2005-2006 Financial Statements and Management Report

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70 THE NUMBER OF EMPLOYEES WILL RISE IN 2006/2007 – MAINLY OUTSIDE GERMANY. Based on a continued positive performance, we expect the Group’s sales to remain strong in 2007/2008. We continue to intensively pursue our sales target of €50 billion. Earnings and dividend: Our long-term target for pre-tax earnings over the economic cycles is €2.5 billion. Having achieved this target in 2005/2006, we are confident we can repeat our performance in 2006/2007. We aim to achieve earnings of a similar magnitude in 2007/2008. We will continue to pay a dividend based on our earnings performance. Employees: We plan to have around 191,000 employees at September 30, 2007, an increase of 2%. In 2007/2008 the headcount is expected to increase by a further 2%. Despite the anticipated increases, the workforce in Germany is likely to decrease because for market- and cost-related reasons the growth in employment will take place almost exclusively outside Germany. Training young people will remain a high priority in the future and for this reason we will continue to provide apprentice training beyond our own requirements. In view of the shortage of apprenticeship places on the market, we aim to give as many young people as possible a sound start to their working lives. The Group’s total personnel expense in 2006/2007 is expected to be around €9.5 billion; in the subsequent year it could increase further. Procurement: In the next two fiscal years, materials expense is again expected to amount to significantly more than 50% of sales due to persistently high raw material prices and the increasing proportion of purchased products and services. In view of our long-term, international supplier relationships, we do not anticipate any bottlenecks in the procurement of raw materials, components, operating materials or services in 2006/2007 or 2007/2008. In fiscal year 2006/2007 we will continue our successful purchasing initiative, which will not only further reduce overall costs but in the medium term also strengthen the quality of purchasing. One aspect of this will be the expansion of our strategic supplier management system, under which we identify the best suppliers worldwide so that we can focus on them more strongly and build long-term partnerships with them. In this way we can limit or in some cases even reduce purchasing prices.
FINANCIAL STATEMENTS AND MANAGEMENT REPORT Subsequent events, opportunities and outlook Research and development: In the current fiscal year we plan to spend over €800 million on the development of new products and processes including quality assurance. This represents an increase of over €50 million. A further increase is planned in the following fiscal year. One key area is the development of new carbon and stainless steel materials which can be easily processed by our customers, e.g. in the auto industry, while at the same time displaying high strength. In the marine systems business we aim to optimize the building of naval ships and the integration of the various electronic control systems. Our plant technology business will further develop several of its production processes with the aim of reducing energy consumption. For the planned increase in development activities, our research centers will recruit more employees; in addition, cooperation with external universities will be intensified. Individual projects may be carried out under international research contracts to shorten development times. The Group’s development centers will work on a cross-segment basis as far as possible in order to pool resources and enhance efficiency. Environmental protection: Spending on ongoing environmental protection programs is expected to total over €400 million in both fiscal 2006/2007 and fiscal 2007/2008. Most of this will go towards reducing air and water pollution. In the Steel and Stainless segments, significant investments in pollution control equipment may be incurred for the construction projects in Brazil and the usa. We will expand our recycling activities in all segments to make better use of materials and conserve natural resources. Efforts aimed at saving energy in our operations will also be continued. EXPECTED FINANCIAL SITUATION At €7 billion, the volume of investment approved by the Supervisory Board is significantly higher than the previous year due to the investments in Brazil. In 2006/2007 – excluding any influences from the Dofasco project – we plan to invest €3.2 billion in tangible, intangible and financial assets, €1.7 billion above depreciation. The Group has adequate funds to finance the planned capital expenditures in 2006/2007, and our ambitious investment program for the following fiscal year is also on a solid financial basis. OUR SPENDING ON RESEARCH AND DEVELOPMENT WILL RISE TO OVER €800 MILLION. 71
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2005 - 2006 Financial Statements an
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02 BUSINESS AREAS AND ORGANIZATIONA
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04 OVERVIEW OF THE COURSE OF BUSINE
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06 NICKEL ALLOYS AND TITANIUM MILL
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08 THYSSENKRUPP ACHIEVED A SIGNIFIC
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10 €489 MILLION OF UNAPPROPRIATED
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12 INVESTMENTS IN GROWTH AREAS STRE
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14 FUEL PRICE INCREASES PUSHED UP T
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16 WE HAVE DEVELOPED A PLANT FOR CO
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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
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 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 102: 100 CONTACT/2007/2008 DATES For mor
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