Annual Report 2003 2004

I
Letter to stockholders
Your ThyssenKrupp stock performed very well in fiscal 2003/2004: the share price rose
36%, clearly outstripping the dax index by almost 17 percentage points. Earnings per share
improved to €1.81 from €1.09 a year earlier, allowing us to propose a €0.10 higher dividend
of €0.60 to the Annual General Meeting in January 2005.
What lies behind these figures? They show two things: firstly, that the Group performed solidly
in the past fiscal year, and secondly that the capital market is recognizing this performance.
To give you a clearer picture of our work, I will concentrate on three key questions:
How did ThyssenKrupp perform? What progress have we made in implementing our corporate
strategy and what are our plans for the new fiscal year? What are the priority issues
for staff and management? I will concentrate here on the key points; further details can
be found elsewhere in this annual report.
I would like to start by stating – with a certain degree of pride – that the Group’s employees
once again gave their best in 2003/2004 and set themselves high standards. We
took advantage of the upswing in many of the countries and sectors important to the Group
to expand our business. However, we did not simply rely on the economy for help but continued
to drive forward our internal performance and efficiency enhancement programs.
How did ThyssenKrupp perform? Orders in the Group rose 17% to €41.0 billion in 2003/2004,
and sales were up by an encouraging 11% to €39.3 billion. Earnings before taxes reached
€1.58 billion, compared with €774 million a year earlier. These figures relate to the Group’s
continuing operations and therefore do not include contributions from operations we have
already sold – such as Triaton or Krupp Edelstahlprofile. We achieved a further significant
improvement in the quality of our earnings in the reporting period which allowed us to meet
our medium-term profit goal earlier than expected. We also showed that our target of €1.5
billion ebt was a realistic reflection of our earnings potential – something else we take pride
in. The Group’s net financial payables were further reduced and stood at €2.8 billion on September
30, 2004 compared with €4.2 billion at the end of the prior fiscal year.
Of course there were also obstacles to be overcome. Although the boom on the international
steel market ensured full order books and high workloads at ThyssenKrupp Steel,
we were also faced with sharp increases in procurement prices for ores, coal, coke, alloys,
energy and freights. Higher steel prices were thus essential to absorb the significant cost
rises. However, these were only possible in some areas, as we have longer-term supply
agreements with many major customers. So it is wrong to believe that the steel industry
is the great beneficiary of the steel boom and can raise its prices virtually at will.