2005-2006 Financial Statements and Management Report

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12 INVESTMENTS IN GROWTH AREAS STRENGTHEN COMPETITIVENESS. CAPITAL EXPENDITURES Investment by segment in million € Steel Stainless Special Materials Automotive Technologies Elevator Services Corporate Consolidation Group All figures relate to continuing operations. * before taxes In 2005/2006, ThyssenKrupp made investments of €2.1 billion, 9% more than the previous year. €1,621 million was spent on property, plant and equipment and intangible assets, while the remaining €456 million was used for acquisitions. Capital expenditure was €0.7 billion higher than depreciation (€1.4 billion). ThyssenKrupp invests strongly in its growth areas to ensure they remain competitive in the future. More than half of the investments made were to expand capacities and production. Other key areas include increasing the technical efficiency of existing equipment and integrating advanced technologies. Further information can be found in the notes to the consolidated statements of cash flows in the section “Financial position” on pages 44-48. PROCUREMENT: RAW MATERIAL PRICES STILL HIGH 2004/2005 537 211 27 480 413 121 190 71 (147) 1,903 2005/2006 Materials expense in the reporting year totaled €29.7 billion, up 11% from the prior year. As well as increased raw material prices, the rise reflects the higher volume of business. Although markets were tight in part, supplies were secured at all times. 515 230 – 448 300 164 393 30 (3) 2,077 Iron ore more expensive Price trends on the international raw material markets varied. Due to continued high demand we had to accept a 19% rise in the price of fine iron ores. By contrast, we achieved a 3% reduction in the price of pellets. We purchase most of our ores and pellets from suppliers in Brazil, Australia and Canada. Materials expense in billion € 2001/2002 2002/2003 2003/2004 2004/2005 2005/2006 20.7 20.5 23.2 26.6 29.7
FINANCIAL STATEMENTS AND MANAGEMENT REPORT Overview of the course of business in the Group The supply situation for coking coal eased significantly in the reporting year. This was partly due to an increase in output by international coal producers and partly to the fact that stocks at consumers worldwide were higher than in the past. Against this background, we were able to achieve price reductions of around 10% at the start of the new coal business year on April 01, 2006, and as much as 35% for PCI coal. The clear easing of the China-dominated coke market has brought about a notable decrease in prices for internationally traded blast furnace coke since 2005. Although prices started to climb again slightly in spring 2006, they are still well below the peak levels of late 2004/early 2005. By contrast, there were signs of supply shortages on the nickel market. During the reporting period, nickel prices rose from US$11,600 per ton in November 2005 to US$20,685 per ton in May 2006 and further to US$29,700 per ton in August 2006. The surcharge for immediate delivery was up to US$5,050 per ton. World market prices for chromium dipped briefly before regaining their previous level from mid-2006. After brief spikes, prices for ferromolybdenum fell to around US$60 per kilogram. There was a similar trend in vanadium. By contrast, prices for aluminum and zinc rose in part drastically. Between October 2005 and May 2006, the price of zinc more than doubled, and at the end of the reporting period was 129% higher than at the start of the fiscal year. Prices for unalloyed steel scrap moved in waves: at the start of the reporting year they fell to €180 per ton, rose as high as €236 per ton in July 2006 and then started to trend slightly downward again. Prices for alloyed scrap remained stable until early 2006, as sufficient quantities were available on the market. With the stainless steel market performing strongly, demand for alloyed scrap later increased significantly, which also drove up prices. Pooling of orders and annual contracts improved purchasing position We were able to counter many price increases by increasingly pooling our orders and concluding annual contracts. This was the case for example for purchased electrical, mechanical, pneumatic and hydraulic parts which are independent of metal prices. Although delivery periods for special and large-scale engineering parts were longer in the mechanical and plant engineering sectors due to very high workloads at supply companies, prices remained stable. For other products as well as direct and indirect services, identifying new international suppliers helped us to maintain or even reduce price levels. Pooling purchasing volumes also strengthened our negotiating position. Further concrete cost advantages were achieved by our in-house sourcing project, under which production operations within the Group compete with established market players. Purchasing activities in the Group are supported by newly introduced strategic tools for supplier management (analysis and development of strategic suppliers) and global sourcing (systematic analysis of sourcing categories and identification of new procurement sources). Our global purchasing efforts are also facilitated by the ThyssenKrupp procurement platform. A Strategic Sourcing module accessible via the internet allows worldwide requests for quotes and auctions. In the reporting year we advertised purchases worth more than €500 million. Online requests for quotes are currently being used by Group companies in Germany, Liechtenstein, France, Italy, the United Kingdom and the usa. The number of auctions has also increased. Our second program module – Catalog Ordering – has further established itself internationally. More than 3 million items from over 250 suppliers can now be purchased online. This significantly reduces the costs of purchasing transactions for both us and our suppliers. PRICES FOR ALLOYING METALS SUCH AS CHROMIUM AND ZINC ROSE SHARPLY. 13
Page 1: 2005 - 2006 Financial Statements an
Page 4 and 5: 02 BUSINESS AREAS AND ORGANIZATIONA
Page 6 and 7: 04 OVERVIEW OF THE COURSE OF BUSINE
Page 8 and 9: 06 NICKEL ALLOYS AND TITANIUM MILL
Page 10 and 11: 08 THYSSENKRUPP ACHIEVED A SIGNIFIC
Page 12 and 13: 10 €489 MILLION OF UNAPPROPRIATED
Page 16 and 17: 14 FUEL PRICE INCREASES PUSHED UP T
Page 18 and 19: 16 WE HAVE DEVELOPED A PLANT FOR CO
Page 20 and 21: 18 STEEL ACHIEVED A PROFIT OF €1.
Page 22 and 23: 20 A STRONG MARKET REVIVAL AND INNO
Page 24 and 25: 22 IN MEXICO, HIGH-VALUE PRODUCTS A
Page 26 and 27: 24 AUTOMOTIVE CONTINUED ITS PORTFOL
Page 28 and 29: 26 TECHNOLOGIES ENJOYS SUCCESS ON T
Page 30 and 31: 28 THE LARGEST LATHE IN NORTHERN EU
Page 32 and 33: 30 ACQUISITIONS IN THE USA, ASIA AN
Page 34 and 35: 32 SERVICES ALMOST DOUBLED ITS PROF
Page 36 and 37: 34 CORPORATE INCLUDES VARIOUS SERVI
Page 38 and 39: 36 OUR CONTROL SYSTEM FOR LASER WEL
Page 40 and 41: 38 TO DATE, ALMOST 300 PROJECTS HAV
Page 42 and 43: 40 OCCUPATIONAL SAFETY HAS IMPROVED
Page 44 and 45: 42 OUR EXECUTIVE POLICY IS BASED ON
Page 46 and 47: 44 FINANCIAL POSITION The Group’s
Page 48 and 49: 46 INTANGIBLE ASSETS INCLUDE GOODWI
Page 50 and 51: 48 THE THYSSENKRUPP BRAND WAS FURTH
Page 52 and 53: 50 WE HAVE SEVERAL STRATEGIC OPTION
Page 54 and 55: 52 OUR INTEGRATED CONTROL CONCEPT S
Page 56 and 57: 54 GROWTH, EFFICIENCY AND OPTIMIZAT
Page 58 and 59: 56 OVER 60% OF BEST PROJECTS TAKE P
Page 60 and 61: 58 COMPENSATION REPORT THE BONUS AM
Page 62 and 63: 60 THE LTMI EXPIRED WITH PAYMENT OF
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62 THE SECURITY OF THE INFORMATION
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64 THE AREAS OF ACTIVITY OF THE SEG
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66 THE RISKS TO THE THYSSENKRUPP GR
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68 VEHICLE PRODUCTION REMAINS A GLO
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70 THE NUMBER OF EMPLOYEES WILL RIS
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72 BALANCE SHEET Assets million €
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74 NOTES GENERAL ThyssenKrupp ag is
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76 FIXED ASSETS SCHEDULE in million
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78 Disclosures on the volume of tre
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80 million € Bonds Liabilities to
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82 Foreign currency derivatives The
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84 22 TAXES ON INCOME Taxes on inco
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86 AUDITORS’ REPORT We have audit
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88 SUPERVISORY BOARD PROF. DR. H.C.
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90 LIST OF EQUITY INTERESTS Compani
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92 Companies (As of September 30, 2
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100 CONTACT/2007/2008 DATES For mor
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2005-2006 Financial Statements and Management Report

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