Financial overview

The Chassis Systems product group grew by 6 %. The production of axle modules for the Mercedes Sprinter in Dusseldorf, Germany, begun in 2005 and ran a full year for the first time in 2006. Moreover, the assembly of modules for the new BMW X5 started up in Spartanburg, USA, at the end of the year. The plant in Migennes, France, took up the delivery of chassis sub frames for the Peugeot 207. Significant components for this program come from the the Company's Czech plant in Rumburk. The plant in Vigo, Spain and the joint venture in Changchun in northern China produced larger numbers of units for the first time.

The Structures product group was able to boost its sales by 8 %. The growth essentially comes from new orders for the plants in Goshen, USA, and Chrastava, Czech Republic.

The Exhaust Systems product group increased its turnover by 4 %.

The Engine Applications product group rose by 17 % compared to the previous year due to the launching of technically more sophisticated components such as fuel supply manifold and exhaust gas recirculation systems.

The Engineering Services product group increased by 12 %, partly due to the investment in a share of a Swedish engineering company.

Outlook
The Automotive Division is counting on an increase in sales volume of 5% for 2007. While results will improve, they remain characterized by the strong downward pressure on prices in the market and the restructuring of the US business. The Company will implement a comprehensive action plan in the USA in 2007.

R&D Expenditure
After the business growth of the last few years and the considerable research and development expenditures which went along with it, the Automotive division concentrated its efforts on the execution of launches and the further expansion of production plants in 2006. For this reason, development expenditures declined by 8 % to 107 million euros.

R&D Structure
New technology center
In March 2002, the Company opened a new technology center at its North American headquarters in Auburn Hills, Michigan. This enables the Company to be closer to and work cooperatively with OEM customers who also are based in the Detroit area. The 80,000 square-foot technology center provides the Company with a North American center of excellence for advanced research and development of automotive components, modules and systems.

Activities
Safety, comfort, lightweight design and reduced emissions are the focus of R&D at the Automotive division. Key areas of development are improved materials, optimized production process and costs, and the transfer of technologies to new and related product fields.

In the area of hydroforming technology, the Automotive division is testing the use of alternate products and materials, For example, the Company has introduced new process with significantly expanded shaping possibilities for lightweight design with aluminum. Furthermore, for the first time in series production, the Company is using functional welding of sensor sockets as a low-heat joining process.

Capital Expenditure

- 150 million euros or 79 % of the total investments went into automotive production equipment and systems, primarily to expand capacity. Main focus areas were the plants in Rumburk, Czech Republic, Spartanburg and Goshen in the USA, as well as German production plants. The volume in 2006 decreased significantly compared to 2005, since investments in basic equipment for the new plants were made to a considerable extent in the previous year.