Q3 2026 Continental AG Pre - Close Earnings Call

September 30, 2026

Speaker #3: Good afternoon, ladies and gentlemen. Welcome to the Continental AG pre-close group call for Quarter 3, 2026. The conference will be recorded. At this time, all participants have been placed in listen-only mode.

Operator 4: Good afternoon, ladies and gentlemen. Welcome to the Continental AG Pre-Close Group Call Q3 2026. The conference will be recorded. At this time all participants have been placed on a listen only mode. The floor will be opened for questions following the presentation. Let me now turn the floor over to our host Max Westmeyer, Head of Investor Relations.

Operator: Good afternoon, ladies and gentlemen. Welcome to the Continental AG Pre-Close Group Call Q3 2026. The conference will be recorded. At this time all participants have been placed on a listen only mode. The floor will be opened for questions following the presentation. Let me now turn the floor over to our host Max Westmeyer, Head of Investor Relations.

Speaker #3: The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Max Westmeyer, Head of Investor Relations.

Speaker #4: Yeah, thank you. And good afternoon, everyone. It's great that you're joining our Q3 pre-close call. As always, this call is intended for sell-side analysts and buy-side participants only.

Max Westmeyer: Thank you and good afternoon everyone. Great that you are joining our Q3 pre-close call. This call is intended for sell side analysts and buy side participants only. If you do not belong to either of these groups please disconnect at this point. The purpose of today's call is to ensure that all participants have access to the latest publicly available information regarding our performance and the management commentary ahead of our Q3 2026 results, which we will publish on 4 November. Everything I will cover today is also reflected in our quarterly reference sheet, which is in parallel released on our investor relations website. Let me begin with the market environment for tires in Q3. In OE passenger cars and the tire volumes, we saw slightly volumes down year-on-year in Europe.

Speaker #4: So, if you do not belong to either of these groups, please disconnect at this point. The purpose of today's call is to ensure that all participants have access to the latest publicly available information regarding our performance and the management commentary ahead of our Q3 2026 results, which we will publish on November 4.

Speaker #4: Everything I'll cover today is also reflected in our quarterly reference sheet, which is, in parallel, released on our Investor Relations website. Let me begin with the market environment for tires and the third quarter.

Speaker #4: In OE passenger cars, and the tire volumes, we saw slightly volumes down year on year in Europe. Vehicle production remains under pressure, although the decline is more moderate than in prior quarters.

Max Westmeyer: Vehicle production remains under pressure although the decline is more moderate than in prior quarters. In North America and China, the decline is expected to be more pronounced, probably in a mid-single-digit percentage range. In North America, weaker vehicle demand and the ongoing tariff-related economic effects continue to weigh on production volumes, while the reduction in the Chinese OE volumes is mainly driven from lower incentives for new vehicle purchases. In the passenger car tire replacement business, European market volumes are expected around the prior year level. In North America, replacement demand is trending below last year, reflecting the high level of imports in the prior year period, as well as currently weak consumer sentiment. Furthermore, the continuously challenging situation in South America is a burden to volumes.

Speaker #4: In North America and China, the decline is expected to be more pronounced, probably in the mid-single-digit percentage range. In North America, weaker vehicle demand and the ongoing tariff-related economic effects continue to weigh on production volumes, while the reduction in Chinese OE volumes is mainly driven by lower incentives for new vehicle purchases.

Speaker #4: In the passenger car tire replacement business, European market volumes are expected to be around the prior year level. In North America, replacement demand is trending below last year, reflecting the high level of imports in the prior year period, as well as currently weak consumer sentiment.

Speaker #4: Furthermore, the continuously challenging situation in South America is a burden to volumes. In China, replacement volumes are expected to decrease slightly, following the stronger demand development we saw in the first half of the year.

Max Westmeyer: In China, replacement volumes are expected to decrease slightly following the stronger demand development we saw in H1. Turning to commercial vehicle tires, the picture continues to improve. In Europe, we see continuous good demand in both OE and replacement for our products. In North America, truck OE volumes are expected to be significantly above the low prior year level, accelerating a trend which already started to materialize towards the end of last quarter. Replacement demand, however, continues to trend below last year in North America, pretty much on the low levels of the previous quarters.

Speaker #4: Turning to commercial vehicle tires, the picture continues to improve. In Europe, we see continuously good demand in both OE and replacement for our products.

Speaker #4: In North America, truck OE volumes are expected to be significantly above the low prior year level, accelerating a trend that already started to materialize toward the end of last quarter.

Speaker #4: Replacement demand, however, continues to trend below last year in North America, pretty much at the low levels of the previous quarters. If we sum up all these market developments for Continental, and our positioning within the markets, our total volumes are expected to decline in a mid-single-digit percentage range year on year against tough comps, even though we see the usual sequentially higher volumes compared with Q2, given the start of the winter tire season.

Max Westmeyer: If we sum up all these market developments for Continental and our positioning within the markets, our total volumes are expected to decline in a mid-single digit percentage range year on year against tough comms, even though we see the usual sequentially higher volumes compared with Q2, given the start of the winter tire season. On currency, FX effects are expected to have a minor positive impact in Q3, continuing the trend we discussed for the second quarter. Our price mix remains clearly positive as well. Ultra-high-performance volumes are expected to be up year on year, once again, especially driven by Europe and APAC. As a result, we expect a positive price mix contribution broadly in line with the levels of H1. Mix continues to be the main driver.

Speaker #4: Regarding currency, FX effects are expected to have a minor positive impact in Q3, continuing the trend we discussed for the second quarter. Our price mix remains clearly positive as well.

Speaker #4: Ultra-high performance volumes are expected to be up year-on-year, once again especially driven by Europe and APAC. As a result, we expect a positive price-mix contribution, broadly in line with the levels of H1.

Speaker #4: Mix continues to be the main driver. The main contributions come from positive UHP and channel mix, but also the improvement of truck volumes is certainly helping with the sales price mix.

Max Westmeyer: The main contributions come from positive UHP and channel mix, but also the improvement of truck volumes is certainly helping for the sales price mix. On the purchasing side, the picture is changing compared with H1. Raw material headwinds are now starting to materialize, and we expect a negative year-on-year effect in a mid-double digit million EUR range for Q3. Certainly a negative sequential swing factor. Regarding the full year impact, our base case assumptions of a low to mid-triple digit million EUR amount are still pretty much intact, with recent developments not impacting 2026 anymore. However, as already indicated in our last earnings call, the higher market costs of the last month will presumably result in another appreciation of our inventory.

Speaker #4: On the purchasing side, the picture is changing compared with the first half of the year. Raw material headwinds are now starting to materialize, and we expect a negative year-on-year effect in a mid double-digit million euro range for Q3.

Speaker #4: So certainly a negative sequential swing factor. And regarding the full-year impact, our base case assumptions of a low to mid triple-digit million euro amount are still pretty much intact, with recent developments not impacting 2026 any more.

Speaker #4: However, and as already indicated in our last earnings call, the higher market costs of the last months will presumably result in another appreciation of our inventory.

Speaker #4: This should basically offset the higher material cost, so the net effect is expected to be rather neutral in Q3 on the raw materials side. Tariffs are expected to provide a slight year-on-year tailwind in Q3.

Max Westmeyer: This should basically offset the higher material cost, so net effect is expected to be rather neutral Q3 on the raw mat side. Tariffs are expected to provide a slight year-on-year tailwind in Q3. At the same time, tariff-related economic effects are, of course, continuing to affect the underlying tire markets, particularly in North America. Looking at the regional development in more detail, EMEA volumes are expected to be broadly flat overall. A higher absolute number, as well as a higher share of ultra-high-performance tires, should support both sales and profitability accordingly. Sales and EBIT should therefore improve slightly year on year. In the Americas, we also expect a higher sales share of ultra-high-performance tires, as well as a slight increase of truck tire sales.

Speaker #4: At the same time, tariff-related economic effects are, of course, continuing to affect the underlying tire markets, particularly in North America. Looking at the regional development in more detail, EMEA volumes are expected to be broadly flat overall.

Speaker #4: A higher absolute number, as well as a higher share of ultra-high-performance tires, should support both sales and profitability accordingly. Sales and EBIT should therefore improve slightly year-on-year.

Speaker #4: In the Americas, we also expect a higher sales share of ultra-high-performance tires, as well as a slight increase in truck tire sales. However, this is not expected to offset the overall market weakness, which in particular comes from lower OE demand in passenger car tires, as well as from the challenging situation in South America that we have mentioned already.

Max Westmeyer: However, this is not expected to offset the overall market weakness, which in particular comes from lower OE demand in passenger car tires, as well as from the challenging situation in South America that we have mentioned already. Consequently, sales and EBIT margin should trend slightly below the prior year. In APAC, sales are expected to be slightly above the prior year level. Due to our recent strong performance in OE, however, we expect a slightly lower profitability compared with Q3 2025. Putting all these factors together, tires revenue, and I am talking about our former group sector now, is expected to come in as just slightly below last year's level. Regarding profitability and based on current expectations, we should again reach the upper end of the full year guidance corridor for the third quarter. Absolute profitability could even be stable sequentially.

Speaker #4: Consequently, sales and EBIT margin should trend slightly below the prior year. In APAC, sales are expected to be slightly above the prior year level.

Speaker #4: Due to our recent strong performance in OE, however, we expect a slightly lower profitability compared with Q3 2025. Putting all these factors together, tires revenue—and I'm talking about our former group sector now—is expected to come in just slightly below last year's level.

Speaker #4: Regarding profitability, and based on current expectations, we should again reach the upper end of the full-year guidance corridor for the third quarter. Absolute profitability could even be stable sequentially.

Speaker #4: But please keep in mind that you will not see a Tires Group sector anymore in our Q3 reporting. You can certainly take our commentary as an indication; however, the actual reporting will happen on a regional basis, and we will, of course, also provide results for the whole corporation as well as for continued operations on a group level.

Max Westmeyer: But please keep in mind that you will not see a tires group sector anymore in our Q3 reporting. You can certainly take our commentary as an indication. However, the actual reporting will happen on a regional basis, and certainly, we will, of course, also provide the results for the whole corporation as well as for continued operations on a group level. But the tires group sector as you know it, will no longer be reported. With that, moving on to ContiTech. As in the last calls, my comments will compare quarter on quarter, meaning sequentially versus Q2 2026, since we do not have a clean prior year comparison for the current setup. The macroeconomic environment in Q3 remained challenging for ContiTech, with continued cyclical headwinds in industrial end markets. In particular, the American industrial business continues to be subdued, while Europe has shown further signs of improvement.

Speaker #4: But the tires group sector, as you know it, will no longer be reported. With that, moving on to ContiTech. As in the last calls, my comment will compare quarter on quarter, meaning sequentially versus Q2 26, since we don't have a clean prior year comparison for the current setup.

Speaker #4: The macroeconomic environment in Q3 remained challenging for ContiTech, with continued cyclical headwinds in industrial end markets. In particular, the American industrial business continues to be subdued, while Europe has shown further signs of improvement.

Speaker #4: Just as in Europe, order books in the Americas have also shown some signs of improvement, though. This supports our expectation of a sequentially improving market environment during the course of the second half of the year.

Max Westmeyer: Just as for Europe, order books in the Americas have also shown some signs of improvement, though. This supports our expectation of a sequentially improving market environment during the course of the H2 of the year. However, the rebound continues to take longer than previously expected. Seasonally speaking, Q3 sales were affected by the lower commercial activity during the summer break as well. On the FX side, we expect neutral or slightly positive effects in Q3, given ContiTech's footprint. On material cost, we expect increasing headwinds from higher material and transportation costs in Q3. Commercial countermeasures should more and more offset these effects throughout the H2 of the year. However, the measures are not yet expected to provide a full offset in the third quarter.

Speaker #4: However, the rebound continues to take longer than previously expected. And, seasonally speaking, Q3 sales were affected by lower commercial activity during the summer break as well.

Speaker #4: On the FX side, we expect neutral or slightly positive effects in Q3, given ContiTech's footprint. On material cost, we expect increasing headwinds from higher material and transportation costs in Q3.

Speaker #4: Commercial countermeasures should increasingly offset these effects throughout the second half of the year. However, the measures are not yet expected to provide a full offset in the third quarter.

Speaker #4: At the same time, of course, tight cost control and self-help measures remain firmly in focus, as we navigate the ongoing weakness in industrial demand.

Max Westmeyer: At the same time, of course, tight cost control and sell side measures remain firmly in focus as we navigate the ongoing weakness in industrial demand. All in all, we expect ContiTech sales to be slightly down sequentially. The adjusted EBIT margin before application of IFRS 5 is also expected to be below the Q2 level as a result. That being said about tires and ContiTech, we anticipate a healthy Q3 at group level. For the continued operations, we are now talking about tires and the relatively stable holding costs. Our adjusted free cash flow is expected to be neutral to slightly positive in Q3, reflecting the solid operational performance as well as the normal seasonal development, which means a buildup in working capital due to increasing receivables resulting from the winter tires sell-in. Just one last upfront commentary before we enter the Q&A.

Speaker #4: All in all, we expect ContiTech sales to be slightly down sequentially. The adjusted EBIT margin before application of IFRS 5 is also expected to be below the Q2 level as a result.

Speaker #4: That being said, regarding tires and ContiTech, we anticipate a healthy Q3 at group level. For the continued operations, we're now talking about tires and the relatively stable holding costs.

Speaker #4: Our adjusted free cash flow is expected to be neutral to slightly positive in Q3, reflecting solid operational performance as well as the normal seasonal development, which means a build-up in working capital due to increasing receivables resulting from the winter tires sell-in.

Speaker #4: And just one last upfront commentary before we enter the Q&A. As customary, we'll also reach out to you shortly to compile the analyst consensus for Q3, as well as the upcoming financial years.

Max Westmeyer: As customary, we will also reach out to you to compile the analyst consensus for Q3 as well as the upcoming financial years. Due to the changes to the group, however, we will approach you with two different sets for the consensus. One in the old structure, should you still need this one due to your model structure, and one already reflecting our new regional reporting. If you can fill both, that's of course great, but our understanding is that not all your models have been rebuilt at this point in time. Please preferably use the regional consensus file if you have the possibility. That being said now, over to your questions, should you have any open items that you would like to address. Operator, would you please open the line for the Q&A?

Speaker #4: Due to the changes to the group, however, we will approach you with two different sets for the consensus: one in the old structure, should you still need this one due to your model structure, and one already reflecting our new regional reporting.

Speaker #4: If you can fill both, that's of course great, but our understanding is that not all your models have been rebuilt at this point in time.

Speaker #4: Please, preferably use the regional consensus file if you have the possibility. That being said, over to your questions—should you have any open items that you would like to address.

Speaker #4: So, operator, would you please open the line for the Q&A?

Speaker #2: Sure, thank you very much. Ladies and gentlemen, if you would like to ask a question, please press star nine and the pound key on your telephone keypad.

Operator 4: Sure. Thank you very much. Ladies and gentlemen, if you would like to ask a question, please press Star 9 and Pound key on your telephone keypad. If you would like to revoke your question, press Star 3 and Pound key. You can also use the dial-in function in the webcast and raise your hand if you would like to ask a question by phone. I repeat, to ask a question, please press Star 9 and Pound key. You can also use the dial-in function in the webcast and raise your hand. There are already a few questions in the line. The first question goes to Harry Martin from Bernstein. The floor is yours.

Operator: Sure. Thank you very much. Ladies and gentlemen, if you would like to ask a question, please press Star 9 and Pound key on your telephone keypad. If you would like to revoke your question, press Star 3 and Pound key. You can also use the dial-in function in the webcast and raise your hand if you would like to ask a question by phone. I repeat, to ask a question, please press Star 9 and Pound key. You can also use the dial-in function in the webcast and raise your hand. There are already a few questions in the line. The first question goes to Harry Martin from Bernstein. The floor is yours.

Speaker #2: If you would like to revoke your question, press star three and the pound key. You can also use the dial-in function in the webcast and raise your hand if you would like to ask a question by phone.

Speaker #2: I'll repeat: to ask a question, please press star nine and the pound key. You can also use the dial-in function in the webcast and raise your hand.

Speaker #2: There are already a few questions in the queue. The first question goes to Harry Martin from Bernstein. The floor is yours.

Harry Martin: Hi, Max and team. The first one I have, could you just remind us how important September is for the Q3? And if you have a good view on September at this point. I just remember last year it was a big positive surprise between the pre-close and the Q3 reporting. So anything that you can reflect on that. The second one, if I can just ask, how were the hold co, the holding the consolidation costs trending in Q3? Does that come down from the H1 levels? And then finally, anything you can say on the price increases that have already been announced? Are they consistent across regions? And have you had to budget for higher price increases, for example, on those winter tires that are now being sold to match the increased commodity prices we can see in the spot market? Thank you.

Speaker #3: Hi. Hi, Max and team. The first one I had, could you just remind us how important September is for the third quarter? And if you have a good view on September at this point, I just remember last year it was a big positive surprise between the pre-close and the Q3 reporting.

Speaker #3: So, is there anything that you can reflect on regarding that? The second one, if I can just ask, how were the HoldCo holding and consolidation costs trending in Q3?

Speaker #3: Does that come down from the first-half levels? And then finally, anything you can say on the price increases that have already been announced—are they consistent across regions?

Speaker #3: And have you had to budget for higher price increases? For example, on those winter tires that are now being sold to match the increased commodity prices we can see in the spot market?

Speaker #3: Thank you.

Speaker #4: Thanks, Harry. So, first, on September—I mean, as said, it's a very important month, especially in terms of volume. And given we talk about winter tires, obviously, it's also quite interesting in terms of mix.

Max Westmeyer: Thanks, Harry. First, on the September, as said, it's a very important month, especially in terms of volume. And given we talk about winter tires, obviously it's also quite interesting in terms of mix. So it's 30 September now, so we have a very good view, I think, in terms of volume and how the month went. What is a bit more difficult to predict exactly is the mix portion and how it comes in. So that's also been one of the reasons, not necessarily on the volume side, but rather on the mix side, where you have seen the surprise or let's say more positive momentum, if you look back into Q3 last year, and this is still true. So September, very important month for us. We think price mix looks fairly decent in the quarter. You've heard my commentary around that.

Speaker #4: So, I mean, it's the 30th of September now, so we have a very good view, I think, in terms of volume and how the month went.

Speaker #4: What is a bit more difficult to predict exactly is the mix portion and how it comes in. So that's also been one of the reasons—not necessarily on the volume side, but rather on the mix side—where you have seen the surprise or, let's say, more positive momentum if you look back into Q3 last year.

Speaker #4: And this is still true. So September is a very important month for us. We think the price mix looks fairly decent in the quarter. I mean, you've heard my commentary around that.

Speaker #4: But there is always a good portion of uncertainty that still remains until we have the actual figures in our books. Therefore, it's just an indication at this point in time that we can give, in particular on the mix side.

Max Westmeyer: But there is always a good portion of uncertainty that still remains until we have the actual figures in our books. Therefore, it's just an indication at this point in time that we can give, in particular, on the mixed side. Holding costs do look, I would say, in line with our recent commentary. So the 30, 35 million mark that we have given out is a fair proxy. Nothing to highlight in terms of one-offs. Pricing is very sensitive for us to comment on. So we have certainly taken countermeasures, given the increased raw material costs that we've seen since the war in Ukraine started. So those are now also being reflected in the price mix.

Speaker #4: Holding cost, I would say, is in line with our recent commentary. So, the $30–35 million mark that we have given out is a fair proxy.

Speaker #4: Nothing in to highlight in terms of one-offs. And I mean, you know pricing is a very sensitive for us to comment on. So we have certainly taken countermeasures, given the improved the increased raw material costs that we've seen since the war in the Iran started.

Speaker #4: So those are now also being reflected in the price mix. At the same time, of course, when you think about the countermeasures that we had to take in light of the tariff situation last year in the US, we also have some annualization effects that are now entering our Q3 price mix comparison base.

Max Westmeyer: At the same time, of course, when you think about the countermeasures that we had to take in light of the tariff situation last year in the US, we also have some annualization effects that are now entering our Q3 price mix comparison base. All in all, again, price mix does look fairly decent, but I'm not in a position to comment really on a detailed basis.

Speaker #4: All in all, again, price mix does look fairly decent, but I'm not in a position to comment, really, on the detailed basis.

Harry Martin: Okay. Thank you.

Speaker #3: Okay. Thank you.

Speaker #2: Question is from Russ McDonald from Citi. The floor is yours.

Operator 4: Question is from Ross Macdonald from Citi. The floor is yours.

Operator: Question is from Ross Macdonald from Citi. The floor is yours.

Speaker #5: Yes, thanks, Max. Excuse me, I had three questions I just wanted to clarify. I think you said on the Q3 EBIT, I appreciate there's not a concept of the Tire division anymore, but if we can maybe think in those terms.

Ross Macdonald: Yes. Thanks, Max. Excuse me. I had three questions. I just wanted to clarify, I think you said on the Q3 EBIT, I appreciate there's not a concept of the tire division anymore, but if we can maybe think in those terms. Was your comment that the tire business should be broadly in line with Q2 from an absolute EBIT perspective on revenue slightly down, if I understood correctly? When I do those maths, if let's say I put last year's revenues down 1% or something for the volume comments. On a broadly flat EBIT, we'd actually be potentially above the 14.5% margin, something like 14.7. Could you just clarify those comments and then maybe be a little bit more specific within the guidance range where we should expect to come out, just because those numbers maybe imply slightly above. Second question on the US truck volumes.

Ross MacDonald: Yes. Thanks, Max. Excuse me. I had three questions. I just wanted to clarify, I think you said on the Q3 EBIT, I appreciate there's not a concept of the tire division anymore, but if we can maybe think in those terms. Was your comment that the tire business should be broadly in line with Q2 from an absolute EBIT perspective on revenue slightly down, if I understood correctly? When I do those maths, if let's say I put last year's revenues down 1% or something for the volume comments. On a broadly flat EBIT, we'd actually be potentially above the 14.5% margin, something like 14.7. Could you just clarify those comments and then maybe be a little bit more specific within the guidance range where we should expect to come out, just because those numbers maybe imply slightly above. Second question on the US truck volumes.

Speaker #5: Was it was your comment that the tire business should be broadly in line with Q2 from an absolute EBIT perspective? On revenue slightly down, if I understood correctly, but when I do those maths, if let's say I put last year's revenues down 1% or something for the volume comments, on a broadly flat EBIT, would actually be potentially above the 14 and a half percent margin, something like 14.7.

Speaker #5: Could you please clarify those comments and then maybe be a little bit more specific within the guidance range about where we should expect to come out?

Speaker #5: Just because those numbers maybe imply slightly above. Second question on the US truck volumes—other numbers are on super, super easy comps here—but can you maybe help frame on the year-on-years, how positive the US truck volumes are at this point?

Ross Macdonald: I know the numbers are on super easy comps here, but can you maybe help frame on the year-on-years how positive the US truck volumes are at this point? I think on the ACT data, the new builds are somewhere like 40%, 50% positive year-on-year. Maybe if you can help us understand how you're trending versus that number. Then the final one, if I understood the comments on ContiTech correctly, it sounded like it's a little bit soft. Maybe if you could confirm that. More importantly, you obviously have this EUR 250 million bonus up for grabs on the ContiTech transactions. Can you maybe just remind us what we need to see to make sure or to potentially unlock the full 250 within that? Thank you.

Ross MacDonald: I know the numbers are on super easy comps here, but can you maybe help frame on the year-on-years how positive the US truck volumes are at this point? I think on the ACT data, the new builds are somewhere like 40%, 50% positive year-on-year. Maybe if you can help us understand how you're trending versus that number. Then the final one, if I understood the comments on ContiTech correctly, it sounded like it's a little bit soft. Maybe if you could confirm that. More importantly, you obviously have this EUR 250 million bonus up for grabs on the ContiTech transactions. Can you maybe just remind us what we need to see to make sure or to potentially unlock the full 250 within that? Thank you.

Speaker #5: I think on the ACT data, the new builds are somewhere like 40 or 50 percent positive year-on-year. Maybe you can help us understand how you're trending versus that number.

Speaker #5: And then the final one, if I understood the comments on ContiTech correctly, it sounded like it's a little bit soft. So maybe if you could confirm that, but more importantly, you obviously have this €250 million bonus up for grabs on the ContiTech transactions.

Speaker #5: Can you maybe just remind us what we need to see to make sure, or to potentially unlock the full $250 million within that? Thank you.

Max Westmeyer: Let me start on the Q3 EBIT comment, Ross, and thanks for the question. Yes, so my comment was exactly going in that direction. Baseline is we should end up either at the upper end of our full year guidance on a margin perspective in Q3, or potentially even keep EBIT flat sequentially. While the commentary on revenue down was a year-over-year comment, not a sequential comment. If you put those two figures in perspective, yes, then there's maybe a potential that we end up also slightly above the guidance range in Q3. On the US truck side, we have a bit more exposure to Class 4, five, so a little more on the heavy pickup Super Duty side. So probably, let's say our volume expectation is a bit below the range that you mentioned, but it's going in the right direction.

Speaker #4: So let me start on the Q3 EBIT comment, Ross, and thanks for the question. Yeah, my comment was exactly going in that direction. The baseline is we should end up either at the upper end of our full-year guidance from a margin perspective in Q3, or potentially even keep EBIT flat sequentially.

Speaker #4: While the commentary on revenue down was a year-over-year comment, not a sequential comment. But if you put those two figures in perspective, yes, then there's maybe a potential that we end up also slightly above the guidance range in Q3.

Speaker #4: On the US truck side, I mean, we have a bit more exposure to Class 4 and 5, so a little less—a little more on the heavy pickup Super Duty side.

Speaker #4: So, probably, let's say our volume expectation is a bit below the range that you mentioned, but it's going in the right direction. So it's clearly double-digit positive.

Max Westmeyer: It's clearly double-digit positive, but probably not completely in the 40%, 50% range on the OE side. Just framing that. Replacement is a bit of a different story. Yes, ContiTech, the market expectations that we had seem to have been a bit too optimistic, so the rebound takes a bit longer. Regarding the 250 million, I'm not really in a position where I can comment around that, given that it's something where we have agreed on confidentiality around the terms and conditions. I can just reiterate what we have stated back then regarding, or when we held the call, and that there's multiple factors that need to be met and that also the timeline is rather not a short-term timeline. Therefore, nothing I would put in the models in the upcoming years, if I can frame it like that.

Speaker #4: But probably not completely in the 40–50 percent range. On the OE side, just framing that—replacement is a bit of a different story.

Speaker #4: And yes, ContiTech—the market expectations that we had seem to have been a bit too optimistic. So, the rebound takes a bit longer regarding the €250 million.

Speaker #4: I'm not really in a position where I—something where we have agreed on confidentiality around the terms and conditions. I can just reiterate what we have stated back then regarding—or when we held the call—and that's that there are multiple factors that need to be met, and that also the timeline is rather not a short-term timeline.

Speaker #4: So, therefore, nothing I would put in the models in the upcoming years, if I can frame it like that. But that's about what I can say right now in terms of commentary that's out there.

Max Westmeyer: But that is about what I can say right now in terms of commentary that is out there due to the clauses that we have in place on a contractual basis.

Speaker #4: Due to the clauses that we have in place on a contractual basis.

Speaker #5: Got it. So, the 250 is still well within sight over the long term.

Ross Macdonald: Got it. So the 250 is still well within sight over the long term.

Ross MacDonald: Got it. So the 250 is still well within sight over the long term.

Speaker #4: Again, nothing I can comment on.

Max Westmeyer: Again, nothing I can comment on.

Speaker #5: Okay. That's fine. Thanks, Max.

Ross Macdonald: Okay. That is fine. Thanks, Max Westmeyer.

Ross MacDonald: Okay. That is fine. Thanks, Max Westmeyer.

Speaker #2: Before we move on to the last submitted question, just a quick reminder: If you would like to ask a question, please press the star (*) nine (9) and pound (#) key on your telephone keypad, or use the dial-in function in the webcast and raise your hand.

Operator 4: Before we move on to the last submitted question, just a quick reminder, if you would like to ask a question, please press star 9 and pound key on your telephone keypad, or use the dial-in function, the webcast, and raise your hand. The next question goes to Monica Bosio from Intesa Sanpaolo. Please go ahead.

Operator: Before we move on to the last submitted question, just a quick reminder, if you would like to ask a question, please press star 9 and pound key on your telephone keypad, or use the dial-in function, the webcast, and raise your hand. The next question goes to Monica Bosio from Intesa Sanpaolo. Please go ahead.

Speaker #2: The next question goes to Monica Bosio from Intesa Sanpaolo. Please go ahead.

Speaker #6: Yes, good afternoon, everyone, and thanks for taking my questions. I have three. The first one: I was wondering if you can comment on the inventory situation in Europe ahead of the winter tire season.

Monica Bosio: Yes. Good afternoon, everyone, and thanks for taking my questions. I have three. The first one, I was wondering if you can comment on the inventories situation in Europe ahead of the winter tire season. That is the first. The second, Max, you said that the ultra-high-performance tires volumes were up. I had no doubt about this, but can you please quantify a range of the improvement? And the third is on the NAFTA. You said, if I am not wrong, that it will be below the last year, NAFTA sales and EBIT margin below last year. If I am not wrong, we have now the Q3 figures for 2025 for NAFTA. Am I right? And in case, can you comment sequentially for NAFTA? And very last, sorry, I did not get, did you say that on tires, the company sees a mid-single-digit decline in volumes in the Q3?

Speaker #6: That's the first. The second, Max, you said that the ultra high-performance tires volumes were up. I had no doubt about this, but can you please quantify a range of the improvement?

Speaker #6: And the third is on NAFTA. You said, if I'm not wrong, that it will be below last year. NAFTA sales and EBIT margin below last year.

Speaker #6: If I'm not wrong, we do not have the third quarter figures for 2025 for NAFTA. Am I right? And in that case, can you comment sequentially for NAFTA?

Speaker #6: And the very last, sorry, I didn’t get. Did you say that, on Tires, the company sees a mid-single-digit decline in volumes in the third quarter?

Speaker #6: Did I understand well? Thank you very much.

Monica Bosio: Did I understand well? Thank you very much.

Speaker #4: Thanks, Monica. So, on the inventory side, I mean, it's a bit too early now to comment, really, on how it's going in Europe, given that we are right in the middle of the season, and it's a very difficult picture to make while selling is happening.

Max Westmeyer: Thanks, Monica. On the inventory side, it is a bit too early now to comment really on how it is going in Europe, given that we are right in the middle of the season and it is a very difficult picture to make while selling is happening. What we have seen towards the beginning of 2026 is that the winter was a good one and lasted well into the year. So that means the starting point should have been decent from an inventory situation. At the same time, though, we have been very strong in terms of selling last year and are just facing tough comps. So that is why we are expecting volumes just to be slightly down, but it is not necessarily an inventory-related situation that we talk about this volume development.

Speaker #4: I mean, what we've seen towards the beginning of 2026 is that the winter was a good one and lasted well into the year. So that means the starting point should have been decent from an inventory situation.

Speaker #4: At the same time, though, I mean, we have been very strong in terms of selling last year and are just facing tough comps. So that's why we're expecting volumes to be slightly down.

Speaker #4: But it's not necessarily an inventory-related situation when we talk about this volume development. On the UHP side, I think overall we are seeing momentum in the low to mid-single-digit positive.

Max Westmeyer: On the UHP side, I think overall, we are seeing a momentum in a low to mid-single digit positive across passenger car markets with a, let's say, a bit pronounced development across regions. But again, overall, low to mid-single digits positive momentum in Q3 that we see year-over-year. On the Americas side, I think that was your third question. Yes, we did actually provide Q3 2025 figures in the capital market update.

Speaker #4: Across passenger car markets, with the, let's say, a bit pronounced development across regions, but again, overall low- to mid-single-digit positive momentum in Q3 that we see year over year.

Speaker #4: On the America side, I think there was a third question. Yes, we did actually provide Q3 2025 figures in the Capital Market Update. No, no worries.

Monica Bosio: Sorry.

Max Westmeyer: No worries.

Monica Bosio: I was looking at, yeah.

Speaker #4: Say it's in Q3.

Max Westmeyer: Say it in Q3.

Monica Bosio: Yeah, you got it. I got it.

Speaker #6: Yeah, you guys, I got it.

Speaker #4: Yeah. We're at $1.2 billion with a margin of 8.5%, just as a reference. And yes, my commentary around the tire volumes was that potentially we could see a mid-single-digit volume decline in Q3 for the tires business, despite positive momentum on the truck side.

Max Westmeyer: We're at $1.2 billion with a margin of 8.5%, just as a reference. Yes, my commentary around the tire volumes was potentially we could see a mid-single digit volume decline in Q3 for the tires business, despite a positive momentum on the truck side, just given the tough comps that we're facing.

Speaker #4: Just given the tough communications that we're facing.

Monica Bosio: Perfect. Thank you very much. Thank you.

Speaker #6: Perfect. Thank you very much. Thank you.

[Analyst] (JPMorgan): Max, it's José. Could you please maybe just repeat the comments around ContiTech, the sales and EBIT and group in their configuration, sales and EBIT, please.

[Analyst]: Max, it's José. Could you please maybe just repeat the comments around ContiTech, the sales and EBIT and group in their configuration, sales and EBIT, please.

Speaker #5: Max, could you please repeat the comments around ContiTech? Just sales and EBIT, and also for Group in the Delt configuration—sales and EBIT, please.

Speaker #4: Yeah. So, on the ContiTech side, overall, we see sales sequentially slightly down, given the continued lower market recovery that we expected, paired with the Q3 summer break. This also has the respective impact on EBIT, which we also expect to come in below Q2 2026 in Q3 2026.

Max Westmeyer: Yeah. On the ContiTech side, overall, we see sales sequentially slightly down, given the continuous lower market recovery that we expected, paired with the Q3 summer break. This also has the respective impact on EBIT, which we also expect to come in below Q2 2026 and Q3 2026. That's what I said on the ContiTech side.

Speaker #4: That's what I said on the ContiTech side.

Speaker #5: Thank you. And on the group level, including Tire, is that across all configurations?

[Analyst] (JPMorgan): Thank you. On the group level, including tire on the old configuration?

[Analyst]: Thank you. On the group level, including tire on the old configuration?

Speaker #4: So, tires is, I mean, basically, say it's slightly down. So, I mean, you heard the mid-single-digit commentary on the volume side. Price, mix, and FX should be positive.

Max Westmeyer: Tires is basically, sales slightly down.

[Analyst] (JPMorgan): Yeah.

[Analyst]: Yeah.

Max Westmeyer: So, you had the mid-single digit commentary on the volume side, price mix and FX should be positive. So say it is slightly down year-over-year. Margin on the, yeah, pretty much on the upper end of the guidance again, and potentially even flat sequentially versus Q2 on an absolute basis.

Speaker #4: So, say it's slightly down year over year. Margin is pretty much on the upper end of the guidance again and potentially even flat sequentially versus Q2 on an absolute basis.

Speaker #5: Got it. Got it. Thank you.

[Analyst] (JPMorgan): Got it. Thank you.

[Analyst]: Got it. Thank you.

Speaker #2: The last question is from Thomas Besson from Kepler Cheuvre. Please go ahead.

Operator 4: The last question is from Thomas Besson, from Kepler Cheuvreux. Please go ahead.

Operator: The last question is from Thomas Besson, from Kepler Cheuvreux. Please go ahead.

Speaker #4: Thank you very much. I hope you can hear me. Two questions, please, Max. The first: Are you able to give us more details on the expected timing of the closing of the ContiTech deal, please?

Thomas Besson: Thank you very much. I hope you can hear me. Two questions, please, Max. The first, are you able to give us more details on the expected timing of the closing of the ContiTech deal, please? Do you anticipate to give us the details of the EUR 2.5 billion cash returns at the time of the closing announcement, or should we get that on 4 November when you report Q3? That is the first question. The second question, I would like to get back to September, if it is possible. Can you maybe give a bit more detailed comments about the winter tire business? Last year was very dynamic, and I think you got a decent fair share of that. Did you manage to repeat that feat, or is that going to be a bit different this year?

Speaker #4: And do you anticipate giving us details of the $2.5 billion cash returns at the time of the closing announcement, or should we expect that on November 4th when you report Q3?

Speaker #4: That's the first question. The second question, I'd like to get back to September, if possible. Can you maybe give a bit more detailed comments about the winter tire business?

Speaker #4: Last year was very dynamic, and I think you got a decent, fair share of that. Did you manage to repeat that feat, or is it going to be a bit different this year?

Speaker #4: All right, so first of all, on the closing timeline, I think there's nothing new that I can really flag. So our base assumption is still that closing is realistic around the turn of the year.

Max Westmeyer: All right. First of all, on the closing timeline, I think there is nothing new that I can really flag. Our base assumption is still that closing is realistic around the turn of the year, with a good portion of uncertainty given that we don't have the closing conditions in our hand completely, again, given that we are waiting on regulatory approval that is outstanding. We're making progress as expected, therefore, we are also confident that we can make the closing as planned. But again, it's not completely in our own hand, and sometimes we just have to wait until we get the final nod from a regulatory body in that regard.

Speaker #4: With a good portion of uncertainty, given that we don't have the closing conditions in our hands completely, as we are waiting on regulatory approval.

Speaker #4: That is outstanding. So, we're making progress as expected. Therefore, we are also confident that we can make the closing as planned. But again, it's not completely in our own hands, and sometimes we just have to wait until we get the final nod from a regulatory body in that regard.

Max Westmeyer: On the split, I would not expect any commentary now related to Q3, but once we have a bit more detailed picture available on how exactly the timing of the closing will look like, we can also, let's say, fine-tune the assumptions and the models that we have made around how to split and when to start allocating the proceeds, and we will communicate around that once we have a bit more of a clear picture. September last season, yes, was very strong, especially on the winter tire side. This is really also one of the, let's say, main drivers where we see volumes, or one of the larger drivers where we see volumes down. Now this year, the order book in terms of mix certainly looks great, but it's just that we have been very strong on the volume side last year.

Speaker #4: So, on the split, I would not expect any commentary now related to Q3. But once we have a bit more detailed picture available on how exactly the timing of the closing will look, we can also, let's say, fine-tune the assumptions and the models that we have made around how to split and when to start allocating the proceeds. We will communicate around that once we have a bit more of a clear picture.

Speaker #4: September last season, yes, was very strong, especially on the winter tire side. And this is really also one of the, let's say, main drivers where we see volumes—or one of the larger drivers where we see volumes—down.

Speaker #4: Now, this year, the order book in terms of mix certainly looks great, but it's just that we have been very strong on the volume side last year.

Speaker #4: So this is something that we feel in the comms space. And therefore, again, our expectation is that volumes are slightly down this year. For the winter season, we saw a very strong Q3 last year, a bit softer Q4, so it should be a bit more level.

Max Westmeyer: This is something that we feel on a comm space. Therefore, again, our expectation is that volumes are slightly down this year. Winter season, we've seen very strong Q3 last year, a bit softer Q4. Should be a bit more level. That's our expectations in terms of quarterly progression.

Speaker #4: That's our expectations in terms of quarterly progression. So, you mean slightly softer Q3, but possibly stronger Q4? Yeah. I mean, let's wait and see.

Thomas Besson: You mean slightly softer Q3, but possibly stronger Q4?

Max Westmeyer: Yeah. Let's wait and see. The Q4 part is yet to be seen. At least Q3, that's basically the assumptions that we've had throughout the year, that it's going to be a tough comp, and that's what we see now also materializing. Q4 is then also a question, how does the first wave of sellout look like? How much second wave of sell-in will we see in the market? That's a bit too early to comment on.

Speaker #4: The Q4 part is yet to be seen, but at least Q3—that's basically the assumptions that we've had throughout the year. That is going to be a tough comb, and that's what we see now also materializing. Q4 is then also a question: how does the first wave of sale outlook look like?

Speaker #4: How much second wave of selling will we see in the market? So that's a bit too early to comment on. Great, thanks. I just have a follow-up question for you.

Thomas Besson: Great. Thanks. I just have a follow-up question for you. Have you had any issues in terms of sourcing some of the oil-related components that you need, or is still everything clear for you?

Speaker #4: Have you had any issues in terms of sourcing some of the oil-related components that you need, or is everything still clear for you?

Speaker #5: No, I mean, we have built up a bit of inventory to make sure that we're always able to deliver and produce the products. But we didn't have any significant issues with sourcing components.

Max Westmeyer: No. We have built up a bit of inventory to make sure that we're always able to deliver and produce the products. But we didn't have any significant issues with sourcing components. So it's been really a price topic that we talk about, not an availability topic in terms of limits of production.

Speaker #5: So it's really been a price topic that we talk about, not an availability topic in terms of limits of production.

Speaker #4: Great, thank you very much, Max.

Thomas Besson: Great. Thank you very much, Max.

Operator 4: There seems to be no further questions.

Operator: There seems to be no further questions.

Speaker #2: There seem to be no further questions at the moment. No, there aren't any more questions. So I'll just hand it back to you for closing remarks.

Max Westmeyer: Great.

Operator 4: I will wait a little bit. No, there are not any more questions, so I will just give it back to you for closing remarks.

Operator: I will wait a little bit. No, there are not any more questions, so I will just give it back to you for closing remarks.

Speaker #4: Thank you very much. I have already done my commentary around the planned consensus before the Q&A, so the obligatory comment that would normally follow, I will leave it at that.

Max Westmeyer: Yeah, thank you very much. I have done my commentary around the planned consensus already before the Q&A, therefore, the obligatory comment that would follow now, I would leave it with that. We will certainly reach out to you regarding consensus. Of course, we are also there if you have any open questions after this call that are remaining, just give us a call. We are very happy to answer those. Please note our next quiet period begins Monday, 5 October. That is when we are preparing earnings. With that, thanks again. Have a great evening, and talk to you soon. Bye-bye.

Speaker #4: We'll certainly reach out to you. Regarding consensus—and of course, we're also here if you have any open questions after this call that remain. Just give us a call.

Speaker #4: We're very happy to answer those. Please note our next quiet period begins Monday, October 5. That's when we are preparing earnings. And with that, thanks again.