2005-2006 Financial Statements and Management Report

68
VEHICLE PRODUCTION REMAINS
A GLOBAL GROWTH SECTOR WITH
NEW CAPACITIES BEING INSTALLED.
Predominantly positive trend on key customer markets
We expect a predominantly favorable trend on the customer markets of importance to ThyssenKrupp.
The prospects for the world steel market in particular remain generally positive. World demand for rolled
steel will grow by around 5% in 2007, driven mainly by the emerging countries of Asia and Latin America
and the cis states. In Europe and the nafta region demand is expected to remain steady or fall slightly
due to the somewhat subdued economic outlook and the expected reduction of stocks. However, steel
consumption is expected to increase further. Output will rise primarily in the emerging countries –
especially China, India and Brazil – as major new capacities go into operation. The situation on the raw
material and energy markets will remain tight on the whole, keeping steel production costs at a high
level or pushing them even higher.
We expect demand for stainless steel and the high-performance materials nickel alloys and titanium
to continue to rise in 2007, both in Europe and North America and also in Asia, in particular China.
While in China most producers have been operating below capacity due to strong capacity growth in
recent years, producers in Europe and the usa are barely able to keep up with demand.
We expect the automotive market to remain a growth market overall. For 2007 we expect worldwide
production to grow by 2% to 70.5 million vehicles. However, the new production capacities are increasingly
being installed in the emerging Asian countries and in Central and Eastern Europe. These countries
could once again significantly expand their vehicle production in 2007. In the nafta region, Western
Europe and Japan, volumes will decrease slightly. As a result of weaker domestic demand, German
auto production is expected to fall to 5.7 million cars and trucks.
Due to the slightly reduced pace of global expansion, growth in the mechanical engineering sector
in 2007 is not expected to be as strong as the year before. There are signs of cooling in the usa and
Western Europe in particular. In China, continuing high investment will continue to ensure strong
growth.
The international construction market will remain characterized by large regional differences in 2007.
In the euro zone growth will be weaker, and in Germany a slight rise in construction output is expected.
However, a significant downturn in construction activity is likely in the usa. Growth will remain focused
on the countries of Eastern Europe as well as India and China.
OPPORTUNITIES THROUGH INNOVATION AND INTERNATIONALIZATION
Under a systematic forward strategy, ThyssenKrupp sees significant growth opportunities for the coming
years. We aim to further increase the innovativeness and competitiveness of our products and services.
Innovative processes and products open up opportunities to secure and build on our top positions on
numerous markets. This applies not only to our range of materials but also to our complete system
solutions, for example in plant technology and marine systems. We also see good prospects in the
industrial services business. Its unique profile with innovative service offerings can make an even
greater contribution to the Company’s success in the future.