2005-2006 Financial Statements and Management Report

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48 THE THYSSENKRUPP BRAND WAS FURTHER DEVELOPED IN THE REPOR- TING YEAR AND IS A MAJOR ASSET. ASSETS NOT RECOGNIZED AND OFF-BALANCE FINANCING INSTRUMENTS In addition to the assets posted in the consolidated balance sheet, the Group uses assets which cannot be recognized in the balance sheet. These mainly concern specific leased or rented assets (operating leases). Of the assets not recognized, the ThyssenKrupp brand is a major intangible asset. It was further developed in the reporting year. In February 2006 we launched a new image campaign comprising an image film, tv commercials, press advertisements and outdoor advertising to further strengthen the brand. We regard the expenses for this as an investment in the future, because they give the brand an international profile, generate a presence on the markets and create transparency with regard to our products. Market studies confirm that the ThyssenKrupp brand enjoys a high recognition rating and is well liked by our customers. The main off-balance financing instruments used by the Group are factoring programs.
FINANCIAL STATEMENTS AND MANAGEMENT REPORT Financial position/Business management – goals and strategy BUSINESS MANAGEMENT – GOALS AND STRATEGY A growth-oriented strategy supported by value-based management at all key management levels provides the roadmap for our Group’s future development. A further contribution to growth stems from the ThyssenKrupp best value enhancement program which reinforces existing strengths and removes weaknesses in all segments. STRATEGY: ON GROWTH TRACK Following a period of consolidation, over the next few years ThyssenKrupp is to pursue a forward strategy aimed at achieving sustainably high earnings. All segments will contribute to this growth. The building of a new corporate headquarters in Essen will signal the strength of the Company going forward and at the same time reduce administrative costs and shorten decision-making paths. Expansion of services and innovations We aim both to strengthen our industrial activities and expand our position as a service provider. Our existing market and customer contacts in all segments provide a strong platform from which to offer our business partners further products and services. Through intensive innovation efforts and investment in new products and processes, we will also enhance our products and services to focus them even more sharply on market and customer needs. To this end, the ratio of research and development expenditure to sales is to be increased to 2%. In the reporting year this ratio was 1.6%. We will also focus systematically on the world market and further internationalize our product, production and customer structures. Sales target €50 billion We plan to achieve sales of €50 billion, 60% of which will be generated by the production of materials and capital goods. The remaining 40% will come from services. All segments are expanding the service side of their business. For the steel activities – i.e. carbon and stainless – we plan to achieve sales of €16 billion to €19 billion. In capital goods we expect sales to reach €19 billion to €21 billion and in materials and industrial services the target is €13 billion to €14 billion. This strong expansion is not to be achieved at the expense of profit – a parallel increase in earnings is also planned. Within a period of around ten years we plan to achieve Group sales of €55 billion. Growth strategies in the steel business In the Steel segment’s carbon steel business, the growth strategy is focused on the markets of North America and Europe. In the nafta region we are aiming for a market share of 5% in high-quality flat products, while in Europe our target is over 13%. Customers in both regions will be supplied with the 5 million tons of carbon steel slabs produced by our new steel mill in Brazil. The foundation stone for the new €3 billion mill was laid on September 29, 2006. Production is scheduled to start in early 2009. The mill will employ around 3,000 people and create a further 10,000 jobs at suppliers and service providers in the region. Offering optimized costs and quality in line with the Group’s high standards, the slabs supplied from the Brazilian state of Rio de Janeiro will secure our market strategies for Europe and the nafta region. STEEL’S STRATEGY REMAINS FOCUSED ON NORTH AMERICA AND EUROPE. 49
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 14 and 15: 12 INVESTMENTS IN GROWTH AREAS STRE
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 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
Page 64 and 65: 62 THE SECURITY OF THE INFORMATION
Page 66 and 67: 64 THE AREAS OF ACTIVITY OF THE SEG
Page 68 and 69: 66 THE RISKS TO THE THYSSENKRUPP GR
Page 70 and 71: 68 VEHICLE PRODUCTION REMAINS A GLO
Page 72 and 73: 70 THE NUMBER OF EMPLOYEES WILL RIS
Page 74 and 75: 72 BALANCE SHEET Assets million €
Page 76 and 77: 74 NOTES GENERAL ThyssenKrupp ag is
Page 78 and 79: 76 FIXED ASSETS SCHEDULE in million
Page 80 and 81: 78 Disclosures on the volume of tre
Page 82 and 83: 80 million € Bonds Liabilities to
Page 84 and 85: 82 Foreign currency derivatives The
Page 86 and 87: 84 22 TAXES ON INCOME Taxes on inco
Page 88 and 89: 86 AUDITORS’ REPORT We have audit
Page 90 and 91: 88 SUPERVISORY BOARD PROF. DR. H.C.
Page 92 and 93: 90 LIST OF EQUITY INTERESTS Compani
Page 94 and 95: 92 Companies (As of September 30, 2
Page 100 and 101:
98 Companies (As of September 30, 2
Page 102:
100 CONTACT/2007/2008 DATES For mor
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2005-2006 Financial Statements and Management Report

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