Engineering

Management report on the Group
2.7 Management report on the Group Expected developments and associated opportunities and risks
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Our business performance in 2011/2012 will be characterized to a very large extent by the possible impact
of the financial crisis on our core markets in Europe and the NAFTA region, the scope of which cannot be
reliably assessed at this time. The Group takes these uncertain parameters into account in its outlook.
Our expectations for sales and earnings from continuing operations (adjusted EBIT) compared with the prior
year are currently as follows:
In the event of stagnation in our core markets we expect the Group’s sales to remain at the prior-year level
provided there are no major dislocations on the raw materials markets.
Earnings from the Materials business units should improve as a result of the ramp-up at Steel Americas; this
will be partly offset by the absence of prior-year earnings effects from raw material-driven price increases at
Steel Europe and Materials Services. At our less cyclical Technologies businesses Elevator Technology, Plant
Technology and Marine Systems, earnings should be stable; however at Marine Systems the positive
nonrecurring effects of the prior year will not be repeated. At Components Technology there could be a slight
decline in capacity utilization.
In the event of a slight downturn in our core markets we expect sales and earnings to slip, but after-tax
income from continuing operations should remain positive.
Our goal in the 2011/2012 fiscal year continues to be to reduce complexity in the Group, cut costs, and
improve cash generation on a sustainable basis. In addition we will strive to lower our net financial debt.
In the 2012/2013 fiscal year we will work on the structural improvement of the Group and rigorously
implement our integrated strategic development plan. This may include among other things measures to
achieve sustainable cost reductions or to optimize the portfolio.
Provided the economic effects of the sovereign debt crisis do not extend into our 2012/2013 fiscal year, we
expect our sales to increase with the general growth in the economy. Offsetting effects could result from
portfolio measures. Rising sales and structural improvements should have a correspondingly positive impact
on earnings. Further upside potential should come from operating improvements at Steel Americas. We will
continue to strive to reduce our net financial debt.
Dividend – We will maintain our policy of dividend continuity and continue to pay an appropriate dividend.
Employees – Based on our current plans, we will maintain our workforce level and also recruit additional
employees in individual regions and business areas. This does not include future portfolio measures.
To meet our long-term requirements for skilled employees, we will further expand our personnel programs.
In particular our training offering for young people will remain at its usual high level.
Research and development – Innovations and new technologies are a key element of the corporate
program impact. We therefore aim to increase research and development efforts in all areas of the Group.