Financial overview

The Chassis Systems Product Group grew by 14 %. A significant share of the increase in sales volume in the module sector went to the production of the BMW X5, which began in 2006 and in 2007 ran, for the first time, for a full year. Sales rose appreciably due to the model change of the Mercedes Sprinter. Overall, the sales in the module business developed positively. The manufacture of components was considerably expanded in 2007. The delivery of axles for the Audi A4 started up in Germany; in the Czech Republic, the production of axles for the Mercedes C-Class began. Newly erected plants in Vigo, Spain and in Changchun, China contributed significantly to the increase in sales volume.

The Structures Product Group was able to boost its sales by 12 %. Fresh orders in Rumburk, Czech Republic, Goshen, USA, and Changchun, China all contributed significantly to growth. At the beginning of 2007, the activities of the former Exhaust Systems and Engine Applications Product Groups were merged into the new unit called Engine and Exhaust Systems. In 2007, the new unit generated an additional turnover of 23 %. In exhaust systems, revenues grew due to new orders, higher volume and a rise in prices for converters. For the engine management components, exceptionally high growth rates were achieved with technically demanding fuel supply manifold and exhaust gas recirculation systems.

R&D Expenditure
In 2007, the Company increased its development exoenditure to 109.3 million euros or 2.5% more than in 2006.

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
Optimized production process
1. The Company developed a new simulation method that can make predictions about thermal and mechanical processes with far greater
precision.
2. In 2007, at the Talle plant in Paderborn, a new, non-destructive hardness
measurement method was qualified and implemented in the first production lines. This method and a previously introduced weld monitoring
system for online control of spot welding adhesion will also be used at other plants in the future.

Capital Expenditure

-The Company invested 318 million euros in the reporting year, 66 % more than in the previous year. Of this sum, 190 million euros were invested in tangible fixed assets.
-A total of 132 million euros were spent for production equipment and systems of the Automotive Division, essentially to expand capacities. In past years, considerable funds were spent for setting up new plants, strengthening the press capacities and underwriting new product launches. But those investments were significantly reduced in the reporting year.