Thyssen-Krupp Company Profile, October 2007

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Thyssen-Krupp Company Profile, October 2007

  1. 1. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 0 ThyssenKrupp
  2. 2. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 1 Agenda Group Overview and Strategy Ulrich Middelmann Vice Chairman of the Executive Board and CFO of ThyssenKrupp AG ThyssenKrupp Steel Karl-Ulrich Köhler CEO ThyssenKrupp Steel AG and Executive Board Member of ThyssenKrupp AG ThyssenKrupp Stainless Jürgen H. Fechter CEO ThyssenKrupp Stainless AG and Executive Board Member of ThyssenKrupp AG ThyssenKrupp
  3. 3. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 2 What the ThyssenKrupp Group is About Strong commitment to sustainable profit and cash generation as well as value enhancement across business cycles Value creation for shareholders not only by profitable growth initiatives, but also by stable and sustainable dividend payment Continuation of systematic value management by concentrating only on high-performance business areas and active portfolio management Further expansion of service orientation as well as fostering technological and innovative capabilities ThyssenKrupp
  4. 4. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 3 ThyssenKrupp Continues the Delta EVA® Story ROCE and TKVA (incl. major nonrecurring items) % / million € ROCE TKVA Δ TKVA 23.4% 1,510 9M: 997 1,930 17.9% Δ14% 513 572 Δ 425 14.4% 12.0% Δ 924 WACC: 9% 7.2% 7.0% incl. major Δ 62 nonrecurring items (414) (352) 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 ThyssenKrupp
  5. 5. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 4 EBT Track Record EBT (as reported) million € 3,200 CAGR: 9M: 2,853 58.0% p.a. 2,623 619 1,219 1,677 1,477 806 572 800 773 421 1,062 425 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 incl. major nonrecurring items ThyssenKrupp
  6. 6. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 5 EPS Track Record Earnings per share (as reported) € CAGR: 66.7% p.a. 3.24 9M: 3.25 1.04 1.49 2.08 1.81 0.87 0.45 1.09 0.84 0.42 1.31 0.49 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 incl. major nonrecurring items ThyssenKrupp
  7. 7. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 6 7 Track Record of Dividend Payment Dividend payment and payout ratio €/% 1.00 0.80* 0.60 0.50 0.40 ≥30% 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 DPS (€) Payout ratio * incl. special dividend of €0.10 ThyssenKrupp
  8. 8. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 7 ThyssenKrupp Management Approach Success Factors for Industrial Top Positions Value-based management system Product and Efficiency process innovation improvement culture Industrial top position Customer Portfolio orientation optimization Excellence in human resources ThyssenKrupp
  9. 9. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 8 ThyssenKrupp Value-Based Management: Focus on Value TKVA Value Driver Tree High share of deliveries Quantities to “valuable“ customers Sales Customer penetration Selling prices (service, cross-selling) EBIT Service initiative/ increase customer value Quantities Costs e-Commerce Input factor prices Permanent reengineering TKVA process Fixed assets Dominant volumes, Fixed assets market shares Non-operating assets Value added Capital X WACC Employed Inventories Disposal Net working Receivables Processes, cycle times capital Non interest- Payment terms bearing liabilities ThyssenKrupp
  10. 10. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 9 ThyssenKrupp Value-Based Management: Focus on Cash Flow Control Levers for the Cash Flow Income/loss before income taxes + Depreciation/ Cash flow (gross) amortization Cash flow (net) - Income taxes w/o +/- Δ Accrued pension and deferred taxes similar obligations Operating cash flow +/- Δ Funds tied down in +/- Δ Inventories - Increase of operating assets net working capital +/- Δ Trade accounts receivables + Decrease of +/- Δ Trade accounts +/- Δ Other operating net working capital payable assets +/- Δ Other payables Free cash +/- Δ Other provisions/ flow accruals - Investments in intangible assets and PPE Cash flow from - Investments in investing financial assets activities - Disinvestment of fixed assets ThyssenKrupp
  11. 11. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 10 A Corporate Culture for Continuous ThyssenKrupp Performance Enhancement is Established best In FY 2005/06 almost 2,000* new projects initiated 7.000 7,000 6.500 6.000 6,000 All in all 6,798* 5.500 projects started in 5,000 5.000 ThyssenKrupp best 4.500 4,000 4.000 3.500 3,000 3.000 2.500 2,000 2.000 1.500 1,000 1.000 500 0 FY 2001/02 FY 2002/03 FY 2003/04 FY 2004/05 FY 2005/06 Number of projects in concept in implementation finished in discontinued operations ThyssenKrupp
  12. 12. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 11 Project Landscape in Initiatives ThyssenKrupp Increase in share of purchasing projects in last fiscal year best Operating efficiency, 43% Corporate organization, 3% Knowledge management, 3% Employees, 4% Performance quality, 6% Capital productivity, 7% Purchasing, 16% Service orientation, 5% Sales, 13% ThyssenKrupp
  13. 13. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 12 Project Potentials ThyssenKrupp EBIT and Capital employed plans clearly surpassed best EBIT potential in million € ~ 400 Plan > 700 > 600 Act > 500 ~ 600 > 600 > 600 Plan 03/04 Act 03/04 Plan 04/05 Act 04/05 Plan 05/06 Act 05/06 Plan 06/07 < -400 ~ -400 < -300 ~ -400 ~ -200 < -200 ~ -100 Capital Employed potential in million € ThyssenKrupp
  14. 14. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 13 Movements in Sales and Capital Employed Indicator for Efficiency Improvements Sales in €bn Capital Employed 50 21.002 in €bn 22 45 19.530 20 18.870 18.388 40 17.056 18 35 16 30 14 36.928 33.487 37.303 42.927 47.125 25 12 20 10 2001/02 2002/03 2003/04 2004/05 2005/06 Sales Capital Employed (CE, average) ThyssenKrupp
  15. 15. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 14 Portfolio Management: Balance of Value and Cash providers Balanced business portfolio ThyssenKrupp Value Added II III Value driver- Value driver- Cash consumer Cash provider Watchlist for Growth Growth 0 I IV Underperformer- Underperformer- Cash consumer Cash provider Watchlist for Disposals Performance Program 0 Free Cash Flow ThyssenKrupp
  16. 16. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 15 Value Drivers and Cash Providers Development from FY 2004/05 to FY 2005/06 Size of disks reflects capital employed ThyssenKrupp
  17. 17. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 16 Active Portfolio Management at ThyssenKrupp Significant change in portfolio since the merger (as at September 2007) Disposals Acquisitions (Total: €9.1 billion) (Total: €8.2 billion) Steel 2,005 455 Stainless 95 235 Automotive* 2,105 1,155 Technologies 2,420 1,955 Elevator 130 1,375 Services 1,435 3,010 Others 910 Sales in €m * since Oct 1, 2006 integrated into Technologies segment ThyssenKrupp
  18. 18. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 17 24 Portfolio Optimizations in 2006/2007 Corporate Elevator Commercial Real Estate Portfolio (DE) Disposal Sele & Colla (IT) Acquisition Sabia (IT) Acquisition Steel Elevator Sales & Services (US) Acquisition Auto Chassis do Brasil (BR) Acquisition Končar Dizala i Servis (HR) Acquisition LWDO Lift Service (PL)** Disposal Stainless Massidda (IT) Acquisition no relevant transactions to date Vertrans Elevator (US) Acquisition Technologies Services Fundicoes (BR) Disposal AT.PRO tec (DE)*** Acquisition BVI Defense Technology (DE) Disposal TK Servicios Técnicos (ES) Disposal DRE/CON Slewing Bearings (DE) Acquisition Schöbel Technik & Service (DE) Acquisition Mechatronics Kassel plant (DE) Disposal TK Materials Vietnam [JV] (VN)**** Acquisition Intecsa-Uhde (ES)* Disposal SIR Industrieservice (DE) Disposal A-C Equipment Services (US) Acquisition Ferostav (SK)**** Acquisition ForTeq (IT) Acquisition Stokvis Plastics (NL/BE) Acquisition Rolling Stock Company (GR) Disposal+ * 50% / ** 93% / *** 61% / **** 80% / + closing not yet completed ThyssenKrupp
  19. 19. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 18 Significant Leading Market Positions (I) Steel Stainless Flat Carbon Steel (hot-rolled) Top 2 (Europe) Stainless Flat Top 1 Tinplate Top 3 (Europe) Nickel Alloys Top 2 Electrical Steel Top 2 Titanium Top 1 (Europe) Stainless Processing Coated Products Top 2 (Europe) (Forgings, Tubes) Top 1 (Europe) Tailored Blanks Top 1 ThyssenKrupp
  20. 20. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 19 Significant Leading Market Positions (II) Technologies Elevator Uhde Top 1-3 Polysius Top 1-2 Elevator (Elevator/Escalator) Top 3 Fördertechnik Top 1 Marine Systems Top 1 Rothe Erde Top 1 Services Berco Top 1 Camshafts Top 1 Mat. Services Intern. Top 1 (Europe) Crankshafts Top 1-3 Waupaca Top 1 (USA) Mat. Services NA Top 3 Steering (steering column) Top 1 Industrial Services Top 1-3 (Eur.) Transrapid USP ThyssenKrupp
  21. 21. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 20 Group Targets 2009/10 and 2011/12 Sales, EBT and EPS (as reported) billion € / million € / € Sales: >50 60 65 Target 4,500-5,000 4,000 3,200* EPS 6.00-6.60 2,623 9M: EPS 2,853 5.30 1,677 1,477 tax rate: 800 33% 421 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 Mid-term Long-term 2009/10 2011/12 * incl. major nonrecurring items ThyssenKrupp
  22. 22. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 21 Key Drivers for Investment Strategy International expansion of our focused business company concept Transfer of the successful European premium strategy Steel to the Americas growth market Build on and expand global leading market position Stainless by performance improvement in European core markets and expansion in NAFTA Strengthen cash generating activities driven by secular trends of increasing demand Technologies for infrastructure, raw materials, renewable energy, nutrition and safety Performance program and continuous acquisitions Elevator to bridge margin gap and optimize portfolio of maintenance contracts Capture growth opportunities Services in Materials Distribution and Industrial Services ThyssenKrupp
  23. 23. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 22 ThyssenKrupp Accelerates Growth by Investment Program Investments Comments 2005/06-2009/10 Greenfield NAFTA, Greenfield Brazil, capacity increase Duisburg, Steel €8.9 bn substance-preserving and value-based investments, acquisitions Stainless €2.0 bn Greenfield NAFTA, substance-preserving and value-based investments Project-related investments, substance-preserving and Technologies €4.1 bn value-based investments, acquisitions Projects for efficiency improvement in new installations and services Elevator €1.2 bn as well as growth by acquisitions New service centers globally and in Eastern Europe, growth in raw materials, Services €1.7 bn other investments and growth by acquisitions up to Other €2.1 bn Other investments and growth by acquisitions €18- €14-16 bn, i.e. >75% growth capex, entirely based on value-driven criteria, Total 20 bn €4 bn substance-preserving investments* * 45% of the average depreciation / amortization in the segments ThyssenKrupp
  24. 24. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 23 Investment Grade Rating with Every Rating Agency is Key The underlying principle for all our growth initiatives High degree of flexibility due to Cash (€2.7 bn as of Jun 30, 2007) Available credit lines (€4.3 bn as of Sep 30, 2006) Treasury stock (25.7 m shares at market value* of €1,017 m) Authorized capital (€500 m) Estimated OCF (approx. €18 bn from 2005/06 - 2009/10) and Continuous revision of current business portfolio remains top priority for management * as at August 8, 2007 ThyssenKrupp
  25. 25. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 24 Wrap-Up: ThyssenKrupp Continues the Delta EVA® Story ROCE and TKVA (incl. major nonrecurring items) % / million € ROCE TKVA Target 3,000 2,500 9M: 1,930 1,510 23.4% 21.4% 22% 997 17.9% 572 14.4% 12.0% WACC: 9% 7.0% 7.2% incl. major nonrecurring items (414) (352) Mid-term Long-term 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2009/10 2011/12 ThyssenKrupp
  26. 26. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 1 Agenda Group Overview and Strategy Ulrich Middelmann Vice Chairman of the Executive Board and CFO of ThyssenKrupp AG ThyssenKrupp Steel Karl-Ulrich Köhler CEO ThyssenKrupp Steel AG and Executive Board Member of ThyssenKrupp AG ThyssenKrupp Stainless Jürgen H. Fechter CEO ThyssenKrupp Stainless AG and Executive Board Member of ThyssenKrupp AG ThyssenKrupp
  27. 27. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 2 Track Record ThyssenKrupp Steel 2001/021) 2002/031) 2003/041) 2004/052) 2005/063) 2006/073) 9M Sales €m 6,861 7,448 8,387 9,568 12,087 9,920 Crude steel prod. 1,000 t 13,145 13,557 13,978 13,826 13,837 10,795 EBT €m 15 243 608 1,094 1,406 1,298 ROCE % 2.6 7.0 13.0 19.6 23.2 27.9 TKVA €m (417) (162) 164 600 876 907 ∅ Capital Employed €m 5,623 5,430 5,520 5,965 6,380 4,919 Employees (Sept. 30) # 29,222 29,249 30,618 31,634 38,840 38,950 1) Business Unit Carbon Steel, incl. discontinued operations US GAAP 2) ThyssenKrupp Steel (new) IFRS 3) incl. Metal Forming ThyssenKrupp
  28. 28. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 3 EBT Track Record ThyssenKrupp Steel EBT (as reported) million € 1,406 9M: 1,298 1,094 327 428*) 386 608 471 424 243 399 15 269 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 *) incl. €76 m impairment charges at Metal Forming ThyssenKrupp
  29. 29. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 4 Delta EVA® Track Record ThyssenKrupp Steel ROCE and TKVA (incl. major nonrecurring items) % / million € ROCE TKVA Δ TKVA 876 27.9% 600 23.2% 9M: 19.6% Δ 276 907*) 164 Δ 436 13.0% WACC 7.0% Δ 326 Δ 255 (162) 2.6% (417) 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 *) incl. €76 m impairment charges at Metal Forming ThyssenKrupp
  30. 30. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 5 Our Current Focus of Business is Europe … Europe Sweden North-East Asia Germany Changchun Poland France Italy Wuhan Dalian USA Spain Turkey Nashik Mexico Brazil Steel mill Coating Tailored blank production Strategic Alliance Rolling facilities (USA incl. coating) Steel service center Projects/under construction ThyssenKrupp
  31. 31. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 6 … with Almost 90% of Sales Generated in Our European Market Sales by Region FY 2005/06 *) in % Germany 52 87% 6 Other Europe of Sales w/o Germany NAFTA 54 33 Asia Europe Sweden North-East Asia Other Germany Poland Changchun France Italy Wuhan Dalian USA Spain Turkey Nashik Mexico Brazil *) excl. Metal Forming ThyssenKrupp
  32. 32. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 7 Premium Product Portfolio Generates Above-Average Revenues Product Portfolio Steel FY 2005/06*) in % Revenue per Tonne €/t Tailored blanks 4% 900 ThyssenKrupp 3% Construction elements Steel**) 13% 800 Steel service 13% Tinplate 700 10% Electrical steels *) 600 26% Coated products 500 Cold strip major 6% 400 European 7% Heavy plate competitors 6% 6% Medium-wide strip 300 12% Hot strip 2001 2002 2003 2004 2005 2006 2007 H1 *) sales of flat products only *) data not yet available **) excl. Metal Forming ThyssenKrupp
  33. 33. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 8 Long Term Customer Relations Establish Lower Volatility Sales by Maturity FY 2005/06 in % Price Index Flat Steel Index (Q3 1997 = 100) Spot 200 Multi-year ThyssenKrupp 10 15 180 Steel Quarterly 22 160 140 11 42 Annual 120 Half-year 100 Sales by Industry FY 2005/06 in % 80 CRU Others 60 Construction Automotive 1997 Q3 2007 Q2 10 industry (incl. Packaging 3 29 9 suppliers) Price index flat carbon steel ThyssenKrupp Steel Mechanical 11 Engineering Price index flat steel, world (CRU) 14 24 Steel and steel- Trade All data incl. Q2 2007 related processing Sources: CRU and own calculations based on CRU, TKS ThyssenKrupp
  34. 34. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 9 Strong Market Positions and Leading Profitability Market Positions by production 2005 EBITDA per Tonne €/t Total Flat Carbon Steel # 2 Europe 200 ThyssenKrupp Tailored Blanks # 1 World Steel**) 150 Tinplate # 3 Europe 100 Electrical Steel # 2 World / # 1 Europe *) 50 Coated Products # 2 Europe major 0 European competitors Heavy Plate, quenched & tempered # 2 Europe -50 2001 2002 2003 2004 2005 2006 2007 Medium-wide Strip # 1 / USP H1 *) data not yet available **) excl. Metal Forming ThyssenKrupp
  35. 35. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 10 Strategic Guidelines ThyssenKrupp Steel Sustainable value growth Efficiency Technology Profitable improvement leadership growth Focus on attractive markets for premium flat steel products ThyssenKrupp
  36. 36. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 11 Further Significant Earnings Improvements Expected from Well Established Efficieny Enhancement Program “TK best“ Project landscape over time number of projects Highlights Completed 678 In process 568 Since start of ThyssenKrupp best 502 388 444 376 in fall 2001 678 projects have been 241 287 211 282 349 launched in the Steel segment 198 138 94 111 73 302 125 147 176 250 233 220 219 Continuous efficiency enhancement Mar. Sept. Mar. Sept. Mar. Sept. Mar. Sept. programs under ThyssenKrupp best 04 04 05 05 06 06 07 07 are continued with great intensity Project landscape by initiatives (Top 5) % across all Business Units Operating efficiency 10 5 Quality enhancements 10 Sales initiative 8 58 Purchasing initiative 9 Organization Additional earnings improvements of Other initiatives +Δ €135 million per year! Source(s): best plaza; excl. Metal Forming ThyssenKrupp
  37. 37. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 12 Innovative High-End-Steel X-IP® Leadership in technology through competence in materials, once again from TKS The new dimension in developing materials Possible reduction of steel Highest strength and energy absorption thickness for the optimization Better elongation compared to mild steels of weight compared to Multiphase steels New possibilities for the designing of assembly parts 0% 80 X-IP® -10% 70 up to -20% -45% 60 up to Konventionellesteels conventional Stähle -55% 50 -30% DP (%) 40 RA -40% 80 Bruchdehnung A80 (%) A elongation 30 -50% CP 20 MS-W® -60% FB-W® Multiphase 10 X-IP® steels steels 0 -70% 200 300 400 500 600 700 800 900 tensile strength Rm (MPa) Zugfestigkeit Rm (MPa) 1400 1500 ThyssenKrupp
  38. 38. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 13 Leadership in technology as a factor of success Continuous Know-how from the basic material to the serial part Materials Innovative steels hot-rolled strip with and New materials cold performance Surfaces Surface coatings Zink Magnesium X-IP-Steels Technology Support in applications Simultaneous Engineering Innovations Leadership and Tailored Blanks in technology Engineering BONDAL® Tailored Blanks Production Parts and components and Solutions for auto bodies T³ -Technique® Chassis systems Service NewSteelBody® ► Overall competence in automobile market as a basis for leadership in technology ThyssenKrupp
  39. 39. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 14 Hot stamping as an integrated process chain… Through leadership in technology being ahead in the market Competence in production Hot stamped parts in Being ahead with innovative coatings (x-tec®) VW Passat Being ahead with Tailored Blanks 15% Competence in processing 18% Evaluation of optimum process parameters Re-creation of the customers‘ production process 67% Competence in manufactoring Leading in the production of hot stamped parts: Sofedit, a company of ThyssenKrupp Steel ► First global successful commercialisation of hot stamped parts with MBW+x-tec® for VW Passat ► First global hot stamped Tailored Blank for Audi A5 ThyssenKrupp
  40. 40. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 15 Pioneer and Innovation Leader in Tailored Products 2007: Strategic Milestones and Product Examples First to supply Tailored Blanks for hot forming 2006: Tailored Strips 2003: NSB® New Steel Body ses ces 1999: Thyssen Engineered Blanks® P ro 1998: s an d duct Thyssen Tailored Tubes® 2006: ro Start of 1st generation in P Tailored Blanks Tailored Orbitals 1985 o vation 2005: uo us Inn Thyssen Tailored Tubes® Contin 2001: 3rd generation Thyssen Tailored Tubes® 1991: 2nd generation Linear Tailored Blanks with differential thickness ThyssenKrupp
  41. 41. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 16 World Premiere IAA 2007: Tailored Blanks for Hot Forming Tailored Tubes® - T3 Tailored Strips® Tailored Blanks for Hot Forming ► Deformable base – Ultra-High-Strength head – Only one piece Engineered Blanks® B-pillar Tailored Strips® Tailored Tubes® ► Tailored products technique: milestones of section-intensive construction ThyssenKrupp
  42. 42. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 17 Premium Flat Carbon Steel Market with Above-Average Growth Global Market Development: Market Forecasts up to 2015 Global Demand for Premium Products* million tons p.a. Premium Products Commodities +3.7% p.a. 751 RoW** +6.1% p.a. NAFTA 637 8% 290 20% 523 220 Asia*** 22% 160 220 m t p.a. 24% Europe 19% 3% China 4% CIS South 2005 2010 2015 America Europe and NAFTA with almost 45% Share in Global Demand for Premium Products * Flat steel products with above-average quality requirements and technological properties ** esp. India *** esp. Japan and South Korea Source(s): CRU MerchantSlabMarket 2006-Q4 – absolute numbers, WSD Global Steel Product Matrix ThyssenKrupp
  43. 43. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 18 Investment Strategy Steel: The Transatlantic Concept Targeted major transatlantic production capacities Capacity in m metric tons p.a. Brazil NAFTA Europe ** “Herkules” Slabs 5 - 15 Greenfield Hot-rolled - 5.2* 17.5 ~3 m t ~2 m t Cold-rolled - 2.5 10 TK CSA Coated - 1.8 8 * incl. 0.9 million t for Stainless ** slabs incl. share in HKM; hot-rolled incl. heavy plate and medium-wide strip; coated incl. EG, HDG and tinplate Utilizing low-cost slabs from Brazil Significant dilution of cost base by highly competitive steel mill in Brazil Build on and expand De-bottlenecking and modernization to process strong European market position 2 m t of additional slabs from Brazil (“Herkules”) Clear strategy to enter NAFTA market Transfer of proven business model with focus on high value-added products into the modern industrial center of the U.S. ThyssenKrupp
  44. 44. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 19 Significant Net Imports Reflect Structural Supply Shortage in NAFTA Flat carbon steel imports, exports and trade balance Canada, U.S., Mexico Canada million t p.a. Canada 18 12 2.7 1.8 1.6 2.1 6 0.9 0.6 0.5 0 -6 2000 2001 2002 2003 2004 2005 2006 United States United States million t p.a. 18 12 6 9.7 10.9 6.0 6.9 7.7 4.7 0 Mexico 2.1 -6 2000 2001 2002 2003 2004 2005 2006 Mexico million t p.a. 18 12 2.3 2.4 2.4 2.2 2.2 3.3 Source(s): 6 2.1 WV Stahl. All data in mn t 0 Flat carbon steel (welded tubes excluded) Imports Exports Trade Balance (net imports counted positive) -6 2000 2001 2002 2003 2004 2005 2006 ThyssenKrupp
  45. 45. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 20 Southern U.S. Exhibits Growing Demand and Local Supply Shortage Typical demand flat carbon steel vs. local capacity south central U.S. in m t p.a. Hot-rolled* million t p.a. Canada Outlook 2010 + Greenfield Steel North Central 5.7 4.3 West 13.9 8.2 Typical Demand** Local Capacity East Cold-rolled million t p.a. South Central Outlook 2010 + Greenfield Steel 3.2 2.5 7.4 4.2 Mexico Typical Demand** Local Capacity Coated products million t p.a. Outlook 2010 + Greenfield Steel 2.1 1.8 Source(s): 4.1 TKS analysis, Metal Strategies, status as of 2006 2.0 * excl. heavy plate ** incl. intermediate products Typical Demand** Local Capacity ThyssenKrupp
  46. 46. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 21 Demanding Customers Drive Demand in Premium Products Example: Light-vehicle production/assemblies 2010 forecast NAFTA in m units Canada 31% 2% Demanding customers from the 2.7 m 67% North Central automotive 7.6 m West 2% 0.4 m 24% construction 85% East 74% 1.5 m engineering 15% South Central 3.1 m 85% pipe and tube 5% 56% 39% appliance industry Mexico 1.7 m drive demand in premium products 19% 25% 56% NAFTA total: 17 m (2010f) South Central U.S. and Mexico exhibit 5% strong position of growing Asian and 30% 65% Big three (GM, Ford, Chrysler) Asian transplants Source(s): Polk Marketing Systems, European transplants European transplants, others TKS analysis, status as of 2006 ThyssenKrupp
  47. 47. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 22 U.S. Greenfield Ideally Positioned to Leverage Favorable Market Trends and Competitive Advantages Market Trends NAFTA characterized by high demand for premium flat carbon steels and significant net imports needs Increasing environmental awareness and gas prices drive demand of automotive industry for innovative lightweight steel solutions Migration from North to South: South Central as the modern industrial center of the U.S. exhibiting growing demand and local supply shortage Cost Advantages Market Expertise Low-cost slabs ex Brazil Well-known target customers with State-of-the-art production facilities with demanding applications low operating costs (energy, personnel, …) Technological expertise ThyssenKrupp Steel Optimum logistics Reputation and brand ThyssenKrupp No legacy costs High-quality slabs from own production in Brazil ThyssenKrupp
  48. 48. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 23 Transatlantic Strategy Leads to Premium Prices and Lowest Costs USD/t Premium quality & technology leadership Ø Prices Greenfield TK Steel Ø Prices NAFTA Margin leadership ! Ø Production cost HRC p&o NAFTA Target Greenfield Cost TK Steel competitiveness Existing Hot rolling capacities Source(s): WSD World Cost Curve 2005; BCG analysis; MEPS; own research TKS NAFTA ThyssenKrupp
  49. 49. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 24 U.S. Greenfield Proceeding to Schedule and Budget May 2007 July 2007 ThyssenKrupp
  50. 50. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 25 Project ”Herkules” Proceeding to Schedule and Budget ThyssenKrupp
  51. 51. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 26 ThyssenKrupp CSA Proceeding to Schedule and Budget Hot Blast Stove 1 Blast Furnace 1 Blast Furnace 2 ThyssenKrupp
  52. 52. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 27 Excellent Positioned and on Track to Meet Increasing Demand for Premium Products Steel Shipments ThyssenKrupp Steel million tons p.a. ~20 ~18 +6% p.a. 13.9 ~14 05/06 06/07F 09/10E 11/12E Shipments to Increase by more than 40% by 2011/12 ThyssenKrupp
  53. 53. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 28 Growth Complemented by Significant Cost Dilution and Flexibility Transatlantic Forward Strategy Target Structure 2012: Slab Production and Consumption ~5 million t p.a. “Herkules” ~15 Greenfield ~15 ~2 ~2 m t ~3 m t ~4.5 ~1.5 German TK CSA German Operations US Green- Operations incl. Herkules field TK CSA ~5 m t Slab Production Slab Consumption Ext. Slabs Significant cost dilution based on 5 m t of high-quality and low-cost slabs from TK CSA based on logistics cost and availability Optimized sourcing of external slabs (adjust slab supply ex CSA to Europe and U.S.) Maximum cost degression based on adjustment of external slab purchases through mini cycles (at maximum utilization of own upstream facilities) based on expansion options to further increase Further growth opportunities slab capacity at TK CSA (+Δ 2.5 m t / +Δ 5 m t) ThyssenKrupp
  54. 54. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 29 Forward Strategy Creates Potential For Significant Value Growth Strong Organic Growth Based on Proven Business Model Capex Forward Strategy Europe Sustainable value growth Forward Strategy NAFTA €5.7bn Forward Strategy Brazil Return hurdle for growth ≥ 15 % Efficiency improvement Technology leadership Profitable growth investments Focus on attractive markets Committed to for premium flat steel products Reliable and significant profit contribution Drive value for the Group ! The best is yet to come ! ThyssenKrupp
  55. 55. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 1 Agenda Group Overview and Strategy Ulrich Middelmann Vice Chairman of the Executive Board and CFO of ThyssenKrupp AG ThyssenKrupp Steel Karl-Ulrich Köhler CEO ThyssenKrupp Steel AG and Executive Board Member of ThyssenKrupp AG ThyssenKrupp Stainless Jürgen H. Fechter CEO ThyssenKrupp Stainless AG and Executive Board Member of ThyssenKrupp AG ThyssenKrupp
  56. 56. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 2 ThyssenKrupp Stainless Business Fields of ThyssenKrupp Stainless Group ThyssenKrupp Stainless Sales € 6.4 billion EBT € 423 million Free cash flow € 243 million Employees 12,197 Stainless Steel Stainless Steel Stainless Steel Stainless Steel Stainless Steel Stainless Steel Nickel Alloys Business Field Titanium Processing ThyssenKrupp ThyssenKrupp ThyssenKrupp ThyssenKrupp VDM ThyssenKrupp Shanghai ThyssenKrupp Acciai Speciali Stainless USA Mexinox Nirosta Krupp Stainless Company Terni (Germany) Stainless International Precision (Germany) (Italy) (USA) (Mexico) (VR China) (Germany) Rolled Products (USA) Sales € 2,682 m € 2,505 m project phase € 559 m € 364 m € 1,186 m € 998 m not consolidated Employees 4,647 3,447 - 1,321 570 409 1,746 * FY 2005/06 ThyssenKrupp
  57. 57. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 3 ThyssenKrupp Stainless Top Positions in all Fields of Activities ThyssenKrupp Stainless Stainless Steel High Performance Alloys Processing Sales: €4.6 bn Sales: €1.1 bn Sales: €0,7 bn Employees: 9,716 Employees: 1,987 Employees: 364 ThyssenKrupp Nirosta ThyssenKrupp VDM No. 2 Societá delle Fucine Europe No. 1 ThyssenKrupp Acciai Speciali Terni (>100 t Unit Weight) No. 1 ThyssenKrupp Mexinox Shanghai Krupp Stainless ThyssenKrupp Titanium No. 6 Tubificio di Terni Europe No. 1 Figures based on fiscal year 2005/06 ThyssenKrupp
  58. 58. Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007 4 ThyssenKrupp Stainless Sustainable Results in spite of Market Fluctuations Q1 - Q3 (Oct – Jun) *) *) *) 2001/2002 2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 Sales €m 4,020 3,957 4,990 5,572 6,437 6,986 Total Shipments 1,000 t 2,482 2,365 2,519 2,237 2,468 1,748 thereof Stainless CR 1,000 t 1,543 1,577 1,742 1,578 1,764 1,359 EBT €m 141 192 385 286 423 912 ROCE % 7,9 9,9 16,9 11,8 16,0 34,2 TKVA €m - 54 - 4 182 68 199 703 Employees # 12,074 12,116 11,811 12,201 12,197 12,187 *) US-GAAP ThyssenKrupp

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