• Sales up to EUR9.21 billion after nine months
• Consolidated net income after taxes up 75.8 percent
• Operating result significantly over EUR one billion expected for 2004

Hanover/Germany, November 3, 2004. Continental AG, is continuing its record-breaking performance. The international automotive supplier increased its consolidated sales in the first nine months of 2004 by 9.1 percent before foreign exchange effects and following consolidation. In-cluding exchange rate effects and consolidation changes, sales were up 8.6 percent from EUR8,485.0 million to EUR9,214.5 million.

The consolidated operating result (EBIT) increased to EUR777.3 million, up 17.6 percent from last year's figure of EUR661.0 million. The return on sales amounted to 8.4 percent (PY: 7.8 percent). The restructuring of our Mayfield plant in the United States impacted the result by EUR108.4 million. Before the restructuring, EBIT improved by 34.0 percent and the return on sales amounted to 9.6 percent. Consolidated net income after taxes increased 75.8 percent from EUR244.9 million to EUR430.6 million, with earnings per share rising from EUR1.86 to EUR3.17.

Sales, EBIT and Return on Sales (in EUR million):

 "Once again our figures demonstrate that we are continuing on the road to suc-cess despite partly unfavourable conditions such as the sluggish global automo-tive economy," said Continental Executive Board chairman, Manfred Wennemer. Dr. Alan Hippe, Executive Board member responsible for finance, audit and law, pointed out the continuing positive impact of the consistent reduction in in-debtedness: "Our interest expense fell to EUR78.3 million in the first three quar-ters of 2004. In the same period last year, it was still approximately EUR96 mil-lion and in the first nine months of 2002 it was as much as EUR134 million." At the end of September 2004, net indebtedness amounted to EUR1,141.1 million and the gearing ratio 46.9 percent (PY: 92.8 percent).

Continental Automotive Systems shows notable improvement in earnings

The Continental Automotive Systems division (CAS) increased its sales in the first nine months of 2004 by 10.9 percent over the same period last year before foreign exchange effects. Including exchange rate effects, sales increased by 8.4 percent from EUR3,470.2 million to EUR3,761.7 million. Except for the Electric Drives business unit, which fell just short of last year's level, all business units contributed to the growth in sales. The positive trends in sales volumes, together with an improved product mix and the cost-saving programs, led to a notable improve-ment in earnings. CAS increased its operating result (EBIT) to EUR352.2 million, up 26.1 percent from EUR279.3 million for the first nine months of last year. The return on sales amounted to 9.4 percent (PY: 8.0 percent).

PLT Tyres earnings (EBIT) up 50.1 percent before restructuring costs

Before foreign exchange effects, sales of the Passenger and Light Truck Tyres (PLT) division were up 7.7 percent for the first nine months of this year. Includ-ing exchange rate effects, sales improved by 5.1 percent from EUR2,821.1 mil-lion to EUR2,964.4 million. The worldwide unit volumes sold to the automotive industry increased by 14 percent, and sales figures were up 7 percent in the European replacement business.

Although replacement unit volumes in the NAFTA region declined overall, a sig-nificantly improved product mix and implemented price increases still enabled the operating result to surpass internal goals. Losses within the region, which were lower than in the prior year, are still being offset within the division by the very good business in Europe. Higher prices of materials and additional social welfare ex-penses in the U.S.A. continued to impact earnings. In addition, there was a EUR108.4 million charge against earnings due to the restructuring at the Mayfield plant. This restructuring expense will amount to about EUR120 million for the year as a whole.

Despite the restructuring, the operating result (EBIT) of the Passenger and Light Truck Tyres division, at EUR250.4 million, is 4.7 percent higher than for the same period last year (EUR239.1 million). The return on sales amounted to 8.4 percent (PY: 8.5 percent). Before the restructuring measures, the EBIT amounted to EUR358.8 million. This represents a 50.1 percent increase and a return on sales of 12.1 percent.

Commercial Vehicle Tyres improves earnings by 22.0 percent

Before foreign exchange effects and changes following consolidation, the sales of the Commercial Vehicle Tyres division rose by 9.9 percent. Including exchange rate effects and the consolidation of Continental Sime Tyre, sales increased 23.4 percent from EUR893.9 million to EUR1,103.5 million. In Europe, total volume sold to vehicle manufacturers and to the replacement market increased by 10 percent. Capacity bottlenecks kept unit sales at the same level as last year in the NAFTA region, where deliveries to the automotive industry were notably higher and sales to the replacement market declined. Higher ma-terial costs and additional social welfare expenses in the U.S.A. continued to impact earnings. The operating result (EBIT) of the Commercial Vehicle Tyres division rose from EUR57.4 million to EUR70.0 million, representing a 22.0 per-cent increase. The return on sales amounted to 6.3 percent (PY: 6.4 percent).

ContiTech improves sales and earnings

Before foreign exchange effects, ContiTech increased its sales in the first nine months of 2004 by 6.8 percent compared with the same period last year. In-cluding exchange rate effects, sales were up 6.6 percent from EUR1,353.8 mil-lion to EUR1,442.6 million. Elastomer Coatings' sales were on a par with the first nine months of 2003, while all other units posted improvements of between 2 and 20 percent. ContiTech increased its operating result (EBIT) to EUR131.8 mil-lion, up 17.5 percent from EUR112.2 million for the first nine months of last year. The return on sales thus amounted to 9.1 percent (PY: 8.3 percent).

Work force increases further

On September 30, 2004, Continental's employees numbered 73,186, up 4,357 compared with December 31, 2003. The increase was due in part to the first-time consolidation of the sensor business at CAS in China and of Continental Sime Tyre in the Commercial Vehicle Tyres division.

Outlook

"We assume that there will be a further gain in consolidated sales for 2004 as a whole and that we will achieve an operating result exceeding last year's figure of EUR855 million, despite the restructuring in Mayfield and possible impair-ment losses from our investment in Moscow. Excluding the restructuring costs in Mayfield, this means that the operating result would significantly surpass one billion euros, thus reaching a new record level," emphasised Wennemer. "For 2005 we anticipate that sales and our operating result will increase further over 2004 levels."

Dr. Hippe pointed out the positive effects of the takeover of Phoenix AG by Continental AG, which was approved by the EU on October 26: "We will be able to further expand the position of the ContiTech division as one of the world's leading specialists in rubber and plastics technology by bringing the two companies together. The concessions required by the antitrust authorities have had only a minor impact on the economic effectiveness of the merger."