Financial Overview

(in million euros)	FY2005-06	FY2004-05	Rate of change (%)	Factors
Overall
Sales	47,125	42,927	9.8	(1)
Income before tax	2,623	1,677	56.4	(2)
Automotive
Sales	8,045	7,867	2.3	(3)
Income before tax	(174)	118	(247.5)	(4)
Sales by Automotive Segment
Body	2,853	2,866	(0,5)	(5)
Chassis	3,657	3,459	(5.7)	(6)
Powertrain	1,679	1,700	(1.2)	(7)
Consolidation	(144)	(158)	-	-

Factors
(1)
-Order intake and sales rose sharply. Orders from continuing operations climbed to 50.8 billion euros, 17% higher than a year earlier. New orders therefore showed a greater improvement than expected a year ago, with above all the materials business in the Steel, Stainless and Services segments performing better than predicted.
-Sales from continuing operations rose by 10% and reached record highs at 47.1 billion euros. Strong demand and higher prices for carbon and stainless steel flat products increased sales at Steel and Stainless more sharply than planned. Services also clearly exceeded its targets thanks to the strong materials markets. The volume of business at Automotive, Technologies and Elevator was slightly higher than anticipated.

(2)
-In addition to the outstanding business performance and successful efficiency enhancement programs, the portfolio optimization improved the quality of the Group窶冱 earnings. Consolidated earnings were 2,623 million euros, 946 million euros or 56% higher than its good prior-year income.

(3)
-Order intake decreased by 3% to 7.9 billion euros. Sales were slightly higher than the prior year at 8.0 billion euros, due to significant growth in the systems business, additional volumes and price-related growth at the North American foundries as well as increased sales from ongoing contracts. In addition, new production lines began operation in a large number of Automotive companies.

(4)
-The Automotive segment returned a loss of 174 million euros, compared with a profit of 118 million euros a year earlier. The loss was mainly due to restructuring expense and impairment charges on goodwill and property, plant and equipment. The impairment charges resulted primarily from the initiation of the disposal of the North American body and chassis business, but also from the deterioration in the situation in Germany for body lines and tool/die making. Non-recurring expense for restructuring and impairment charges amounted to 339 million euros. This was set against disposal gains of 35 million euros.
-Operating profits in the Body business unit, i.e. disregarding non-recurring expense, fell short of the prior-year level. This was mainly due to declining workloads at the North American and French stamping plants and higher scrap prices at the American foundries.
-The Chassis business unit increased its operating income, thanks to improved operating performances at the British stamping plants and in the areas of steering and suspension.
-The Powertrain business unit failed to match the high operating earnings of the previous year. Profits were impacted by the development of the exchange rate for the Brazilian real against the us dollar.

(5)
-In the Body business unit, sales in 2005/2006 were almost level with the previous year at 2.9 billion euros. The North American foundries of ThyssenKrupp Waupaca benefited from continuing strong demand for trucks. Demand was particularly strong for products for medium and heavy trucks as well as construction and agricultural equipment. ThyssenKrupp Umfortmtechnik began production of stampings for a new van and a luxury class vehicle. Sales of the Body business units were severely impacted by the collapse in demand for sport utility vehicles, previously very popular in the usa. This resulted in significant volume decreases in the North American stamping plants. Business at ThyssenKrupp Sofedit was impacted by lower demand from French automobile manufacturers. The decrease in sales at ThyssenKrupp Drauz Nothelfer was due to lower market volumes as well as stiffer competition on the European production equipment market.

(6)
-The Chassis business unit increased its sales by 6% to 3.7 billion euros in the reporting period. This development was due among other things to a significant increase in systems business. As well as the start of production of axle assembly plants in Leipzig and Mexico, the three plants of ThyssenKrupp Budd Systems in London, Columbia and Fowlerville recorded significantly higher orders. At ThyssenKrupp Umformtechnik, ThyssenKrupp Presta SteerTec USA and ThyssenKrupp Bilstein Suspension, new orders from various German auto manufacturers went into production. ThyssenKrupp Tallent Chassis also reported increasing order numbers. Sales of the business unit were adversely impacted by lower orders from us manufacturers in particular. Divestments also had a negative effect on sales.

(7)
-The Powertrain business unit achieved sales of 1.7 billion euros. Favorable factors were the start of production on various crankshaft and camshaft orders, price increases in South America, and exchange rate effects. In the Transmission & Driveline Components business, numerous programs were launched for German, French and American auto manufacturers. Lower truck output and massive competition in the area of 4-cylinder car crankshafts had a negative impact on sales.

Acquisitions
-During 2005/2006, the Company increased its shareholding in Liaoyang KS Automotive Spring, a manufacturer of coil springs, from 30% to 60%. In addition, the Company purchased the remaining shares in ThyssenKrupp Presta SteerTec held by DaimlerChrysler.

Divestitures
-In June 2006, ThyssenKrupp Budd Company announced the sale of its aluminum castings operations as part of a restructuring plan announced earlier this year. ThyssenKrupp Stahl Company, a subsidiary which produces aluminum castings at foundries in Kingsville and Warrensburg, Mo., has been sold to an equity holding concern. Sale price was not disclosed. ThyssenKrupp Stahl employs 813 people. The sale of the aluminum castings operation is in line with restructuring plans ThyssenKrupp AG of Germany announced for its North American automotive segment. Speyside Equity LLC, a Delaware company, now owns the stock of ThyssenKrupp Stahl as well as other industrial investments.

-In July 2006, ThyssenKrupp Budd Company announced the sale of its plastics materials manufacturing and molding operations to Continental Structural Plastics of Bingham Farms, MI. Sale price was not disclosed.

-The operations of the Automotive segment are being realigned. The reasons for this are the restructuring requirements of the body and chassis business, especially in North America. On October 16, 2006, an agreement was signed to sell the North American body and chassis operations with sales of around 1 billion euros and 3,500 employees to the Canadian company Martinrea International, Ontario.

Factory Closure
-In May 2006, ThyssenKrupp Budd Company announced plans to phase out its Detroit manufacturing plant. The plant makes metal stampings and assemblies such as roofs, doors, fenders, tailgates, liftgates and body side panels for cars, trucks and sport utility vehicles. Company officials said the phase-out will begin within the next several weeks and final shutdown could be completed by the end of the year. ThyssenKrupp Budd has seen a decline in orders which has created open capacity and the company is looking at ways to consolidate its manufacturing base. The company cited competitive pressure as one of the reasons for the phase-out.

Environmental Activity
Overall:
- In addition to the 412 million euros spent on operating pollution control equipment and the 30 million euros invested in environmental protection, all segments took numerous measures to reduce their consumption of energy and raw materials. As raw material and energy prices are high, these measures also helped improve profitability.
-The Steel segment was honored with Volkswagen AG窶冱 Environmental Award. As well as its environment- friendly production operations, the award was mainly in recognition of the Company's innovative solutions to help reduce emissions from cars. These include weight-optimized parts which reduce fuel consumption. ThyssenKrupp Steel was named as one of Volkswagen窶冱 Sustainability Partners and thus joined a circle of suppliers who have committed to the objectives of sustainability.

Automotive:
-For the production of modern injection valves used in car engines, a sleeve was developed using the material Pernifer 36Z which displays virtually no thermal expansion even at temperatures up to 200ﾂｰC. This guarantees the functionality of the injection valves - which is key to low-emission engines - in all load and temperature ranges.
-Resource conservation and energy savings were also to the fore at Automotive. In the future, production shops will be heated utilizing the waste heat from furnaces, which was previously unused. Heating oil consumption will also be lowered using a heat pump. Water consumption has been reduced in a hardening shop by redesigning the cooling circuits. A new forging technology introduced at ThyssenKrupp Metallurgica Campo Limpo in Brazil allowed a combination of improved production precision, compliance with strict emissions standards and weight reduction. The Company also set up an 窶彳nvironment school窶 specially for students from schools in the area to raise their awareness of nature.

Combination of Automotive and Technologies
-The Technologies segment is now also a market partner for high-quality vehicle components and systems following the combination of its automotive business with the Technologies segment effective October 01, 2006. This integration focuses its automotive activities on core businesses with sustainable earnings potential and concentrates its innovation and marketing capabilities. As part of the planned realignment, its body and chassis activities in North America with around 1 billion euro sales and 3,500 employees were sold on October 16, 2006. The sale is to be closed by the end of 2006.
- In other regions the Company remains on expansion track. In China it has prepared the acquisition of the activities of the crankshaft manufacturer Tianrun, and further moves will follow on this auto market of the future. Following the integration of Automotive into Technologies, the ThyssenKrupp Group will in the future comprise the five segments Steel, Stainless, Technologies, Elevator and Services.

Outlook
-The Company expects a predominantly favorable trend on the customer markets of importance to ThyssenKrupp. The prospects for the world steel market in particular remain generally positive. World demand for rolled steel will grow by around 5% in 2007, driven mainly by the emerging countries of Asia and Latin America and the CIS states. In Europe and the NAFTA region demand is expected to remain steady or fall slightly due to the somewhat subdued economic outlook and the expected reduction of stocks. However, steel consumption is expected to increase further. Output will rise primarily in the emerging countries - especially China, India and Brazil - as major new capacities go into operation. The situation on the raw material and energy markets will remain tight on the whole, keeping steel production costs at a high level or pushing them even higher.
-The Company expects the automotive market to remain a growth market overall. For 2007 it expects worldwide production to grow by 2% to 70.5 million vehicles. However, the new production capacities are increasingly being installed in the emerging Asian countries and in Central and Eastern Europe. These countries could once again significantly expand their vehicle production in 2007. In the NAFTA region, Western Europe and Japan, volumes will decrease slightly. As a result of weaker domestic demand, German auto production is expected to fall to 5.7 million cars and trucks.

R&D Expenditures

(in million euros)	FY2005/2006	FY2004/2005	FY2003/2004
Basic research and development	241	186	191
Customer-related development*	230	266	182
Technical quality assurance	272	281	275
Group Total	743	733	648

* including outside R&D funds and public funding

R&D Structure

Groupwide Cooperation
-The Company aims to extend its technology lead, as it continuously is developing new products and processes in collaboration with other segments in the Group. This Group-wide cooperation creates synergies and gives the Company competitive advantages which the Company uses to the benefit of its customers.
One example of such cooperation is the hydroforming process, in which tubular steel parts are precision shaped by internal fluid pressure. This process delivers numerous technical advantages for chassis components. Specialists from Group's Automotive and Steel segments work together on the development of ultra-light auto bodies.

-Its Automotive and Steel segments have joined forces with Bertrandt, one of Europe's leading engineering companies, to form a joint competency team covering the entire auto development chain as well as major areas of vehicle production.

New Product Development

-October 2005, the Company has commenced promotion activities in Japan for "New Steel Body", the steel-made white body of approx. 30% less weight. Effective use of high tensile steel, hollow parts and production techniques as laser beam welding is its distinctive feature. It will soon be commercialized in Europe and the company expects demand from automakers in Japan. The Company will develop new customers in cooperation with its partner, JFE Steel Corporation. It will also make efforts to reach a larger customer base in Asia.

- New DuoPML steering system: This is an electro-hydraulic system which delivers decreasing steering assistance with increasing speed and offers greater convenience in terms of lane-holding and parking assist features.

- Chassis area: the Company developed an air supply system for the air suspension in a German sport utility vehicle. Work also started on the preliminary development of an independent suspension system for a new track chassis. The Company made further improvements to the functions of the DampMatic damping system. The Automotive segment's ability to reduce weight were augmented by the development of a fiber ceramic piston rod, ultrahigh-strength springs, and split tubular stabilizers.

- Camshaft/crankshaft product area: The Company made further improvements to its lightweight camshafts and - in collaboration with an engine manufacturer- brought its Presta Delta Valve Control system to the production stage. This continuously variable valve control system reduces fuel consumption and exhaust emissions while significantly enhancing driving enjoyment through higher engine efficiency.
For a German automotive OEM, the Company is currently developing a new differential gear module intended mainly for trucks. A further development is a lightweight differential with an aluminum housing.

2006 JSAE Automotive Engineering Exposition

<Chassis Parts> Front axle bracket for Audi A4 -Cataphoretic painting -Coated in Microzing (R) D4+ Application of Microzing (R) D4+ to chassis parts -Responding to hexavalent chromium regulations -Thickness of 60-100 micro meter by ordinary coating can be reduced to 8-20 micro meter by application of Microzing (R) D4, enabling weight to be reduced. -Resistance to corrosion and chipping improved. -Anti-corrosion attribute improved due to high content of aluminum. -Superior adhesion property (30.3N/mm2-DIN EN24624) -No cracks after bending test. (DIN 50111after test) -Dipping process under low temperature contains parts deformation. -Parts rigidity improved due to permeation of zinc into parts joints and spot welded points. Self piercing riveting: Application of self piercing riveting technique -Self piercing riveting makes it easy to joint parts with different coating and materials. -Almost no rise in temperatures in jointing processes. -No need for pre-piercing, nor pre-centering. <Body parts> Hydroforming Subframe used for BMW Mini -Superior to stamp-welded parts in static and dynamic strength. -No deterioration in mechanical property, and light weight. -Hydroforming makes downsizing and flexible layout possible. Layout can be minimized. -Production line can be shortened. -Dimensional tolerance can be made shorter than stamped parts (Higher accuracy) <Others> To Major Supply Agreements

Capital Expenditure

Capital expenditures (in million euros)	FY2005-06	FY2004-05
Automotive	448	480
Total	2,077	1,903

Automotive invested 448 million euros in the reporting period, with depreciation at 323 million euros. The focus was again on capacity adjustments to meet new customer orders.

Body business unit
-In the Body business unit, welding capacities in the UK were expanded to fill an order for stampings and welded parts from a Japanese auto manufacturer. ThyssenKrupp Waupaca expanded its melting capacities in the USA to permit further sales growth. In France, ThyssenKrupp Sofedit increased its capacities with a second hot stamping line. At ThyssenKrupp Umformtechnik, a newly built body stamping plant began operation in Bielefeld, while in Ludwigsfelde investment was carried out to expand the stamping and assembly lines.

Chassis business unit
-In the Chassis business unit, the welding, stamping and assembly lines were adapted to meet new orders. ThyssenKrupp Automotive Tallent expanded its welding and assembly capacities in the UK for the production of front and rear axle components of a large car platform. In Germany, ThyssenKrupp Umformformtechnik began building new production lines for subframes and control arms. In India, stamping capacities for the Asian market are being expanded. ThyssenKrupp Automotive Systems invested in new production lines for the manufacture of axle components in Brazil. ThyssenKrupp Presta also adapted and expanded its production lines to meet new orders for steering columns and steering gears. ThyssenKrupp Bilstein did likewise for the production of shock absorbers, stabilizers and springs.

Powertrain business unit
-In the Powertrain business unit, ThyssenKrupp Gerlach modernized and expanded its production capacities for forged crankshafts. An induction hardening facility is being built for the production of large crankshafts. Investment was also carried out in North America and Brazil to increase crankshaft production capacity. This unit is setting up a company with a partner in China to move into the production of forged truck crankshafts on the Asian continent. ThyssenKrupp Presta invested in new production lines to meet orders for assembled crankshafts. A new assembly and grinding facility is being set up at the Chemnitz location. ThyssenKrupp Prazisionsschmiede also expanded its production capacities to meet encouragingly high demand for warm forged differential bevel gears.

-May 2006, ThyssenKrupp Umformtechnik GmbH inaugurated a new stamping shop for automotive body parts at its Brackwede plant. The new production area, specializing in the processing of high-strength steels and large exposed and structural parts, took just under a year to complete. 40 new jobs have been created.This extension of 10,800 m2 to the site's capacities for exposed panels and large body parts includes a blanking line, a stamping line with robotic links plus - a technical highlight - a fully automated packing system for the stamped parts. The investment is a sign of the company's commitment to Germany as a production location. The skills and dedication of the workforce, their quality awareness, capacity for product and process innovations, problem-solving competency and flexibility tipped the balance in favor of expanding the Brackwede site in Bielefeld. A further important factor is its proximity to customer production facilities. Especially for large, thin-walled stampings this minimizes the risk of transit damage. The new shop will allow just-in-time and just-in-sequence supply directly to OEM assembly lines.