2005-2006 Financial Statements and Management Report

64
THE AREAS OF ACTIVITY OF THE
SEGMENTS GIVE RISE TO DIFFERENT
MARKET RISKS.
RISKS OF FUTURE DEVELOPMENTS IN THE ECONOMY
For 2007 we expect continuing growth of the world economy. World gdp is expected to increase by
4.5%, slightly lower than the year before. For 2008, too, we expect the growth to continue, albeit at a
slightly slower rate. This forecast is based on a number of assumptions. It is assumed that the geopolitical
and economic situation will remain largely stable, in particular in respect of developments on the
capital, foreign currency and raw materials markets and in international trade.
Prices of crude oil and other energy raw materials are not expected to increase significantly in 2007.
A marked rise in the price of oil would slow down global economic growth, increase our procurement
costs and negatively impact sales prospects on the international markets. We expect supplies of
energy and other raw materials to remain secure.
Against the background of the slight slowdown in world economic growth and the limited inflation
risks, we expect at most only isolated interest rate increases by the central banks. In particular in the
usa the central bank is unlikely to introduce further interest rate rises. As a result we do not expect any
major changes in the us dollar/euro exchange rate. An interest and exchange rate risk would occur if
the capital markets were to significantly change their positive stance toward the financial feasibility of
the us trade deficit. This would lead to an increase in the value of the euro with negative effects on the
competitiveness of European businesses.
MARKET RISKS IN THE SEGMENTS
In the steel business we counter the risks arising from cyclical trends by optimizing costs, adjusting
production in a timely manner and concentrating on exacting market segments. Quality and delivery
deadline risks are minimized through continuing optimization of the value chains.
In the Steel segment there are major opportunities as well as risks on the market side regarding the
implementation and development of sales prices and volumes. Disproportionate increases in raw
materials prices pose risks on the cost side. We therefore keep a constant eye on developments and
influential factors. In addition, potential damage events could negatively impact earnings even though
organizational and technical measures are implemented on an ongoing basis to prevent such events.
Despite our special market position, there remains a risk of surplus capacities arising particularly in
China in the coming years which would disturb the balance on the world markets and could lead to
inadequate price structures. This poses significant risks for ThyssenKrupp Steel and its competitors.
Developments in Asia are therefore being closely monitored.
In addition to the general risks affecting the steel business, the Stainless segment also faces risks
mainly from existing or anticipated overcapacities at the stainless producers in Asia, in particular
China. Stainless counters these market risks by expanding its business with end customers, providing