to affect reported revenues in Q2. The impact was limited in Q2, but it should become more visible in the coming quarters. In truck tires, both OE and replacement volumes increased versus prior year, demonstrating outperformance against the market. Consequently, price mix remained continuously positive. In APAC, we also achieved positive organic growth, driven especially by increased ultra-high performance volumes. In particular, outperformance in China resulted in positive OE volumes despite decreasing light vehicle production figures and in a stable replacement volume environment.

Speaker #2: While the sale of our French retail network has started to affect reported revenues in Q2, the impact was limited in Q2, but it should become more visible in the coming quarters.

Speaker #1: Moving on to country tech, on page 11. In continued weak market conditions, country tech delivered a solid result. This was supported by the measures we've implemented to improve efficiency and strengthen profitability.

Speaker #2: In truck tires, both OE and replacement volumes increased versus the prior year, demonstrating outperformance against the market. Consequently, price/mix remained continuously positive. In APAC, we also achieved positive organic growth, driven especially by increased ultra-high-performance volumes.

Speaker #1: The market environment, however, remained difficult, and this continued to weigh on volumes and profitability. Sales came in at 1.1 billion euros, almost at the same level as last year, if we exclude the OESL effect that is still down in the previous year's comparison base.

Speaker #2: In particular, our performance in China resulted in positive OE volumes despite decreasing light vehicle production figures and a stable replacement volume environment. Our sales price mix remained positive, while portfolio adjustments, such as the exit from our Asian truck business, provided a low double-digit million-euro headwind to sales year-on-year.

Speaker #1: The organic decrease was mainly driven by the continuously challenging volume environment. At the same time, we had a good finish to the quarter, especially in EMEA and the Americas, mainly driven by solid execution, in the project-related business.

Roland Welzbacher: Our sales price mix remained positive while portfolio adjustment, such as the exit from our Asian truck business, provided a low double-digit million EUR headwind to sales year-on-year. Moving on to ContiTech on page 11. In continued weak market conditions, ContiTech delivered a solid result. This was supported by the measures we've implemented to improve efficiency and strengthen profitability. The market environment, however, remained difficult, and this continued to weigh on volumes and profitability. Sales came in at EUR 1.1 billion, almost at the same level as last year, if we exclude the OE SL effect that is still down in the previous year's comparison base. The organic decrease was mainly driven by the continuously challenging volume environment.

Speaker #1: Which makes us confident moving forward. Adjusted EBIT came in at a margin of 6.9%. As already mentioned, our safeguarding measures defended profitability against a slightly unfavorable product mix, and first negative impacts from raw material price inflation.

Speaker #2: Moving on to Country Tech on page 11. In continued weak market conditions, Country Tech delivered a solid result. This was supported by the measures we implemented to improve efficiency and strengthen profitability.

Speaker #2: The market environment, however, remained difficult, and this continued to weigh on volumes and profitability. Sales came in at €1.1 billion—almost at the same level as last year, if we exclude the OESL effect that is still down in the previous year's comparison base.

Speaker #1: Commercial measures we've implemented are expected to increasingly take effect from Q3 onwards. Broadly covering the increasing material costs. And one more technicality: due to the signed sale of country tech, our for S5 is applied starting end of Q2.

Speaker #1: In Q2 itself, this had no tangible effect on the result, but it will come with a stop depreciation from Q3 onwards. You're probably still know the drill from automotive last year.

Speaker #2: The organic decrease was mainly driven by the continuously challenging volume environment. At the same time, we had a good finish to the quarter, especially in EMEA and the Americas, mainly driven by solid execution in the project-related business.

Roland Welzbacher: At the same time, we had a good finish to the quarter, especially in EMEA and the Americas, mainly driven by solid execution in the project-related business, which makes us confident moving forward. Adjusted EBIT came in at a margin of 6.9%, as already mentioned. Our safeguarding measures defended profitability against a slightly unfavorable product mix and first negative impacts from raw material price inflation. Commercial measures we've implemented are expected to increasingly take effect from Q3 onwards, broadly covering the increasing material costs. One more technicality. Due to the signed sale of ContiTech, IFRS 5 is applied starting end of Q2. In Q2 itself, this had no tangible effect on the result, but it will come with a stock depreciation from Q3 onwards. You probably still know the drill from automotive last year.

Speaker #1: Turning now to our cash flow on slide 12. When we moved from minus 46 million in Q2 25 to plus 216 million in Q2 2026.

Speaker #2: Which makes us confident moving forward. Adjusted EBIT came in at a margin of 6.9%. As already mentioned, our safeguarding measures defended profitability against a slightly unfavorable product mix and the first negative impacts from raw material price inflation.

Speaker #1: The improvement was predominantly driven by our improved operational performance. By working capital, and by capex. Working capital tailwind resulted from operational changes in receivables and payables, while seasonal inventories increased slightly stronger than in the comparison period.

Speaker #2: Commercial measures we have implemented are expected to increasingly take effect from Q3 onwards, broadly covering the increasing material costs. And one more technicality: due to the signed sale of Country Tech, our Fresh 5 is applied starting end of Q2.

Speaker #1: Also due to valuation effects, as mentioned. The lower capex reflects this year's planned H2 weighted phasing of investments. Thus, our solid operational performance contributed positively to our Q2 free cash flow.

Speaker #2: In Q2 itself, this had no tangible effect on the result, but it will come with a stop depreciation from Q3 onwards. You probably still know the drill from automotive last year.

Speaker #1: But timing effects also played a role. On working capital, which you can see on the next slide, the development was in line with the typical seasonality and sales development.

Speaker #2: Turning now to our cash flow on slide 12. We moved from minus €46 million in Q2 2025 to plus €216 million in Q2 2026.

Roland Welzbacher: Turning now to our cash flow on slide 12, where we moved from EUR -46 million in Q2 2025 to EUR +216 million in Q2 2026. The improvement was predominantly driven by our improved operational performance, by working capital, and by CapEx. Working capital tailwind resulted from operational changes in receivables and payables, while seasonal inventories increased slightly stronger than in the comparison period, also due to valuation effects as mentioned. The lower CapEx reflects this year planned H2-weighted phasing of investments. Thus, our solid operational performance contributed positively to our Q2 free cash flow. A timing effect also played a role. On working capital, which you can see on the next slide, the development was in line with the typical seasonality and sales development. Working capital stood at EUR 4.6 billion at the end of Q2, corresponding to 25% of sales.

Speaker #1: Working capital stood at 4.6 billion at the end of Q2, corresponding to 25% of sales. Net debt was at 5.5 billion, and the proforma leverage ratio stood at 2.0 times.

Speaker #2: The improvement was predominantly driven by our improved operational performance, by working capital, and by CapEx. The working capital tailwind resulted from operational changes in receivables and payables, while seasonal inventories increased slightly more than in the comparison period.

Speaker #1: That means our net debt was slightly up compared with Q1, which was driven, as mentioned by Christian, by the 540 million euro dividend payment in May.

Speaker #1: While our positive free cash flow partially countered that effect. Let me now turn to our market outlook for 2026 on slide 14. Looking at our full-year market assumptions, we continue to expect volumes to remain unsupportive in challenging and uncertain market conditions.

Speaker #2: Also, due to valuation effects, as mentioned. The lower CapEx reflects this year's planned H2-weighted phasing of investments. Thus, our solid operational performance contributed positively to our Q2 free cash flow.

Speaker #2: But timing effects also played a role. On working capital, which you can see on the next slide, the development was in line with the typical seasonality and sales development.

Speaker #1: Within passenger cars and light tracks, we have become slightly more cautious on both vehicle production and replacement demand. A slightly lower outlook for vehicle production is largely driven by China.

Speaker #2: Working capital stood at €4.6 billion at the end of Q2, corresponding to 25% of sales. Net debt was €5.5 billion, and the pro forma leverage ratio stood at 2.0 times.

Speaker #1: And when it comes to replacement demand, we now expect slightly negative developments in both Europe and North America, given the year-to-date market development. In commercial vehicles, the picture on the UE side is more encouraging.

Roland Welzbacher: Net debt was at EUR 12.5 billion and the pro forma leverage ratio stood at 2.0x. That means our net debt was slightly up compared with Q1, which was driven, as mentioned by Christian, by the EUR 540 million dividend payment in May. While our positive free cash flow partially countered that effect. Let me now turn to our market outlook for 2026 on slide 14. Looking at our full-year market assumptions, we continue to expect volumes to remain unsupportive in challenging and uncertain market conditions. Within passenger cars and light trucks, we have become slightly more cautious on both vehicle production and replacement demand. A slightly lower outlook for vehicle production is largely driven by China. When it comes to replacement demand, we now expect slightly negative developments in both Europe and North America, given the year-to-date market development.

Speaker #2: That means our net debt was slightly up compared with Q1, which was driven, as mentioned by Christian, by the €540 million dividend payment in May.

Speaker #1: We continue to assume decent growth in European truck production and have also slightly increased our North American production outlook, reflecting the strong class 8 or intake in recent months.

Speaker #2: While our positive free cash flow partially countered that effect. Let me now turn to our market outlook for 2026 on slide 14. Looking at our full-year market assumptions, we continue to expect volumes to remain unsupportive in challenging and uncertain market conditions.

Speaker #1: We have, however, become more cautious on North American truck tire replacement demand. Finally, turning to our guidance. As Christian mentioned already, we have updated our guidance to reflect the planned sale of country tech.

Speaker #2: Within passenger cars and light trucks, we have become slightly more cautious on both vehicle production and replacement demand. A slightly lower outlook for vehicle production is largely driven by China.

Speaker #1: The underlying expectations for operational business, however, are confirmed. For the continued operations of Continental, we now expect consolidated sales of around 13.2 billion to 14.2 billion, and an adjusted EBIT margin of around 12 to 13.5%.

Speaker #2: And when it comes to replacement demand, we now expect slightly negative developments in both Europe and North America, given the year-to-date market development. In commercial vehicles, the picture on the OE side is more encouraging.

Speaker #1: Coming from unchanged assumption, in our tires business, plus the holding costs, on top. Looking at year-to-date performance, however, I think it is fair to state that we're currently assumed to achieve the upper half of the profitability range in tires, while sales will probably end up around or slightly below midpoint.

Roland Welzbacher: In commercial vehicles, the picture on the OE side is more encouraging. We continue to assume decent growth in European truck production and have also slightly increased our North American production outlook, reflecting the strong Class 8 order intake in recent months. We have, however, become more cautious on North American truck tire replacement demand. Finally, turning to our guidance. As Christian mentioned already, we have updated our guidance to reflect the planned sale of ContiTech. The underlying expectations for our operational business, however, are confirmed. For the continued operations of Continental, we now expect consolidated sales of around EUR 13.2 billion to 14.2 billion, and an adjusted EBIT margin of around 12% to 13.5%, coming from unchanged assumptions in our tires business, plus the holding costs on top.

Speaker #2: We continue to assume decent growth in European truck production, and have also slightly increased our North American production outlook, reflecting the strong Class 8 order intake in recent months.

Speaker #2: We have, however, become more cautious on North American truck tire replacement demand. Finally, turning to our guidance: as Christian mentioned already, we have updated our guidance to reflect the planned sale of ContiTech.

Speaker #1: Adjusted free cash flow expected at around 0.7 billion to 1.1 billion, also here no change in underlying assumptions. PPA amortization is no longer a material KPI for tires, and special effects for continuing operations are now expected at around minus 200 million while capex is expected at around 7 to 8% of sales, reflecting the higher investment profile of tires versus country tech.

Speaker #2: The underlying expectations for operational business, however, are confirmed. For the continued operations of Continental, we now expect consolidated sales of around €13.2 billion to €14.2 billion, and an adjusted EBIT margin of around 12 to 13.5%.

Speaker #1: The underlying spending assumptions for this year are unchanged, though. For country tech, the outlook is unchanged and does not consider any IFRS implications, such as stop depreciation.

Speaker #2: Coming from unchanged assumptions in our Tires business, plus the holding costs on top. Looking at year-to-date performance, however, I think it is fair to state that we're currently assumed to achieve the upper half of the profitability range in Tires, while sales will probably end up around or slightly below the midpoint.

Roland Welzbacher: Looking at year-to-date performance, however, I think it is fair to state that we currently assume to achieve the upper half of the profitability range in tires, while sales will probably end up around or slightly below midpoint. Adjusted free cash flow expected at around EUR 0.7 billion to 1.1 billion. Also here, no change in underlying assumptions. PPA amortization is no longer a material KPI for tires, and special effects from continuing operations are now expected at around EUR -200 million, while CapEx is expected at around 7% to 8% of sales, reflecting the higher investment profile of tires versus ContiTech. The underlying spending assumptions for this year are unchanged, though. For ContiTech, the outlook is unchanged and does not consider any IFRS implications such as stock depreciation. That being said, I would like to hand over now the rest of the time to you, operator.

Speaker #1: So, that being said, I would like to hand over now the rest of the time to you, Operator. Can you please open the line for Q&A?

Speaker #2: Adjusted free cash flow is expected at around €0.7 billion to €1.1 billion; also here, no change in underlying assumptions. PPA amortization is no longer a material KPI for Tires, and special effects for continuing operations are now expected at around minus €200 million, while CapEx is expected at around 7% to 8% of sales, reflecting the higher investment profile of Tires versus ContiTech.

Speaker #2: So the first question comes from José Asumendi from JP Morgan. The status is yours.

Speaker #3: Thank you very much. A few questions, please. Maybe regarding your margin assumptions for the second half within the tire business. Maybe just going through a few buckets.

Speaker #3: Do you expect volume to be at some point a positive contributor to the business, either in the third or the fourth quarter? Second, should we expect any impact of revaluation of inventories the positive or negative impact non-cash impact on the P&L in Q3 or Q4?

Speaker #2: The underlying spending assumptions for this year are unchanged, though. For Country Tech, the outlook is unchanged and does not consider any IFRS implications, such as stop depreciation.

Speaker #2: So, that being said, I would now like to hand over the rest of the time to you, Operator. Can you please open the line for Q&A?

Speaker #3: And then three, can you comment on your expansion plans in China and whether you're starting to see a revenue acceleration in the region? Any update you could give us on the region, please.

Roland Welzbacher: Could you please open the line for Q&A?

Speaker #1: Of course. Ladies and gentlemen, if you have joined by telephone and would like to ask a question, please press star 9 and the pound key on your telephone keypad.

Operator: Of course. Ladies and gentlemen, if you have joined by telephone and would like to ask a question, please press star nine and pound key on your telephone keypad. Star nine and pound key. If you'd like to withdraw your question, please press star three and pound key. If you are connected online and listening via the web interface, please click the telephone handset button and then the raise hand icon. This will allow you to ask your question verbally as well. The first question comes from José Asumendi from J.P. Morgan. The stage is yours.

Speaker #3: Thank you.

Speaker #1: Star 9 and the pound key. If you'd like to withdraw your question, please press star 3 and the pound key. If you are connected online and listening via the web interface, please click the telephone handset button and then the raised hand icon.

Speaker #1: Thank you, José. Let me start. I think your question goes back to the guidance. And as a fair question, looking at the good H1 results, let me answer this first of all a little bit broader, and then I will go into the specifics.

Speaker #1: First of all, we expect that the ongoing economic uncertainty will affect the market volumes. Also, in H2, and will remain in total below prior year.

Speaker #1: This will allow you to ask your question verbally as well. So, the first question comes from José Azumendi from J.P. Morgan. The stage is yours.

Speaker #1: And you should remember we've had this good Q3 quarter last year, which was very strong, also on the volume side, and if price mix stuff comes to be.

Speaker #3: Thank you very much. I have a few questions, please—maybe regarding your margin assumptions for the second half within the tire business. Could you go through a few areas?

José Asumendi: Thank you very much. A few questions, please. Maybe regarding your margin assumptions for H2 within the tire business. Maybe just going through a few pockets. Do you expect volume to be, at some point, a positive contributor to the business, either in Q3 or Q4? Second, should we expect any impact of revaluation of inventories, the positive or negative impact, non-cash impact on the P&L in Q3 or Q4? Three, can you comment on your expansion plans in China and whether you're starting to see a revenue acceleration in the region? Any update you could give us on the region, please? Thank you.

Speaker #1: Let's remind ourselves. Second of all, and this is the real difference, we benefited from substantial raw material wind year over year in H1. We're talking about a triple digit euro million amount, and this will fully go away, of course, in the second half.

Speaker #3: Do you expect volume to be, at some point, a positive contributor to the business, either in the third or the fourth quarter? Second, should we expect any impact from revaluation of inventories—a positive or negative non-cash impact—on the P&L in Q3 or Q4?

Speaker #1: But in fact, it will reverse in the second half and turn into a headwind of similar magnitude. Yes, you know we put a mitigation plan in place.

Speaker #1: We discussed that in the first quarter already, in May. But still, it's a completely different ballgame than in the first half. So this is why we said, in terms of sales, we'll most probably come out slightly below the midpoint and profitability in the upper half of the guidance range.

Speaker #3: And then third, can you comment on your expansion plans in China and whether you're starting to see a revenue acceleration in the region? Any update you could give us on the region, please?

Speaker #1: So talking volume, because you asked specifically, first half now in total, volume effect on sales minus 3.3%, we expect this negative effect to be slightly lower in the second half.

Speaker #3: Thank you.

Speaker #1: So we expect some improvement on the passenger car tire replacement side, but again, it will be in total below prior year. And in terms of revaluation, because it was mentioned that it was a non-cash item in Q2, we will also have a positive revaluation effect in the second half.

Speaker #4: Thank you, José. Let me start. I think your question goes back to the guidance, and that is a fair question. Looking at the good H1 results, let me answer this, first of all, a little bit broader, and then I will go into the specifics.

Roland Welzbacher: José, let me start. I think your question goes back to the guidance. It's a fair question looking at the good H1 results. Let me answer this, first of all, a little bit broader. Then I will go into the specifics. First of all, we expect that the ongoing economic uncertainty will affect the market volumes also in H2 and will remain in total below prior year. If you remember, we've had this good Q3 last year, which was very strong also on the volume side and in price mix. It's tough comps to beat. Let's remind ourselves. Second of all, this is the real difference, we benefited from substantial raw material win year-over-year in H1. We're talking about a triple-digit EUR million amount, and this will fully go away, of course, in H2.

Speaker #4: First of all, we expect that the ongoing economic uncertainty will affect market volumes. Also, in H2, they will remain in total below the prior year.

Speaker #1: The magnitude still remains to be seen, but I would say at least it's a mid double digit euro million amount, also in the second half.

Speaker #4: And you should remember, we had this good Q3 last year, which was very strong, also on the volume side and in price/mix.

Speaker #1: And on China, Christian, you want to take this?

Speaker #4: Stuff comes to be. Let's remind ourselves. Second of all, and this is the real difference, we benefited from substantial raw material wind year-over-year in H1.

Speaker #3: Yeah. And before I, so José, before I talk about the situation in China and the status of our expansion plans, let me just add to what Roland said.

Speaker #3: Yes, we have consciously taken a conservative approach on our second year, or half, or H2, second half year. Assumptions why, and this goes in line with what you've asked for.

Speaker #4: We're talking about a triple-digit euro million amount, and this will fully go away, of course, in the second half. But, in fact, it will reverse in the second half and turn into a headwind of similar magnitude.

Roland Welzbacher: In fact, it will reverse in H2 and turn into a headwind of similar magnitude. Yes, we put a mitigation plan in place. We discussed that in Q1 already in May, but still, it is a completely different ballgame than in H1. This is why we said in terms of sales, we will most probably come out slightly below the midpoint and profitability in the upper half of the guidance range. Talking volume, because you asked specifically, H1 now in total, volume effect on sales, -3.3%. We expect this negative effect to be slightly lower in H2. We expect some improvement on the passenger car tire replacement side, but again, it will be in total below prior year.

Speaker #4: Yes, you know, we put a mitigation plan in place. We discussed that in the first quarter already, in May, but still, it's a completely different ballgame than in the first half.

Speaker #3: Basically because of the very high continuous volatility and challenging market environment. This is why we've also reduced our market assumptions for the second half of the year, as explained.

Speaker #4: So this is why we said, in terms of sales, we'll most probably come out slightly below the midpoint, and profitability in the upper half of the guidance range.

Speaker #3: And even under this consciously conservative assumptions, we confirm our guidance with the, let me say, additional details of assuming that under these conditions, or assumptions, sales will come in at the midpoint or slightly below the midpoint of our sales guidance, and profitability rather above the average towards the upper end of the corridor.

Speaker #4: So, talking volume—because you asked specifically—for the first half, now in total, the volume effect on sales was minus 3.3%. We expect this negative effect to be slightly lower in the second half.

Speaker #4: So we expect some improvement on the passenger car tire replacement side, but again, it will be in total below the prior year. And in terms of revaluation, because it was mentioned that it was a non-cash item in Q2, we will also have a positive revaluation effect in the second half.

Roland Welzbacher: In terms of revaluation, because it was mentioned that it was a non-cash item in Q2, we will also have a positive reevaluation effect in H2. The magnitude still remains to be seen, but I would say at least it is a mid-double-digit EUR million amount also in H2. On China, Christian, you want to take this?

Speaker #3: As you know, for us, Q3 and Q4 are decisive quarters, and August and September are obviously already very important for business will develop. I mean, it's definitely too early to tell, but at least the winter tire preorders are giving some hope that maybe the development is more positive than what we have assumed.

Speaker #4: The magnitude still remains to be seen, but I would say at least it's a mid-double-digit million euro amount, also in the second half.

Speaker #4: And on China, Christian, do you want to take this?

Christian Kötz: Yeah. Jose, before I talk about the situation in China and the status of our expansion plans, let me just add to what Roland said. Yes, we have consciously taken a conservative approach on our second year or H2, second half year assumptions. Why? This goes in line with what you have asked for. Because of the very high continuous volatility and challenging market environment. This is why we have also reused our market assumptions for H2 as explained. Even under these consciously conservative assumptions, we confirm our guidance with the, let me say, additional details of assuming that under these conditions or assumptions, sales will come in at the midpoint or slightly below the midpoint of our sales guidance and profitability rather above the average towards the upper end of the corridor.

Speaker #3: Yeah. So, José, before I talk about the situation in China and the status of our expansion plans, let me just add to what Roland said.

Speaker #3: But as I said, too early to tell. And this is why we have consciously taken a conservative assumption. Now to your question on the expansion plans in China.

Speaker #3: Yes, we have consciously taken a conservative approach on our second year or half or H2, second half year. Assumptions why, and this goes in line with what you've asked for.

Speaker #3: We continue to execute our expansion plans. So we are ramping now our plant in Hefei from roughly 15 million to 18 million PET tires per year.

Speaker #3: Basically, because of the very high continuous volatility and challenging market environment, we've also reduced our market assumptions for the second half of the year, as explained.

Speaker #3: This goes very, very smoothly. We are utilizing fully our capacities. As Roland said earlier, we are clearly outperforming the light vehicle production in OE.

Speaker #3: And even under these consciously conservative assumptions, we confirm our guidance with the, let me say, additional details of assuming that under these conditions or assumptions, sales will come in at the midpoint or slightly below the midpoint of our sales guidance, and profitability rather above the average towards the upper end of the corridor.

Speaker #3: So we are rather increasing our volumes in a declining production volume environment. And carefully balancing OE versus replacement volumes. And I'm very confident that we will continue to be able to fill, let me say, the plant and execute our expansions as indicated and planned.

Speaker #3: As you know, for us, Q3 and Q4 are decisive quarters, and August and September are obviously already very important for us. Let's see how the business will develop.

Christian Kötz: As you know, for us, Q3 and Q4 are decisive quarters, and August and September are obviously already very important for us, and let us see how the business will develop. It is definitely too early to tell, but at least the winter tire pre-orders are giving some hope that maybe the development is more positive than what we have assumed. As I said, too early to tell, this is why we have consciously taken a conservative assumption. Now to your question on the expansion plans in China. We continue to execute our expansion plans. We are ramping now our plant in Hefei from roughly 15 million to 18 million PLT tires per year. This goes very smoothly. We are utilizing fully our capacities.

Speaker #3: Thank you. Just a quick follow-up. The Chinese business, what's the split, please, between PLT and CVT, OE, and RT? If possible, just to give some broad indications.

Speaker #3: Is it mainly passenger car, and is it mainly OE at the moment? Or what's the split between OE and RT?

Speaker #3: I mean, it's definitely too early to tell, but at least the winter tire pre-orders are giving some hope that maybe the development is more positive than what we have assumed.

Speaker #1: José, which part of the business are you referring to? I didn't get that on the phone.

Speaker #3: Within the tire business, your expansion of the plant or your Chinese plant, is this mainly passenger car, or is it mainly truck? And what's the split, roughly, of your Chinese revenues?

Speaker #3: But as I said, it's too early to tell, and this is why we have consciously taken a conservative assumption. Now, to your question on the expansion plans in China.

Speaker #3: Is it mainly original equipment, or are we looking at more replacement? Thank you.

Speaker #3: We continue to execute our expansion plans. So we are ramping up our plant in Hefei from roughly 15 million to 18 million PET tires per year.

Speaker #1: Okay. So in China, we are purely focusing on PLT business. We are basically not selling truck tires. And as we have indicated or communicated earlier with the closure of our truck tire production in our Modipuram India plant, we are basically withdrawing or really reducing our overall truck tire APEC activities to a bare minimum.

Speaker #3: This goes very, very smoothly. We are utilizing fully our capacities, as Roland said earlier. We are clearly outperforming the light vehicle production in OE.

Christian Kötz: As Roland said earlier, we are clearly outperforming the light vehicle production in OE, so we are rather increasing our volumes in the declining production volume environment and carefully balancing OE versus replacement volumes and are very confident that we will continue to be able to fill, let me say, the plant and execute our expansions as indicated and planned.

Speaker #3: So, we are rather increasing our volumes in a declining production volume environment, and carefully balancing OE versus replacement volumes. I'm very confident that we will continue to be able to fill, let me say, the plant and execute our expansions as indicated and planned.

Speaker #1: But China only, it's pure PLT, no truck volumes. Second, OE replacement. I mean, normally our split is between 25 and 75. In China, we are a little bit more OE heavy with outgoing and too much details.

Speaker #3: Thank you. Just a quick follow-up. The Chinese business—what's the split, please, between PLT and CVT, OE, and RT? If possible, just to give some broad indications.

José Asumendi: Thank you. Just a quick follow-up. The Chinese business, what's the split, please, between PLT and CVT, OE and RT? If possible, just to give some broad indications. Is it mainly passenger car and is it mainly OE at the moment, or what's the split between OE and?

Speaker #1: Why? Because we are still trying, obviously, to subsid or, let me say, to support potential future replacement growth by slightly overproportional OE exposure. But we are also benefiting quite a lot from all the export volumes from China.

Speaker #3: Is it mainly passenger car, and is it mainly OE at the moment? Or what's the split between OE and RT?

Roland Welzbacher: Jose, which part of the business are you referring to? I didn't get that on the phone.

Speaker #4: José, which part of the business are you referring to? I didn't catch that on the phone.

Speaker #3: Within the tire business, your expansion of the plant, or your Chinese plant—is this mainly passenger car, or is it mainly truck? And what's the split, roughly, of your Chinese revenues?

José Asumendi: Within the tire business, your expansion of the plant or your Chinese plant, is this mainly passenger car or is it mainly truck? What's the split, roughly, of your Chinese revenues? Is it mainly original equipment or are we looking at more replacement? Thank you.

Speaker #1: As we discussed, and communicated in the past, we are nicely represented at the Chinese OEMs and we are heavily used also on their export vehicles, mainly to Europe, which is helping us, obviously, also to increase our volumes.

Speaker #3: Is it mainly original equipment, or are we looking at more replacement? Thank you.

Speaker #1: And it's also part of the reasons why in China we have this higher share of OE versus replacement business. But as everywhere in the world, replacement is by far above the 50% mark of our total volumes in China.

Speaker #4: Okay. So in China, we are purely focusing on PLT business. We are basically not selling truck tires. And as we've indicated or communicated earlier, with the closure of our truck tire production in our Modi Puram, India plant, we are basically withdrawing or really reducing our overall truck tire APAC activities to a bare minimum.

Christian Kötz: Okay. In China, we are purely focusing on PLT business. We are basically not selling truck tires. As we have indicated or communicated earlier with the closure of our truck tire production in our Modipuram, India plant, we are basically withdrawing or really reducing our overall truck tire Asia Pacific activities to a bare minimum. China only, it's pure PLT, no truck volumes. Second, OE replacement. Normally our split is between 25 and 75. In China, we are a little bit more OE heavy, without going in too much details. Why? Because we are still trying, obviously, to subset or let me say, to support potential future replacement growth by a slightly over proportional OE exposure. We are also benefiting quite a lot from all the export volumes from China.

Speaker #3: Thank you very much for your helpful.

Speaker #1: Thank you, José.

Speaker #2: So the next question comes from Harry Martin from Bernstein. You can speak.

Speaker #3: Oh, yeah. Thanks for taking my questions. The first one I had is on the high-value segment in Europe. We have seen some very strong selling data in Europe this year of double digits year to date.

Speaker #4: But in China only, it's purely PLT, with no truck volumes. Second, OE replacement. Normally, our split is between 25 and 75. In China, we are a little bit more OE-heavy, without going into too much detail.

Speaker #3: So are you matching the market growth in Europe? Do you have any comments or anything else you can share on market share and the opportunity in the high-value segment specifically?

Speaker #4: Why? Because we are still trying, obviously, to subsidize—or let me say, to support—potential future replacement growth by slightly over-proportional OE exposure. But we are also benefiting quite a lot from all the export volumes from China.

Speaker #3: Secondly, on US trucks, I just wanted to think about the implications of increasing the original equipment outlook. Cutting the replacement, how different is the margin mix between original equipment and replacement for you in that segment?

Speaker #4: As we discussed and communicated in the past, we are nicely represented at the Chinese OEMs, and we are heavily used also on their export vehicles, mainly to Europe, which is helping us, obviously, also to increase our volumes.

Christian Kötz: As we discussed and communicated in the past, we are nicely represented at the Chinese OEMs, and we are heavily used also on their export vehicles, mainly to Europe, which is helping us obviously also to increase our volumes, and it's also part of the reasons why in China we have this higher share of OE versus replacement business. As everywhere in the world, replacement is by far above the 50% mark of our total volumes in China.

Speaker #3: And then would it be correct to assume the relative market share would be higher in original equipment with a much lower import share? And then the final question just a clarification on really on the raw material impact.

Speaker #4: And it's also part of the reason why, in China, we have a higher share of OE versus replacement business. But, as everywhere in the world, replacement is by far above the 50% mark of our total volumes in China.

Speaker #3: So is the underlying assumption around a low to mid triple digit million amount still consistent as it was in Q1? I think that's based on 85 dollars oil.

Speaker #3: Thank you very much for your help.

José Asumendi: Thank you very much. Very helpful.

Speaker #3: But if you could give any more color on the other assumptions around things like natural rubber that go into that guidance, that would be very helpful.

Speaker #4: Thank you, José.

Christian Kötz: Thank you, José.

Speaker #2: So, the next question comes from Harry Martin from Bernstein. You can speak.

Operator: The next question comes from Harry Martin from Bernstein. You can speak.

Speaker #3: Thank you.

Speaker #1: Okay. Then let me, Harry, let me start with the first two questions and Roland will continue. So first, the high-value segment in Europe, I mean, overall, I would say we are broadly in line with market development.

Speaker #3: Oh, yeah. Thanks for taking my questions. The first one I have is on the high-value segment in Europe. We have seen some very strong selling data in Europe this year, with double-digit growth year to date.

Harry Martin: Oh, yeah. Thanks for taking my questions. The first one I had is on the high-value segment in Europe. We have seen some very strong selling data in Europe this year of double digits year to date. Are you matching the market growth in Europe? Do you have any comments or anything else you can share on market share and the opportunity in the high-value segment specifically? Secondly, on US trucks, I just wanted to think about the implications of increasing the original equipment outlook, cutting the replacement. How different is the margin mix between original equipment and replacement for you in that segment? Would it be correct to assume the relative market share would be higher in original equipment with a much lower import share? The final question, just a clarification one really on the raw material impact.

Speaker #3: So, are you matching the market growth in Europe? Do you have any comments, or anything else you can share, on market share and the opportunity in the high-value segment specifically?

Speaker #1: We have still some let me say, improvement potentials, which we are trying to utilize by extending our product portfolio offering. So especially on the summer side, but also on the all-season side, as you know, we have been rather a late entry into the all-season segment due to our history let me say, of focusing very much on the winter tire segment.

Speaker #3: Secondly, on US trucks, I just wanted to think about the implications of increasing the original equipment outlook. Cutting the replacement—how different is the margin mix between original equipment and replacement for you in that segment?

Speaker #3: And then, would it be correct to assume the relative market share would be higher in original equipment, with a much lower import share? And then, the final question is just a clarification, really, on the raw material impact.

Speaker #1: We are closing this gap very fast, which really helps now, I think, to outperform also in terms of sales development, in terms of Euro the market.

Speaker #1: And this is an area where with extended product portfolio, we definitely will have a chance to further grow or continuously grow our UHP share.

Speaker #3: So, is the underlying assumption around a low to mid triple-digit million amount still consistent, as it was in Q1? I think that's based on $85 oil.

Harry Martin: Is the underlying assumption around a low to mid triple-digit million amount still consistent as it was in Q1? I think that is based on $85 oil. If you could give any more color on the other assumptions around things like natural rubber that go into that guide, that would be very helpful. Thank you.

Speaker #1: But overall, we are in line with market development in the high-value segment. US truck, so a little different than in the PLT world. The difference between OE profitability and truck profitability, at least for us, is not that big.

Speaker #3: But if you could give any more color on the other assumptions around things like natural rubber that go into that guide, that would be very helpful.

Speaker #3: Thank you.

Speaker #4: Okay. Then let me, Harry, let me start with the first two questions, and Roland will continue. So, first, the high-value segment in Europe—I mean, overall, I would say we are broadly in line with market development.

Christian Kötz: Harry, let me start with the first two questions, then Roland will continue. First, the high-value segment in Europe. Overall, I would say we are broadly in line with market development. We have still some, let me say, improvement potentials, which we are trying to utilize by extending our product portfolio offering. Especially on the summer side, but also on the all-season side. As you know, we have been rather a late entry into an all-season segment due to our history, let me say, of focusing very much on the winter tire segment. We are closing this gap very fast, which really helps now, I think, to outperform also in terms of sales development, in terms of euro, the market. This is an area where with extended product portfolio, we definitely will have a chance to further grow or continuously grow our UHP share.

Speaker #1: We have also a very profitable, satisfying OE truck standalone businesses. It really depends also on the replacement side, which customers you sell to, which brands do you use.

Speaker #4: We still have some, let me say, improvement potentials, which we are trying to utilize by extending our product portfolio offering. Especially on the summer side, but also on the all-season side. As you know, we have been rather a late entry into the all-season segment due to our history, let me say, of focusing very much on the winter tire segment.

Speaker #1: So the difference between OE and replacement for us in truck is especially in the US much smaller than what we used to see and what you're used to probably on the PLT side.

Speaker #1: So with this therefore increasing amount of OE volumes compared to still, let me say, under pressure replacement market, this will not lead to a margin deterioration for us as far as truck profitability in the US is concerned.

Speaker #4: We are closing this gap very fast, which really helps now, I think, to outperform also in terms of sales development, in terms of euro, the market.

Speaker #4: And this is an area where, with an extended product portfolio, we definitely will have a chance to further grow or continuously grow our UHP share.

Speaker #1: So this is what I would I hope this addresses your questions on the first two. And then maybe Roland, you take the question on the raw material side.

Speaker #4: But overall, we are in line with market development in the high-value segment. U.S. truck is a little different than in the PLT world. The difference between OE profitability and truck profitability, at least for us, is not that big.

Christian Kötz: Overall, we are in line with market development in the high-value segment. US truck. A little different than in the PLT world. The difference between OE profitability and truck profitability, at least for us, is not that big. We have also a very profitable, satisfying OE truck and trailer businesses. It really depends also on the replacement side, which customers you sell to, which brands do you use. The difference between OE and replacement for us in truck is, especially in the US, much smaller than what we used to see and what you're used to probably on the PLT side. With this therefore increasing amount of OE volumes compared to a still, let me say, under pressure replacement market, this will not lead to a margin deterioration for us as far as truck profitability in the US is concerned.

Speaker #2: Yeah. Oh, Harry. So when the crisis started in Q1, we started to analyze what that means for county. And we made an assumption on the raw material energy and transport cost increase.

Speaker #2: And we said it would be a low to mid triple digit Euro million amount based on the assumption that the oil price average in total would be around 85 dollars per barrel.

Speaker #2: Now we have seen lately a lot of volatility on the oil price side. It came down pretty nicely in the last days. I think today is trading around 84.

Speaker #4: We also have a very profitable, satisfying OE truck standalone business. It really also depends, on the replacement side, which customers you sell to and which brands you use.

Speaker #2: The base assumption of 85 average is still our assumption going forward. There's no change. We believe for this to happen, oil prices need to go further down slightly in Q4, which this is our expectation.

Speaker #4: So the difference between OE and replacement for us in truck is, especially in the US, much smaller than what we used to see and what you're probably used to on the PLT side.

Speaker #2: As hopefully the crisis is continue to ease a little bit. And that also means our mitigation plan we put in place with a high coverage ratio of the additional cost would hold for the second quarter.

Speaker #4: So, with this therefore, the increasing amount of OE volumes compared to the still, let me say, under-pressure replacement market, this will not lead to a margin deterioration for us as far as truck profitability in the U.S. is concerned.

Speaker #2: If this was the intention of the question.

Speaker #3: Great. Thank you very much.

Speaker #1: Okay.

Speaker #2: So the next question comes from Thomas Besson from Kepler Gevuru. The status years.

Speaker #4: So, this is what I would— I hope this addresses your questions on the first two. And then maybe, Roland, you can take the question on the raw material side.

Speaker #3: Thank you. Hi, it's Thomas at Kepler Gevuru. I have three questions as well, please. I'd like to start with a comment on your trading activities.

Christian Kötz: I hope this addresses your questions on the first two, and then maybe Roland, you take the question on the raw material side.

Speaker #4: Yeah. Oh, Harry. So, when the crisis started in Q1, we started to analyze what that means for the company. And we made an assumption on the raw material, energy, and transport cost increase.

Roland Welzbacher: Harry. When the crisis started in Q1, we started to analyze what that means for Conti, and we made an assumption on the raw material, energy, and transport cost increase. We said it would be a low to mid triple-digit EUR million amount based on the assumption the oil price average in total would be around $85 per barrel. We have seen lately a lot of volatility on the oil price side. It came down pretty nicely in the last days. We think today it's trading around 84. The base assumption of 85 average is still our assumption going forward. There's no change. We believe for this to happen, oil prices need to go further down slightly in Q4, which this is our expectation as hopefully the crisis is continue to ease a little bit.

Speaker #3: Your French competitor talked about a very strong June versus a relatively mediocre April and May. Could you talk about your own experience about June and July versus April and May, and is that part of what you were mentioning as maybe being overly conservative?

Speaker #4: And we said it would be a low- to mid-triple-digit Euro million amount, based on the assumption that the oil price average in total would be around $85 per barrel.

Speaker #3: The first question, the second, one of you guys has been on Bloomberg and talked about traction of M&A opportunities in the US and in the specialty tire business.

Speaker #4: Now, we have seen lately a lot of volatility on the oil price side. It came down pretty nicely in the last days. I think today it is trading around $84.

Speaker #4: The base assumption of an 85 average is still our assumption going forward. There's no change. We believe that for this to happen, oil prices need to go down slightly further in Q4, which is our expectation.

Speaker #3: Could you talk about whether Conti could effectively be eventually active on M&A before the deliberating targets are achieved, or what kind of targets you would consider acquiring in 2027, 2028?

Speaker #4: As, hopefully, the crisis continues to ease a little bit. And that also means our mitigation plan, which we put in place with a high coverage ratio of the additional cost, would hold for the second quarter.

Roland Welzbacher: That also means our mitigation plan we put in place with a high coverage ratio of the additional cost would hold for Q2, if this was the intention of the question.

Speaker #3: And lastly, I understand you want to do a call on that. It's great. But is it possible to have an idea of the additional disclosures you plan to give us about the tire business?

Speaker #4: If this was the intention of the question.

Speaker #3: Great. Thank you very much.

Harry Martin: Great. Thank you very much.

Speaker #4: Okay.

Roland Welzbacher: Okay.

Speaker #3: Are you going to provide us with margins by region? Are you going to break down your margins as well for trucks and specialty on top of passenger tires, or do you want to keep that for that call?

Operator: The next question comes from Thomas Besson from Kepler Cheuvreux. The stage is yours.

Speaker #2: So, the next question comes from Thomas Besson from Kepler Cheuvreux. The status U.S.?

Operator: The next question comes from Thomas Besson from Kepler Cheuvreux. The stage is yours.

Speaker #3: Thank you, Harry, it's the best at Kepler Cheuvreux. I have three questions as well, please. I'd like to start with a comment on your trading activities.

Thomas Besson: Thank you. Hi, it's Thomas at Kepler Cheuvreux. I have three questions as well, please. I'd like to start with a comment on your trading activities. Your French competitor talked about a very strong June, versus a relatively mediocre April and May. Could you talk about your own experience about June and July versus April and May? Is that part of what you were mentioning as maybe being overly conservative? The first question. The second question. One of you guys has been on Bloomberg and talked about traction of M&A opportunities in the US and in the specialty tire business. Could you talk about whether Conti could effectively be eventually active on M&A before the deleveraging targets are achieved? What kind of targets you would consider acquiring in 2027, 2028? Lastly, I understand you want to do a call on that, and it's great.

Speaker #3: Thank you.

Speaker #1: Thomas, then let me get started. Talking first, I think what your question June, July trading versus a week April, May trading, I think that was the question.

Speaker #3: Your French competitor talked about a very strong June versus a relatively mediocre April and May. Could you talk about your own experience for June and July versus April and May?

Speaker #1: And I believe that's probably more related to Europe. I didn't really gut whether this was European specific or global. I assume that was more a European related question.

Speaker #3: And is that part of what you were mentioning as maybe being overly conservative? That's the first question. The second—one of you has been on Bloomberg and talked about traction of M&A opportunities in the U.S. and in the specialty tire business.

Speaker #1: We do see, let me say, a slightly stabilization and improvement in June and July versus April, May. Do we see step change improvements? No.

Speaker #3: Could you discuss whether the company could effectively be eventually active on M&A before the deliberated targets are achieved? Or what kind of targets you would consider acquiring in ’27, ’28?

Speaker #1: And this is why, as Roland said earlier, we continue to assume that in the second half of the year, volumes will be negative. Year over year.

Speaker #1: But less negative, let me say, compared to last year, compared to what we've seen in H1. So as said, maybe we are a little bit too conservative.

Speaker #3: And lastly, I understand you want to do a call on that, which is great. But is it possible to have an idea of the additional disclosures you plan to give us about the tire business?

Thomas Besson: Is it possible to have an idea of the additional disclosures you plan to give us about this tire business? Are you going to provide us with the margins by region? Are you going to break down your margins as well for trucks and the specialty on top of passenger tires, or do you want to keep that for that call? Thank you.

Speaker #1: On the other side, we have seen so much volatility and so much change short notice that, as I said earlier and I was trying to explain earlier, we've consciously have taken a conservative assumption I think it's fair to say.

Speaker #3: Are you going to provide us with margins by region? Are you going to break down your margins as well for trucks and specialty, on top of passenger tires?

Speaker #3: Or do you want to keep that for that call? Thank you.

Speaker #1: And maybe one word on the M&A activity side. I mean, to be honest, there is no update compared to what we've always said. What did we say?

Speaker #4: Thomas, let me get started. First, I think your question was about trading in June and July versus trading in April and May. I believe that was the question.

Christian Kötz: Thomas, let me get started. Talking first, I think, what's your question? June, July trading versus a weak April, May trading. I think that was the question. I believe that's probably more related to Europe. I didn't really get whether this was European specific or global. I assume that was more a European-related question. We do see, let me say, a slight stabilization and improvement in June and July versus April, May. Do we see step change improvements? No. This is why, as Roland said earlier, we continue to assume that in H2, volumes will be negative year over year, but less negative, let me say, compared to last year, compared to what we have seen in H1. As said, maybe we are a little bit too conservative.

Speaker #1: We always said that M&A or inorganic growth is part of the tire industry. It has been part of Conti's history forever. And we will continue to evaluate if there are options which do complement and fit to our portfolio.

Speaker #4: And I believe that's probably more related to Europe. I didn't really get whether this was European-specific or global. I assume that was more a European-related question.

Speaker #4: We do see, let me say, a slight stabilization and improvement in June and July versus April and May. Do we see step-change improvements? No.

Speaker #1: What would fit? Also no change to what I've always said. There's a regional and, let me say, a product perspective. On the regional side, as you all know, we are underrepresented in Asia.

Speaker #4: And this is why, as Roland said earlier, we continue to assume that in the second half of the year, volumes will be negative year over year.

Speaker #1: On the product side, we are specifically underrepresented on the commercial specialty tire side. So everything which would fit would be obviously an option. Is this now a change priority compared to after the Conti tech sales or being in process of hopefully closing the Conti tech sales soon?

Speaker #4: But less negative, let me say, compared to last year and compared to what we've seen in H1. So, as said, maybe we are a little bit too conservative.

Speaker #4: On the other side, we have seen so much volatility and so much change at short notice that, as I said earlier and was trying to explain earlier, we have consciously taken a conservative assumption—I think it's fair to say.

Christian Kötz: On the other side, we have seen so much volatility and so much change short notice that as I said earlier, I was trying to explain earlier, we consciously have taken a conservative assumption. I think it's fair to say. Maybe one word on the M&A activity side. To be honest, there is no update compared to what we've always said. What did we say? We always said that M&A or inorganic growth is part of the tire industry. It has been part of Conti's history forever. We will continue to evaluate if there are options which do complement and fit to our portfolio. What would fit? Also, no change to what I've always said. There's a regional and, let me say, a product perspective. On the regional side, as you all know, we are underrepresented in Asia.

Speaker #1: No. This continues to be an option. It's not a priority for the time being. We will continue to work on our priorities first. This means closing and competing and completing the transformation doing our operational necessities.

Speaker #4: And maybe one word on the M&A activity side. I mean, to be honest, there is no update compared to what we've always said. What did we say?

Speaker #1: But obviously in the long run, it's always an option if the news or what you have heard indicates that this may have now triggered a change in terms of priorities and timing.

Speaker #4: We always said that M&A, or inorganic growth, is part of the tire industry. It has been part of Continental's history forever, and we will continue to evaluate if there are options which do complement and fit into our portfolio.

Speaker #1: Then I would say that is not the case. Maybe a word then Roland from you on the changes in our disclosure policies and structures?

Speaker #2: Yeah. I'll be add to this. Thomas, I got the question this morning on Bloomberg and it was a rather general question. I gave a rather general answer.

Speaker #2: I probably should have said it's not the number one priority. So there's no change in scope and focus. And also not in terms of priority, of course.

Speaker #4: What would fit? Also, no change to what I've always said. There's a regional, and let me say, a product perspective. On the regional side...

Speaker #2: With regard to disclosure and reporting going forward, as we mentioned, we plan that starting in Q3 will provide more details on the regional developments.

Speaker #4: As you all know, we are underrepresented in Asia. On the product side, we are specifically underrepresented on the commercial specialty tire side. So everything which would fit would obviously be an option.

Christian Kötz: On the product side, we are specifically underrepresented on the commercial specialty tire side. Everything which would fit would be obviously an option. Is this now a change priority compared to after the ContiTech sales or being in process of hopefully closing the ContiTech sales soon? No. This continues to be an option. It's not a priority for the time being. We will continue to work on our priorities first. This means closing and completing the transformation, doing our operational necessities. Obviously in the long run, it's always an option if the news or what you have heard indicates that this may have now triggered a change in terms of priorities and timing, then I would say that is not the case. Maybe a word then, Roland, from you on the changes in our disclosure policies and structures.

Speaker #2: In order to help the analyst community to prepare and build models and before we actually come with a Q3 figures, we most likely will invite for some sort of capital market update or bring down call pretty soon in order to give you the chance.

Speaker #4: Is this now a change in priority compared to after the ContiTech sale, or being in the process of hopefully closing the ContiTech sale soon? No, this continues to be an option.

Speaker #2: And before we go into the quiet period to tell you a little bit more about the past and provide more details. On the region so you can actually start preparing for this way before.

Speaker #4: It's not a priority for the time being. We will continue to work on our priorities first. This means closing, competing, and completing the transformation—doing our operational necessities.

Speaker #3: Yeah. And this will include margin breakdowns as well. Yeah. On the regional view, on the regional level, I think it's fair to say don't expect significant details on the product segment level.

Speaker #4: But obviously, in the long run, it's always an option if the news or what you have heard indicates that this may have now triggered a change in terms of priorities and timing.

Speaker #2: Yeah, exactly.

Speaker #3: Great. Thank you very much.

Speaker #2: You're welcome, Thomas.

Speaker #4: Then I would say that is not the case. Maybe a word, then, Roland, from you on the changes in our disclosure policies and structures?

Speaker #1: Next question is from Ross MacDonald from City. The stage is yours.

Speaker #4: Yeah, no, let me add to this. Thomas, I got the question this morning on Bloomberg, and it was a rather general question. I gave a rather general answer.

Roland Welzbacher: Yeah. I'll happy answer this. Thomas, I got the question this morning on Bloomberg. It was a rather general question. I gave a rather general answer. I probably should have said it's not the number one priority. There's no change in scope and focus, and also not in terms of priority, of course. With regard to disclosure and reporting going forward, as we mentioned, we plan that starting in Q3, we'll provide more details on the regional developments.

Speaker #3: Yes. Thank you very much. My first question is just coming back onto the revenue bridge actually and just picking up on the comments around where we're tracking in the full year guide.

Speaker #4: I probably should have said it's not the number one priority, so there's no change in scope and focus, and also not in terms of priority, of course.

Speaker #3: On revenues, I think Roland, you said we're in the middle, maybe slightly lower half of the guidance range. So if I do the maths, that would imply to hit the midpoint, around about 7.1 billion of revenue from the tire business, which would be up about 1% versus the second half of last year.

Speaker #4: With regard to disclosure and reporting going forward, as we mentioned, we plan that starting in Q3 we will provide more details on the regional developments.

Speaker #4: In order to help the analyst community prepare and build models, and before we actually come with the Q3 figures, we most likely will invite you for some sort of capital market update or breakdown call pretty soon, in order to give you the chance.

Speaker #3: So just interesting, take your volume comments on board. It sounds like volume will be a negative in the second half. Let's say minus one and a half, minus two.

Roland Welzbacher: In order to help the analyst community to prepare and build models, and before we actually come with the Q3 figures, we most likely will invite for some sort of capital market update, a bring down call pretty soon in order to give you the chance, and before we go into the quiet period, to tell you a little bit more about the past and provide more details on the region so you can actually start preparing for this way before.

Speaker #3: How do I think about the price mix contribution? It feels like price mix should step up versus Q2's maybe 3%, something like that is more appropriate for the second half.

Speaker #4: And before we go into the quiet period, I'd like to tell you a little bit more about the past and provide more details on the region, so you can actually start preparing for this well before.

Speaker #3: So I'd be interested what we should pencil in on the price mix side. And then when I add those two up, that would imply that we're kind of maybe slightly towards the middle of the guidance here rather than the lower end.

Speaker #3: Yeah. And this will include margin breakdowns as well. Yeah. On the regional view, on the regional level, I think it's fair to say, don't expect significant details on the product segment level.

Christian Kötz: This will include margin breakdowns as well. Yeah.

Roland Welzbacher: Yeah.

Christian Kötz: On the regional view, on the regional level, I think it's fair to say, don't expect significant details on the product segment level.

Speaker #3: So I'd be interested in your comments there. And that obviously linked to that just if you could update on how you see the FX headwinds for the second half.

Speaker #4: Yeah, exactly.

Roland Welzbacher: Yeah, exactly.

Speaker #3: Great. Thank you very much.

Thomas Besson: Great. Thank you very much.

Speaker #3: Next question just on capex. If I look at the CMD targets from last year, the tire business was talking about midterm capex to sales of around about 7%.

Speaker #4: You're welcome, Thomas.

Christian Kötz: You're welcome, Thomas.

Speaker #1: Next question is from Ross McDonald from Citi. The stage is yours.

Operator: Next question is from Ross MacDonald from Citi. The stage is yours.

Speaker #3: You're obviously guiding 7 to 8 now for the tire business. So if you could comment on whether this is a sort of transitory period of higher investment spend and you're still happy with that 7% level, would be keen to understand that.

Speaker #3: Yes, thank you very much. My first question is just coming back to the revenue bridge, actually, and picking up on the comments around where we're tracking in the full-year guide.

Ross MacDonald: Yes. Thank you very much. My first question is just coming back onto the revenue bridge, actually, and just picking up on the comments around where we're tracking in the full year guide. On revenues, I think, Roland, you said we're in the middle, maybe slightly lower half of the guidance range. If I do the maths, that would imply to hit the midpoint roundabout EUR 7.1 billion of revenue from the tire business, which would be up about 1% versus the H2 of last year. Just interesting. I take your volume comments on board. It sounds like volume will be a negative in the H2, let's say, -1.5, -2. How do I think about the price mix contribution? It feels like price mix should step up versus Q2, so maybe 3%, something like that, is more appropriate for the H2.

Speaker #3: On revenues, I think, Roland, you said we're in the middle, maybe slightly lower half of the guidance range. So, if I do the maths, that would imply, to hit the midpoint, around €7.1 billion of revenue from the tire business, which would be up about 1% versus the second half of last year.

Speaker #3: And then the final question is just on the other slash holding consolidation line. Maybe more for 2027, but obviously now that you're cleaner and leaner business, how should we think about the full year 27 central cost line?

Speaker #3: So, just interesting—I take your volume comments on board. It sounds like volume will be a negative in the second half, let's say minus 1.5, minus 2.

Speaker #3: Can that can we get that number down? It's obviously 100 bits at the group level, but just curious if there's any juice you can squeeze on that number.

Speaker #3: Thank you.

Speaker #3: How should I think about the price/mix contribution? It feels like price/mix should step up versus Q2’s, maybe 3%. Something like that is more appropriate for the second half.

Speaker #2: Okay, Ross. Thanks a lot. Let me start with the first one, guidance second half. And so more details. So on the volume side, as I said earlier, I would expect a lower but still negative effect compared to the first half.

Speaker #3: So, I'd be interested in what we should pencil in on the price/mix side. And then, when I add those two up, that would imply that we're kind of maybe slightly towards the middle of the guidance here, rather than the lower end.

Ross MacDonald: Be interested what we should pencil in on the price mix side. When I add those two up, that would imply that we are maybe slightly towards the middle of the guidance here rather than the lower end. It would be interesting your comments there. Obviously linked to that, just if you could update on how you see the FX headwinds for the H2. Next question just on CapEx. If I look at the CMD targets from last year, the tire business was talking about midterm CapEx to sales of around about 7%. You are obviously guiding 7% to 8% now for the tire business. If you could comment on whether this is a sort of transitory period of higher investment spend and you are still happy with that 7% level. We would be keen to understand that.

Speaker #2: On the price mix side, it will also be a little bit lower than in the first half according to our expectations. First of all, we have seen a fantastic price mix effect in Q3 and a pretty good price effect in Q4 last year.

Speaker #3: So be interested in your comments there. And then obviously link to that just if you could update on how you see the FX headwinds for the second half.

Speaker #2: And it's really tough to bid this. On the other hand, what we might see is a little bit of a higher drop on price mix side than usual because we have not only product, we also have channel and regional effects playing a role here.

Speaker #3: Next question, just on CapEx. If I look at the CMD targets from last year, the Tire business was talking about midterm CapEx to sales of around about 7%.

Speaker #2: On the FX side, however, and this has been really a drag for many, many months now, this is now turning positive actually, slightly positive on the EBIT side in the second half.

Speaker #3: You're obviously guiding 7% to 8% now for the tire business. So, if you could comment on whether this is a sort of transitory period of higher investment spend and if you're still happy with that 7% level, I would be keen to understand that.

Speaker #2: So no hate rent anymore. It would rather be a slight tailwind. I want to take the capex question, Christian.

Speaker #3: And then the final question is just on the other/holding consolidation line. Maybe more for 2027, but obviously now that you're a cleaner, leaner business, how should we think about the full year 2027 central cost line?

Ross MacDonald: The final question is just on the other/holding consolidation line, maybe more for 2027. Obviously now that you are a cleaner, leaner business, how should we think about the full year 2027 central cost line? Can we get that number down? It is obviously 100 basis points at the group level, but just curious if there is any juice you can squeeze on that number. Thank you.

Speaker #3: Yeah. So Ross, I can talk about the capex. No, I mean, our 7% as the average midterm assumption still holds true and is valid.

Speaker #3: Can we get that number down? It's obviously 100 bits at the group level, but just curious if there's any juice you can squeeze on that number.

Speaker #3: Why are we a little higher now short term? It's basically because we are investing in two of our Asian footprint and making some real step changes there.

Speaker #3: Thank you.

Speaker #4: Okay, Ross. Thanks a lot. Let me start with the first one: guidance for the second half and some more details. So, on the volume side, as I said earlier, I would expect a lower but still negative effect compared to the first half.

Roland Welzbacher: Okay, Ross. Thanks a lot. Let me start with the first one, guidance H2 and some more details. On the volume side, as I said earlier, I would expect a lower but still negative effect compared to the H1. On the price mix side, it will also be a little bit lower than in the H1, according to our expectations. First of all, we have seen a fantastic price mix effect in Q3 and a pretty good price effect in Q4 last year, and it is really tough to beat this. On the other hand, what we might see is a little bit of a higher drop on price mix side than usual because we have not only product, we also have channel and regional effects playing a role here.

Speaker #3: We talked about. Our step, the next step we are doing in China. So from the 15 to the 18 million, we've also decided to pull ahead the next expansion step of our rayon plant in Thailand.

Speaker #4: On the price/mix side, it will also be a little bit lower than in the first half, according to our expectations. First of all, we have seen a fantastic price/mix effect in Q3 and a pretty good 'bricks' effect in Q4 last year.

Speaker #3: You probably know we have closed our Malaysian PLT factory by the end of last year and a consolidating a lot of the volumes into our more efficient rayon plant.

Speaker #3: So to be able to basically in a dense scale, rayon also to a mega plant as quickly as possible and serve the South. Let me say market including then also Korea and parts of also Australia and these parts of the world out of our Thailand factory where we have opportunities to utilize the profitable growth.

Speaker #4: And it's really tough to bid this. On the other hand, what we might see is a little bit of a higher drop on the price/mix side than usual, because we have not only product, we also have channel and regional effects playing a role here.

Speaker #4: On the FX side, however—and this has really been a drag for many, many months now—this is now turning positive, actually, slightly positive on the EBIT side in the second half.

Roland Welzbacher: On the FX side, however, and this has been really a drag for many months now, this is now turning positive, actually, slightly positive on the EBIT side in the H2. No headwind anymore. It would rather be a slight tailwind. Want to take the CapEx question, Christian?

Speaker #4: So no headwind anymore. It would rather be a slight tailwind. I want to take the CapEx question, Christian.

Speaker #3: Let me say the market provides. So that's why short term we are rather a little bit above the average. But in the long run, the 7% assumption is still valid and is still what we believe is a healthy investment rate.

Speaker #3: Yeah. So Ross, I can talk about the CapEx. No, I mean, our 7% as the average midterm assumption still holds true and is valid.

Christian Kötz: Yeah. Also I can talk about the CapEx. No, our 7% as the average midterm assumption still holds true and is valid. Why are we a little higher now short term? It's basically because we are investing into our Asian footprint, and making some real step changes there. We talked about the next step we are doing in China. From EUR 15 to EUR 18 million. We've also decided to pull ahead the next expansion step of our Rayong plant in Thailand. You probably know we have closed our Malaysian PLT factory by the end of last year and are consolidating a lot of the volumes into our more efficient Rayong plant.

Speaker #3: Why are we a little higher now short-term? It's basically because we are investing into our Asian footprint and making some real step changes there.

Speaker #3: Central costs, the word.

Speaker #2: Yeah, I'll take this. So finally, holding costs, you probably have noticed that we had some positive one-time effects in Q2. We got a reimbursement on the insurance side on diesel and we also had, because we started sectorization, so putting central function from holding into the sector in the second quarter, we've had still higher cost of the holding, which now went into the different sectors, went away with automotive, will partly go with the company tech, and will also remain with tires.

Speaker #3: We talked about our step, the next step we are doing in China. So from the 15 to the 18 million, we've also decided to pull ahead the next expansion step of our Rayong plant in Thailand.

Speaker #3: You probably know we closed our Malaysian PLT factory by the end of last year and are consolidating a lot of the volumes into our more efficient Rayong plant.

Speaker #2: So looking at 2027, I would expect 30, 35 million quarterly holding costs going forward for 27. Of course, we're trying to drive this down over time a little bit.

Speaker #3: So, to be able to basically, on a dense scale, ramp Rayong also to a mega plant as quickly as possible and serve the south—let me say, markets including then also Korea and parts of Australia and these parts of the world—out of our Thailand factory, where we have opportunities to utilize the profitable growth.

Christian Kötz: To be able to basically in a dense scale, Rayong also to a mega plant as quickly as possible and serve the South, let me say, market including then also Korea and parts of Australia and these parts of the world out of our Thailand factory where we have opportunities to utilize the profitable growth, let me say, the market provides. That's why short term, we are rather a little bit above the average. In the long run, the 7% assumption is still valid and is still what we believe is a healthy investment rate. Central costs. Go ahead.

Speaker #2: So just shy of 1% of net sales, I think is a fair assumption.

Speaker #3: With the clear intent, obviously, as you said, Roland, to become more efficient on that line item as well. But first of all, we need to confirm and complete our transformation.

Speaker #3: Before we can more actively work on that part of the business as well. Understood. Thank you. Can I maybe just check on the FX, given that's turning to a tailwind?

Speaker #3: Is there any change in the drop throughs we should assume into the EBIT line from FX or maybe a quick update on how that drops?

Speaker #3: Let me say the market provides. So that's why, in the short term, we are rather a little bit above the average. But in the long run, the 7% assumption is still valid and is still what we believe is a healthy investment rate.

Speaker #3: Thanks.

Speaker #2: Yeah. It dropped normally 30, 40% roughly. I would assume similar drop now also in the second half. I don't see a big difference. I mean, obviously depends also which currency pair you look at.

Speaker #3: Central costs, the word.

Roland Welzbacher: I'll take this. Finally, holding costs. You probably have noticed that we had some positive one-time effects in Q2. We got a reimbursement on the insurance side on diesel, and we also had, because we started sectorization, putting central function from holding into the sector in Q2, we had still higher cost of the holding, which now went into the different sectors, went away with Automotive, will partly go away to ContiTech and will also remain with Tires. Looking at 2027, I would expect EUR 30 to 35 million quarterly holding costs going forward for 2027. Of course, we're trying to drive this down over time a little bit. Just shy of 1% of net sales, I think is a fair assumption.

Speaker #4: Yeah, I'll take this. So finally, holding costs—you probably have noticed that we had some positive one-time effects in Q2. We got a reimbursement on the insurance side on diesel, and we also had, because we started sectorization—so putting central functions from holding into the sector—in the second quarter, we've had still higher costs at the holding, which now went into the different sectors. Those costs went away with Automotive, will partly go with ContiTech, and will also remain with Tires.

Speaker #3: Absolutely.

Speaker #2: So when you consider our footprint in US versus Europe, in terms of production versus sales, obviously drop through tends to be a little higher.

Speaker #2: Also that works in both directions. Again, depends very much on where exactly you would look into the currency pairings.

Speaker #3: Thank you.

Speaker #1: So as a small reminder, if you like to ask a question, please press star 9 and pound key on your telephone keypad. Or if you are connected online and listening via the web interface, please click the telephone handset button and then raise hand icon.

Speaker #4: So, looking at 2027, I would expect €30–35 million in quarterly holding costs going forward for '27. Of course, we're trying to drive this down over time a little bit.

Speaker #4: So, just shy of 1% of net sales, I think, is a fair assumption.

Speaker #1: At the moment, there are oh, there is a question. The next question comes from Monica Poseo from Intesana Polo. This stage is yours.

Speaker #3: With the clear intent, obviously, as you said, Roland, to become more efficient on that line item as well. But first of all, we need to confirm and complete our transformation.

Christian Kötz: With the clear intent, obviously, as you said, Roland, to become more efficient on that line item as well. First of all, we need to confirm and complete our transformation before we can more actively work on that part of the business as well.

Speaker #3: Before we can more actively work on that part of the business as well.

Speaker #4: Yes. Good morning and thanks for taking my questions. Just a follow-up on the price mix. You just said that the price mix for the second half will be a bit lower.

Speaker #4: Understood. Thank you.

Ross MacDonald: Understood. Thank you. Could I maybe just check on the FX, given that turning to a tailwind, is there any change in the drop-throughs we should assume into the EBIT line from FX or maybe a quick update on how that drops? Thanks.

Speaker #2: Can I maybe just check on the FX, given that's turning to a tailwind? Is there any change in the drop-throughs we should assume into the EBIT line from FX, or maybe a quick update on how that drops?

Speaker #4: Sequentially, but with a higher drop through. Can you just remind me what do you expect in terms of drop through for the second half and for the full year?

Speaker #2: Thanks.

Speaker #4: Yeah. It dropped, normally 30 to 40% roughly. I would assume a similar drop now also in the second half. I don't see a big difference.

Roland Welzbacher: Yeah. It dropped normally 30% and 40% roughly. I would assume similar drop now also in H2. I don't see a big difference.

Speaker #4: And my second question is on the YEPA tariff refunds. I was wondering if the company benefited from any tariff refunds in the second quarter.

Christian Kötz: Yeah. Obviously depends also which currency pair you look at, right?

Speaker #3: I mean, obviously it also depends on which currency pair you look at. So, when you consider our footprint in the US versus Europe in terms of production versus sales, obviously drop-through tends to be a little higher.

Roland Welzbacher: Absolutely.

Christian Kötz: When you consider our footprint in US versus Europe, in terms of production versus sales, obviously drop-through tends to be a little higher. Also that works in both directions. Again, depends very much on where exactly you would look into the currency pairings.

Speaker #4: And my final question is on the ultra high performance tires. That went very well in Europe. So can you give us an update of the overall weight and on the other side, I was wondering whether the company is cutting some capacity in budget tires or if it plans to do this.

Speaker #3: That also works in both directions. Again, it depends very much on where exactly you would look into the currency pairings.

Speaker #2: Thank you.

Ross MacDonald: Thank you.

Operator: As a small reminder, if you'd like to ask a question, please press star nine and pound key on your telephone keypad, or if you are connected online and listening via the web interface, please click the telephone handset button and then the raise hand icon. At the moment there are There is a question. The next question comes from Monica Bosio from Intesa Sanpaolo. The stage is yours.

Speaker #1: As a small reminder, if you'd like to ask a question, please press star 9 and the pound key on your telephone keypad. Or, if you are connected online and listening via the web interface, please click the telephone handset button and then the raise hand icon.

Speaker #4: Thank you very much.

Speaker #2: Okay. Roland here. Monica, I'm going to take the first one. Because this is basically a follow-up on the price mix side. We have seen last year a drop rate of 60, 70%, which would also be over midterm average we've seen.

Speaker #1: At the moment, there is—oh, there is a question. The next question comes from Monica Poseo from Intesana Polo. The stage is yours.

Speaker #2: Now this year the drop rate is a little bit higher because it's not just product related, it's also again general related. And we've had region performing better.

Speaker #5: Yes, good morning, and thanks for taking my questions. Just a follow-up on the price/mix: you just said that the price/mix for the second half will be a bit lower sequentially, but with a higher drop-through.

Monica Bosio: Yes. Good morning, and thanks for taking my questions. Just a follow-up on the price mix. You just said that the price mix for the H2 will be a bit lower sequentially, but with a higher drop-through. Can you just remind me, what did you expect in terms of drop-through for the H2 and for the full year? My second question is on the IEEPA tariff refunds. I was wondering if the company benefited from any tariff refunds in the Q2. My final question is on the ultra-high performance tires that went very well in Europe. Can you give us an update of the overall weight? On the other side, I was wondering whether the company is cutting some capacity in Budget Tires or if it plans to do this. Thank you very much.

Speaker #2: Which are more overproportionally profitable. This is why I said the drop rate is a little bit higher. It used to be higher already in the first half and this continues most likely also in the second half.

Speaker #5: Can you just remind me what you expect in terms of drop-through for the second half and for the full year? And my second question is on the YEPA tariff refunds.

Speaker #2: UHP?

Speaker #3: Oh, let's maybe talk about the tariffs for a second. Yes, we had I think a 10 million refund impact of the IEPA, whatever you pronounce them.

Speaker #5: I was wondering if the company benefited from any tariff refunds in the second quarter. And my final question is on the ultra-high performance tires.

Speaker #3: Tariffs in the US in Q2. This is not let me say corresponding to the full refund we believe we will get. So more to come.

Speaker #5: That went very well in Europe. So, can you give us an update on the overall weight? And on the other side, I was wondering whether the company is cutting some capacity in budget tires, or if it plans to do this.

Speaker #3: But 10 million, I think. Correct me if I'm wrong, Roland, Max.

Speaker #2: Yes.

Speaker #3: Is what we have considered or have seen in Q2. UHP tires, in Europe, yes, it works in Europe, which is obviously the for us, the most important region.

Speaker #5: Thank you very much.

Speaker #3: But I mean, the positive mix development in terms of sizes, you see worldwide, and actually in North America probably with even some stronger opportunities for us as well as in some of the Asian markets.

Speaker #4: Okay. Roland here. Monica, I'll kind of take the first one, because this is basically a follow-up on the price-mix side. We have seen, last year, a drop rate of 60 to 70 percent, which would also be over the midterm average we've seen.

Roland Welzbacher: Okay. Roland here, Monica. I will take the first one because it is basically a follow-up on the price mix side.

Monica Bosio: Yeah.

Christian Kötz: We have seen last year a drop rate of 60% and 70%, which would also be our midterm average we have seen. This year, the drop rate is a little bit higher because it's not just product-related, it's also, again, general-related. We've had regions performing better, which are more over-proportionately profitable. This is why I said the drop rate is a little bit higher. It used to be higher already in the first half, and this continues most likely also in the second half. UHP. Let's maybe talk about the tariffs for a second.

Roland Welzbacher: We have seen last year a drop rate of 60% and 70%, which would also be our midterm average we have seen. This year, the drop rate is a little bit higher because it's not just product-related, it's also, again, general-related. We've had regions performing better, which are more over-proportionately profitable. This is why I said the drop rate is a little bit higher. It used to be higher already in the first half, and this continues most likely also in the second half. UHP.

Speaker #3: So talking about China, for example, in OE today, I think we don't even sell a single tire below 18-inch in OE. And I think the average size is in the meantime significantly above 18-inch.

Speaker #4: Now, this year the drop rate is a little bit higher because it's not just product-related, it's also general-related. And we've had regions performing better, which are more overproportionally profitable.

Speaker #4: This is why I said the drop rate is a little bit higher. It was already higher in the first half, and this will most likely continue in the second half.

Speaker #3: So there are significant mix improvement and in North America also due to our underrepresentation in the light truck and full-size SUV segment, we also have significant positive mix improvement potential.

Speaker #4: UHP?

Speaker #3: Oh, let's maybe talk about the tariffs for a second. Yes, we had, I think, a $10 million refund impact of the EPA, or whatever you pronounce them.

Christian Kötz: Let's maybe talk about the tariffs for a second.

Christian Kötz: Okay

Monica Bosio: Okay

Christian Kötz: I think a EUR 10 million refund impact of the IEEPA, whatever you pronounce them, tariffs in the US in Q2. This is not, let me say, corresponding to the full refund we believe we will get, so more to come, but EUR 10 million, I think. Correct me if I'm wrong, Roland, Max.

Speaker #3: So and on the overall weight, I think we are now at 62% of our total PLT sales represented by the sale of UHP tires.

Speaker #3: Tariffs in the US in Q2—this does not, let me say, correspond to the full refund we believe we will get. So more to come, but $10 million, I think. Correct me if I'm wrong, Roland, Max.

Speaker #2: On the Conti brand.

Speaker #3: On the Conti brand, yeah. So sorry. On the Conti brand, without the Conti brand, we are 55.

Max Westmeyer: Yes.

Speaker #3: As we have considered, or as we have seen in Q2, UHP tires in Europe—yes, it works in Europe, which is obviously, for us, the most important region.

Christian Kötz: Is what we have considered or have seen in Q2. UHP tires in Europe. It works in Europe, which is obviously for us, the most important region. But the positive mix development in terms of sizes you see worldwide and actually, in North America, probably with even some stronger opportunities for us as well as in some of the Asian markets. Talking about China, for example, in OE today, I think we don't even sell a single tire below 18-inch in OE. I think the average size is, in the meantime, significantly above 18-inch. There are significant mix improvement. In North America, also due to our under-representation in the light truck and full-size SUV segment, we also have significant positive mix improvement potential.

Speaker #2: Okay.

Speaker #3: So and capacity and budget and capacity and budget tires, I mean, we are now for at least a number of quarters, not selling more tires.

Speaker #3: But I mean, the positive mix development in terms of sizes you see worldwide, and actually in North America probably with even some stronger opportunities for us, as well as in some of the Asian markets.

Speaker #3: So the only improvement we are seeing is basically due to mix nevertheless, we invest 7% in average CAPEX in our facilities. And this is partly obviously in terms of capacity increases.

Speaker #3: So, talking about China, for example, in OE today, I think we don't even sell a single tire below 18-inch in OE. And I think the average size is, in the meantime, significantly above 18-inch.

Speaker #3: So I mentioned Rayong and Hefei. So Asia being obviously the most pronounced region where we invest into capacity. But the majority investment of our investments are really going into structural investments.

Speaker #3: So turning existing capacities into future-ready capacities. We do this in line with market development and also let me say preparing for some opportunities. So that we are never hopefully never get into a situation that we cannot fulfill additional UHP opportunities.

Speaker #3: So there are significant mix improvements, and in North America, also due to our underrepresentation in the light truck and full-size SUV segment, we also have significant positive mix improvement potential.

Speaker #3: So, on the overall weight, I think we are now at 62% of our total PLT sales represented by the sale of UHP tires.

Christian Kötz: On the overall weighted, I think we are now at 62% of our total PLT sales represented by the sale of UHP tires.

Speaker #3: So we always should have a little bit of excess capacity and capabilities in this segment. But as long as we can sell also non-UHP tires and Tier 2 and 3 tires as a part of our overall customer value proposition and a profitable way, we will continue to do this.

Max Westmeyer: On the Conti brand.

Speaker #3: On the Conti brand, yeah. So, sorry, on the Conti brand—without the Conti brand, we are at 55.

Christian Kötz: On the Conti brand, yeah. Sorry. On the Conti brand. Without the Conti brand, we are 55.

Speaker #4: Okay.

Max Westmeyer: Okay.

Speaker #3: So, and capacity and budget, and capacity and budget tires—I mean, we are now, for at least a number of quarters, not selling more tires.

Christian Kötz: Capacity.

Christian Kötz: Capacity. Budget

Speaker #3: So I mean, if you ask the ultimate question, do we decide or have we decided to step out of non-UHP business? Then I would say a clear no because especially from the customer perspective, we want to be a reliable partner.

Monica Bosio: Budget

Christian Kötz: Capacity in Budget Tires. We are now for at least a number of quarters, not selling more tires. The only improvement we are seeing is basically due to mix. Nevertheless, we invest 7% in average CapEx in our facilities. This is partly, obviously, in terms of capacity increases. I mentioned Rayong and Hefei. Asia being obviously the most pronounced region where we invest into capacity, but the majority of our investments are really going into structural investments. Turning existing capacities into future-ready capacities. We do this in line with market development and also, let me say, preparing for some opportunities so that we hopefully never get into a situation that we cannot fulfill additional UHP opportunities. We always should have a little bit of excess capacity and capabilities in this segment.

Speaker #3: So the only improvement we are seeing is basically due to mix. Nevertheless, we invest 7% on average CAPEX in our facilities, and this is partly, obviously, in terms of capacity increases.

Speaker #3: We want to make sure that our customers can buy our B2B customers, can buy from us what they really need and they not only need UHP premium tires, they also need other brands and other tires.

Speaker #3: So, I mentioned Rayong and Hefei. So, Asia is obviously the most pronounced region where we invest into capacity. But the majority of our investments are really going into structural investments.

Speaker #3: And we do believe that this is a very, very let me say strong value contribution or value proposition from a customer perspective.

Speaker #4: Yeah, very clear. I understood it. Thank you very much.

Speaker #3: So, turning existing capacities into future-ready capacities. We do this in line with market development and also, let me say, preparing for some opportunities, so that we hopefully never get into a situation where we cannot fulfill additional UHP opportunities.

Speaker #2: You're welcome, Monica.

Speaker #1: For the moment, the last question is from Thomas Besson again from Kepler Chevreux.

Speaker #5: Yeah, thank you. Just a small Berlin question. Can you talk about the net interest charge? I mean, your net debt is declining. It's still around 300.

Speaker #3: So we always should have a little bit of excess capacity and capabilities in this segment. But as long as we can also sell non-UHP tires and tier two and three tires as part of our overall customer value proposition, and in a profitable way, we will continue to do this.

Christian Kötz: As long as we can sell also non-UHP tires and tier 2 and 3 tires as a part of our overall customer value proposition in a profitable way, we will continue to do this. If you ask the ultimate question, do we decide or have we decided to step out of non-UHP business, then I would say a clear no. Especially from the customer perspective, we want to be a reliable partner. We want to make sure that our B2B customers can buy from us what they really need. They not only need UHP premium tires, they also need other brands and other tires. We do believe that this is a very, let me say, strong value contribution or value proposition from a customer perspective.

Speaker #5: Can you give us an indication of where you think it's going next year? And same question for the tax rate. You're guiding for sub-25% this year.

Speaker #5: Can you stay there or improve that further? Have you already done the best you can on that one? Thank you.

Speaker #3: So, I mean, if you ask the ultimate question—do we decide, or have we decided, to step out of non-UHP business—then I would say clearly no, because especially from the customer perspective, we want to be a reliable partner.

Speaker #2: I take this one knitted and then on the tax rate. So if you look at our financial targets, which we communicated back at the capital markets day in June 25, we said midterm we want to land at a leverage ratio of one.

Speaker #3: We want to make sure that our B2B customers can buy from us what they really need, and they not only need UHP premium tires, they also need other brands and other tires.

Speaker #2: So on a proforma basis, we're now around two. So that means we need to drop by 0.3, 0.3, 0.2, 0.3 every year. And this is also the plan for this year.

Speaker #3: And we do believe that this is a very, very—let me say—strong value contribution, or value proposition, from a customer perspective.

Speaker #2: So if you put that in the model, I think this is a fair assumption. On the tax rate, we went down now from 27 to 24 because we have a different business and country mix.

Monica Bosio: Very clear. I understood it. Thank you very much.

Speaker #5: That's very clear. I understand. Thank you very much.

Monica Bosio: Very clear. I understood it. Thank you very much.

Speaker #4: You're welcome, Monica.

Christian Kötz: You're welcome, Monica.

Speaker #2: Going forward. And I cannot really judge how it's going to look like in 27. I would say it's a similar level. I'm not seeing any influencing factor changing this dramatically next year.

Operator: For the moment, the last question is from Thomas Besson again, from Kepler Cheuvreux.

Speaker #1: For the moment, the last question is from Thomas Besant again from Kepler Chevreux.

Operator: For the moment, the last question is from Thomas Besson again, from Kepler Cheuvreux.

Speaker #6: Yeah, thank you. Just a small Berlin question. Can you talk about the net interest charge? I mean, your net debt is declining—it's still around 300.

Thomas Besson: Yeah, thank you. Just to Small building question. Can you talk about the net interest charge? Your net debt is declining. It's still around EUR 300. Can you give us an indication of where you think it's going next year? Same question for the tax rate. You're guiding for sub-25% this year. Can you stay there or improve that further, or have you already done the best you can on that front? Thank you.

Speaker #5: Thank you. Sorry, the question was not on that, but on the interest charge. As your debt falls, should we assume that you can take down your net interest charge next year as well?

Speaker #6: Can you give us an indication of where you think it's going next year? And same question for the tax rate. You're guiding for sub-25% this year.

Speaker #2: Yeah, maybe Thomas, let me jump in there. I mean, what we see right now for the time being is stable gross debt, right? So we have to pay the interest for that regardless.

Speaker #2: So for this year, there is no change to be anticipated. I mean, once we then look at how we're planning on using proceeds, we have said roughly 600 million will be used for deleveraging from the Conti tech transaction.

Speaker #6: Can you stay there, or improve that further, or have you already done the best you can on that one? Thank you.

Speaker #4: I take this one, knit it, and then on the tax rate. So, if you look at our financial targets, which we communicated back at the Capital Markets Day in June '25, we said mid-term we want to land at a leverage ratio of 1.

Roland Welzbacher: I take this one on net debt and then on the tax rate. If you look at our financial targets, which we communicated back at the Capital Markets Day on 25 June, we said midterm, we want to land at a leverage ratio of 1. On a pro forma basis, we're now around 2. That means we need to drop by 0.2, 0.3 every year, and this is also the plan for this year. If you put that in the model, I think this is a fair assumption. On the tax rate, we went down now from 27% to 24% because we have a different business and country mix going forward. I cannot really judge how it's going to look like in 2027. I would say it's a similar level. I'm not seeing any influencing factor changing this dramatically next year.

Speaker #2: So let's assume maybe there's one bond that might become due that we might not refinance. So this will then end up in lower gross debt and this will also then contribute to slightly lower interest rates.

Speaker #4: So, on a pro forma basis, we're now around two. So that means we need to drop by 0.3, 0.3, 0.2, 0.3 every year, and this is also the plan for this year.

Speaker #2: But it's going to be rather a stepwise approach given that gross debt has to go down in the first place, not necessarily net debt related.

Speaker #5: Yeah, that was my question. Whether you are going to use these proceeds. Okay, thank you, Max. And thanks, Saul.

Speaker #4: So, if you put that in the model, I think this is a fair assumption. On the tax rate, we went down now from 27 to 24 because we have a different business and country mix.

Speaker #2: Thank you.

Speaker #4: Going forward, I cannot really judge how it's going to look like in '27. I would say it's a similar level. I'm not seeing any influencing factor changing this dramatically next year.

Speaker #1: This was the last question. So I'll hand over to Max Westmeyer.

Speaker #2: Thank you very much. And thank you all for participating in today's call. As always, we, the Continental Investor Relations team, are available should you have any follow-up questions.

Speaker #6: Thank you. Sorry, the question was not about that, but about the interest charge. As your debt falls, should we assume that you can bring down your net interest charge next year as well?

Thomas Besson: Thank you. Sorry, the question was not on debt, but on the interest charge. As your debt falls, should we assume that you can take down your net interest charge next year as well?

Speaker #4: Yeah, maybe Thomas, let me jump in there. I mean, what we see right now, for the time being, is stable gross debt, right? So we have to pay the interest for that, regardless.

Max Westmeyer: Yeah. Maybe, Thomas, let me jump in there. What we see right now for the time being is stable gross debt. We have to pay the interest for that regardless.

Speaker #6: Sure.

Thomas Besson: Sure.

Speaker #4: So for this year, there is no change to be anticipated. I mean, once we then look at how we're planning on using proceeds, we have said roughly €600 million will be used for deleveraging from the ContiTech transaction.

Max Westmeyer: For this year, there is no change to be anticipated. Once we look at how we are planning on using proceeds, we have said roughly EUR 600 million will be used for deleveraging from the ContiTech transaction. Let's assume maybe there is one bond that might become due that we might not refinance. This will end up in lower gross debt, and this will also then contribute to slightly lower interest rates. It's going to be rather a stepwise approach, given that gross debt has to go down in the first place, not necessarily net debt related.

Speaker #4: So, let's assume maybe there's one bond that might become due that we might not refinance. So, this will then end up in lower gross debt, and this will also then contribute to slightly lower interest rates.

Speaker #4: But it's going to be rather a stepwise approach, given that gross debt has to go down in the first place—not necessarily net debt related.

Speaker #6: Yeah, that was my question—whether you are going to use these proceeds. Okay, thank you, Max. And thanks, all.

Thomas Besson: That was my question, whether you are going to use these proceeds. Okay. Thank you, Max, and thanks all.

Speaker #4: Thank you.

Roland Welzbacher: Thank you.

Speaker #1: This was the last question, so I'll hand over to Max Westmeyer.

Operator: This was the last question. I'll hand over to Max Westmeyer.

Speaker #4: Thank you very much, and thank you all for participating in today's call. As always, we, the Continental Investor Relations team, are available should you have any follow-up questions.

Max Westmeyer: Thank you very much, and thank you all for participating in today's call. As always, we, the Continental Investor Relations team, are available should you have any follow-up questions. With that, let me conclude today's call. Thank you very much for dialing in, and goodbye.