2.4. LOS PRINCIPIOS DE LA INVERSI ´ ON
2.4.2. EL PRINCIPIO DE TRANSPARENCIA: FUENTES DE IN-
2.4.2.3. LOS HECHOS RELEVANTES Y LAS PARTICIPA-
Management Report Corporate Profile Annual Report 2014 Continental AG 41
Rubber Group:
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The Tire division offers the complete spectrum of tires, rang- ing from tires for cars, trucks, and buses to specialist products for construction and industrial vehicles to tires for bicycles and motorcycles.›
The ContiTech division combines our rubber and plastics activities for numerous key industries.Globally interconnected value chain
Our research and development (R&D) takes place at 127 loca- tions in 27 countries, predominantly in close proximity to our local customers to ensure that we have the flexibility to adapt to individual requirements and regional market characteristics. This applies particularly to the R&D projects of the Automotive Group and ContiTech division, which have a more decentralized organizational structure. The global product requirements gov- erning tire business are largely similar but are defined different- ly depending on the market requirements. In this respect, R&D has a largely centralized structure in the Tire division. Within the Continental Corporation, around €2.1 billion is invested in R&D. The focal points are the Automotive Group’s pioneering projects, which account for a large amount of our total R&D expenses. In addition, the share that these expenses hold in sales in the Automotive Group is much greater than in the Rubber Group (for detailed explanations, see the Research and Development section).
Continental uses a wide range of raw materials and semifin- ished products. The purchasing volume comes to about €16 billion. Key raw materials for the Automotive Group are steel, aluminum, precious metals, copper, and plastics. One point of focus when it comes to purchasing materials and semifinished products is electronics and electronic components, which to-
gether make up around 41% of the corporation’s total purchas- ing volume. Furthermore, mechanical components account for just over a quarter of this volume. Natural rubber and oil-based chemicals such as synthetic rubber and carbon black are key raw materials for the Rubber Group. The total purchasing vol- ume for these materials amounts to just under a fifth of the total volume for production material (for detailed explanations, see the Development of Raw Material Markets section in the Economic Report). In line with our purchasing strategy, suitable suppliers are selected and certified for each group of materials. Our goal here is to ensure competitiveness as well as constant availability.
In accordance with our philosophy and strategy, production and sales in our Automotive divisions and in the ContiTech division are customer-focused and organized across regions (for detailed explanations, see the Corporate Strategy section). With major locations in Europe, the U.S.A., and China, we have tire production activities, in which economies of scale play a key role, in the three dominant automotive markets in terms of production and vehicle stock. As such, low production costs coupled with large volumes or high rates of regional growth constitute key success factors. We have systematically brought our infrastructure for tire production into line with this.
With a share of just under 73% of our consolidated sales, the automotive industry (original equipment manufacturers) is our largest customer segment. And the importance of this industry to the growth of the Automotive Group is equally high. In the Rubber Group, the tire business with end customers dominates. At ContiTech, other key industries play an important role along- side the automotive industry. These include machine and equipment engineering, and applications in mining and oil production.
Management Report Corporate Profile Annual Report 2014 Continental AG 42
Continental is a leading global automotive supplier, tire manu- facturer, and industrial partner to other key industries. The mar- ket environment is highly competitive, which means there is intense pressure to innovate and keep costs down. The needs and demands of our customers in the individual regions and market segments are changing at an increasing pace. A high level of flexibility and customer focus are therefore key to our success.
Over the long term, market development is being influenced by social trends in the major regions of the world. These trends include the rapid growth of the world’s population, resulting in increasing urbanization; demographic change, and – in particu- lar – globalization. In this context, people are striving to achieve a higher standard of living and the need for mobility is on the rise. Four megatrends can be derived from these global devel- opments. They form the foundation of our strategy and our business activities:
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Safety – For safe mobility›
Information – For intelligent driving›
Environment – For clean power›
Affordable Cars – For global mobilitySeven strategic dimensions
Based on the four megatrends, our strategy comprises seven dimensions that complement one another and are systematical- ly geared toward sustainably creating value and ensuring the future viability of the company.
1. Value creation – enhancing the value of the corporation on a long-term basis
We want to achieve a lasting increase in the value of the com- pany. This aspiration encompasses much more than just the earnings margin in relation to sales. Instead, value results from sustainable, lasting success while taking into consideration the costs of capital. We therefore manage Continental in accord- ance with the principles of value-oriented management (for detailed explanations, see the Corporate Management section). According to these principles, the company achieves an in- crease in value in a fiscal year when the return on capital em- ployed (ROCE) exceeds the average costs of capital – the mini- mum required rate of return. To ensure our future viability, we are striving to achieve much more than this. In the medium term, we want to increase our ROCE to exceed 20%.
Three areas of activity are key to us: innovations, improvement of efficiency and productivity; and strong, profitable growth on the emerging markets. In the year under review, we achieved a ROCE of 20.0% following 19.4% the previous year. With this, 2014 saw another positive contribution toward the company’s value.