2005-2006 Financial Statements and Management Report

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AUTOMOTIVE CONTINUED
ITS PORTFOLIO OPTIMIZATION
IN 2005/2006.
The Chassis business unit increased its sales by 6% to €3.7 billion in the reporting period. This
pleasing development was due among other things to a significant increase in systems business. As
well as the start of production of axle assembly plants in Leipzig and Mexico, the three plants of ThyssenKrupp
Budd Systems in London, Columbia and Fowlerville recorded significantly higher orders. At
ThyssenKrupp Umformtechnik, ThyssenKrupp Presta SteerTec USA and ThyssenKrupp Bilstein Suspension,
new orders from various German auto manufacturers went into production. ThyssenKrupp
Tallent Chassis also reported increasing order numbers. Sales of the business unit were adversely
impacted by lower orders from us manufacturers in particular. Divestments also had a negative effect
on sales.
The Powertrain business unit achieved sales of €1.7 billion. Favorable factors were the start of production
on various crankshaft and camshaft orders, price increases in South America, and exchange
rate effects. In the Transmission & Driveline Components business, numerous programs were launched
for German, French and American auto manufacturers. Lower truck output and massive competition in
the area of 4-cylinder car crankshafts had a negative impact on sales.
Earnings
The Automotive segment returned a loss of €174 million, compared with a profit of €118 million a year
earlier. The loss was mainly due to restructuring expense and impairment charges on goodwill and
property, plant and equipment. The impairment charges resulted primarily from the initiation of the
disposal of the North American body and chassis business, but also from the deterioration in the situation
in Germany for body lines and tool/die making. Non-recurring expense for restructuring and impairment
charges amounted to €339 million. This was set against disposal gains of €35 million.
Operating profits in the Body business unit, i.e. disregarding non-recurring expense, fell short of
the prior-year level. This was mainly due to declining workloads at the North American and French
stamping plants and higher scrap prices at the American foundries.
The Chassis business unit increased its operating income, thanks to improved operating performances
at the British stamping plants and in the areas of steering and suspension.
The Powertrain business unit failed to match the high operating earnings of the previous year. Profits
were impacted by the development of the exchange rate for the Brazilian real against the us dollar.
Significant events
The Automotive segment further optimized its portfolio in 2005/2006. In the usa, the plastics plants
and the ThyssenKrupp Stahl Company aluminum foundry were sold. The closure of the Detroit plant of
ThyssenKrupp Budd began on September 30, 2006. In addition, the operations of Aluminiumfeinguss