Hanover (August 3, 2006) -- Continental AG, Hanover, is continuing on its stable and successful course despite increases in the prices of raw materials and the restrained economic situation within the automotive industry worldwide. For the first half of 2006, the international automotive supplier again reported higher sales and EBIT figures compared with the same period last year. “Given the positive half-year results in a difficult environment, we are highly confident of reaching our set annual targets and of achieving new record figures for sales and EBIT in 2006 for the fifth consecutive year. We are looking to the second half of this year with optimism because, driven by the winter tire business among other things, sales are traditionally stronger than in the first half,” said Manfred Wennemer, Chairman of the Executive Board, on Thursday in Hanover. “In addition, we will be consolidating and rapidly integrating the automotive electronics business we have just acquired from Motorola.”

In the first six months of 2006, consolidated sales rose 6.2 percent to EUR7,230.9/USD8,900.5 million compared with the same period of the previous year (EUR6,807.7/USD8,745.2 million). Before changes in the scope of consolidation and exchange rate effects, consolidated sales also increased by 6.2 percent. EBIT was up by a significant 17.1 percent or EUR112.8/USD138.8 million before changes in the scope of consolidation and one-time effects. Altogether, EBIT improved 5.3 percent to EUR722.0/USD888.7 million (PY: EUR685.7/USD880.9 million). The return on sales amounts to 10.0 percent (PY: 10.1 percent). Net income attributable to the shareholders of the parent increased 3.1 percent to EUR423.6/USD521.4 million (PY: EUR411.0/USD528.0 million). Earnings per share rose to EUR2.90/USD3.60 (PY: EUR2.82/USD3.5).

€/USD millions	Sales		EBIT ( ) = Return on sales
	Jan. – June 2006	Jan. – June 2005	Jan. – June 2006	Jan. – June 2005
Continental Corporation	EUR7,230.9/ USD8,900.5	EUR6,807.7/ USD8,745.2	EUR722.0/ USD888.7 (10.0%)	EUR685.7/ USD880.9 (10.1%)
Automotive Systems	EUR2,853.9/ USD3,512.9	EUR2,656.3/ USD3,412.3	EUR316.8/ USD389.9 (11.1%)	EUR277.3/ USD356.2 (10.4%)
Passenger and Light Truck Tires	EUR2,243.4/ USD2,761.4	EUR2,081.2/ USD2,673.5	EUR211.9/ USD260.8 (9.4%)	EUR247.5/ USD317.9 (11.9%)
Commercial Vehicle Tires	EUR719.7/ USD885.9	EUR651.1/ USD836.3	EUR44.2/ USD54.4 (6.1%)	EUR51.5/ USD65.6 (7.8%)
ContiTech	EUR1,475.3/ USD1,815.9	EUR1,469.2/ USD1,887.3	EUR175.3/ USD215.8 (11.9%)	EUR130.0/ USD167.0 (8.8%)

“Before changes in the scope of consolidation and one-time effects, we achieved marked improvements in EBIT amounting to EUR40.6/USD51.1 million for the second quarter of 2006, and EUR112.8/USD138.8 million for the first half of 2006, compared with the respective periods of last year. Contributing factors included the improved passenger and light truck tires business in the NAFTA region, where adjusted EBIT distinctly outperformed the figure for the same period of 2005,” underlined CFO Dr. Alan Hippe. “Looking at the adjusted consolidated EBIT after six months, one must take into account that we had positive one-time effects of EUR27.0/USD34.7 million in the same period of 2005 owing to the switch from defined benefit pension plans in the U.S.A. During the first six months of this year, however, we had various one-time effects influencing EBIT, in particular the negative amount of EUR65.2/USD80.3 million for restructuring expenses in Charlotte, U.S.A., and in Ebbw Vale, UK.”

The increasing raw material prices, in particular for natural rubber and oil, reduced EBIT in the first six months of 2006 by approximately EUR127.0/USD156.3 million compared with the average prices for 2005 as a whole, and by about EUR158.0/USD194.5 million compared with the prices for the first six months of 2005.

For the period to June 30, 2006, research and development expense rose by 8.8 percent compared with the same period of 2005 to EUR316.7/USD389.8 million (PY: EUR291.0/USD373.8 million), representing 4.4 percent of sales (PY: 4.3 percent). In the first half of 2006, EUR362.1/USD445.7 million (PY: EUR346.4/USD445.0 million) was invested in property, plant, equipment and software; the capital expenditure ratio amounts to 5.0 percent (PY: 5.1 percent). As of June 30, 2006, Continental’s employees numbered 80,306, an increase of 457 compared with December 31, 2005.

Sales by the Automotive Systems division increased during the first half of 2006 to EUR2,853.9/USD3,512.9 million, up 7.4 percent compared with the same period of 2005 (EUR2,656.3/USD3,412.3 million). Before exchange rate effects, sales grew by 6.2 percent. Automotive Systems improved its EBIT by 14.2 percent to EUR316.8/USD389.9 million (PY: EUR277.3/USD356.2 million) and the return on sales to 11.1 percent (PY: 10.4 percent). Before one-time effects, EBIT improved by EUR67.0/USD82.5 million.

The Passenger and Light Truck Tires division increased sales for the first six months of 2006 in comparison to the first half of 2005 by 7.8 percent to EUR2,243.4/USD2,761.4 million (PY: EUR2,081.2/USD2,673.5 million). Before exchange rate effects, sales rose by 5.8 percent. The division reported a 14.4 percent decline in EBIT to EUR211.9/USD260.8 million (PY: EUR247.5/USD317.9 million) and a return on sales of 9.4 percent (PY: 11.9 percent). Before one-time effects, EBIT improved by EUR23.8/USD29.3 million.

The Commercial Vehicle Tires division reported sales of EUR719.7/USD885.9 million for the first six months of 2006, an increase of 10.5 percent over the same period of 2005 (EUR651.1/USD836.4 million). Before changes in the scope of consolidation and exchange rate effects, sales were up 8.2 percent. The division reported a decline in EBIT to EUR44.2/USD54.4 million (PY: EUR51.1/USD65.6 million) and a return on sales of 6.1 percent (PY: 7.8 percent). Before changes in the scope of consolidation and one-time effects, EBIT declined by EUR1.2/USD1.5 million.

Sales by the ContiTech division increased during the first half of 2006 to EUR1,475.3/USD1,815.9 million, up 0.4% compared with the same period of 2005 (EUR1,469.2/USD1,887.3 million). Before changes in the scope of consolidation and exchange rate effects, sales rose by 6.2 percent. Roulunds contributed EUR14.5/USD17.8 million to sales. ContiTech raised EBIT by 34.8 percent to EUR175.3/USD215.8 million (PY: EUR130.0/USD167.0 million) and its return on sales to 11.9 percent (PY: 8.8 percent). Roulunds contributed EUR1.4/USD1.7 million to EBIT. Before changes in the scope of consolidation and one-time effects, EBIT improved by EUR29.2/USD35.9 million.

“We see these first-half results as especially encouraging for our forecast of topping last year’s sales and earnings. In the light of this performance we have no cause to revise our outlook for fiscal year 2006 – even though competitors operating in parts of our business have been forced to do so,” said Wennemer.

The Continental Corporation is a leading supplier of brake systems, chassis components, vehicle electronics, tires and technical elastomers. In 2005 the corporation posted consolidated sales of EUR13.8 billion. It currently has a worldwide workforce of around 80,600 employees.