1998/99 1997/98 Pro forma figures ¤DM ¤DM Order intake m 31,964 62,516 36,265 70,928 Sales m 32,378 63,325 35,884 70,182 EBITDA m 2,552 4,991 3,043 5,951 Income before taxes and minority interests m 616 1,205 1,335 2,611 Net income m 275 538 695 1,359 Earnings per share 0.53 1.04 1.35 2.64 Earnings per share excluding non-recurring items 0.79 1.55 1.45 2.84 Return on equity including purchase accounting % 3.4 9.0* excluding purchase accounting % 9.6 18.3* ROCE including purchase accounting % 6.4 10.3 excluding purchase accounting % 8.3 12.8 EVA including purchase accounting m – 519 – 1,014 248 485 excluding purchase accounting m – 126 – 246 630 1,232 Net financial payables m 6,193 12,113 3,741* 7,316* Stockholders’ equity m 8,053 15,750 7,750* 15,158* Gearing % 76.9 48.3*
Employees (Sept. 30) 184,770 183,937 * Thyssen and Krupp excluding Dover Elevators and Mannesmann Handel
1998/99 Proposal to Annual Stockholders' Meeting ¤DM Total dividend payment m 368 720 Dividend per share 0.71581 1.40
All figures in this report are presented on a pro forma basis. For both fiscal years these pro forma figures include figures for Krupp, Dover Elevators and Mannesmann Handel as well as those for Thyssen. This applies independently of the initial consolidation date.
All figures in this report are in ¤, with key figures also shown in DM. The translation rate is 1 ¤ = 1.95583 DM. OVERVIEW OF THYSSENKRUPP
ThyssenKrupp Group
Segments Steel Automotive Industries
New segments Steel Automotive Elevators Production Systems
1998/99 1998/99 1998/99 1998/99 Sales ¤ m 10,452 Sales ¤ m 5,208 Sales ¤ m 2,756 Sales ¤ m 1,257 Income* ¤ m 248 Income* ¤ m 291 Income* ¤ m 145 Income* ¤ m – 6 * before taxes and minority interests Employees (Sept. 30) 54,388 Employees (Sept. 30) 37,594 Employees (Sept. 30) 26,126 Employees (Sept. 30) 8,383 Engineering Materials & Services
Other Group Companies
Components MaterialsServices FacilitiesServices
Real Estate
Engineering Overview of ThyssenKrupp
1998/99 Sales ¤ m 1,816
Income* ¤ m 4 Employees (Sept. 30) 9,594
Others
1998/99 1998/99 1998/99 1998/99 1998/99 Sales ¤ m 1,184 Sales ¤ m 8,886 Sales ¤ m 1,298 Sales ¤ m 426 Sales ¤ m 2,108 Income* ¤ m 76 Income* ¤ m 80 Income* ¤ m 71 Income* ¤ m 54 Income* ¤ m – 291 Employees (Sept. 30) 9,191 Employees (Sept. 30) 12,815 Employees (Sept. 30) 15,378 Employees (Sept. 30) 831 Employees (Sept. 30) 10,470
CONTENTS 1
The Group in figures Overview of ThyssenKrupp 2 Executive Board 3 Letter to Stockholders 8 ThyssenKrupp shares
Year One 16 The merger 18 Growing together 22 Communication in a new corporate design 24 Economic situation 1998/99 30 Start to the new fiscal year
Strategy for the future 34 6-point program to increase value 38 Steel flotation 40 Focus on customers 42 The world market in our sights 44 People at ThyssenKrupp 48 Technological capability as a competitive factor
The Group’s segments 54 Steel 58 Automotive 62 Elevators 64 Production Systems 66 Components 68 MaterialsServices 72 FacilitiesServices 74 Real Estate 76 Engineering 78 Others
80 Supervisory Board 82 Report by the Supervisory Board
86 Major Subsidiaries and Investments 88 Contact ThyssenKrupp Glossary Index 2000/2001 financial calendar 2
Executive Board.
Dr. Gerhard Cromme Prof. Dr. Ekkehard Schulz Chairman Chairman also Executive Board Chairman of also Executive Board Chairman of Thyssen Krupp Automotive AG Thyssen Krupp Steel AG Directorates Directorates Corporate development Central bureau Communication Senior executives Segment Technical developments Automotive Energy and environment Segment Steel
Dr. Hans-Erich Forster Dr. Gerhard Jooss Jürgen Rossberg also Executive Board Chairman of Directorates Directorates Thyssen Krupp Materials & Corporate accounting Legal affairs Services AG Taxes and customs Organizational development Segments Foreign organization Internal auditing MaterialsServices Materials management Real estate FacilitiesServices Information technology Segment Others Real Estate Project Management Dr. Ulrich Middelmann Directorates Dr. Heinz-Gerd Stein Dieter Hennig Controlling Directorates also Labor Director of Mergers & Acquisitions Finance Thyssen Krupp Steel AG Investor relations Directorates Investments Personnel and social policy Prof. Dr. Eckhard Rohkamm Insurance General administration also Executive Board Chairman of Thyssen Krupp Industries AG Segments Elevators Production Systems Components Engineering Others Shipyards Plastics Machinery Civil Engineering 3
Letter to Stockholders.
Dear Stockholders,
For ThyssenKrupp, 1998/99 was the year of the merger:
Thyssen and Krupp were combined swiftly into a new entity. Our task was to implement the merger plan that you approved by a large majority in late 1998 and justify the trust you placed in us. Our businesses were operating in a difficult economic environment. They were not to be additionally impeded by the post-merger process. On the contrary, the merger of Thyssen and Krupp was to bring immediate benefits for all. The merger is not the end of the road. It is the platform on which to strengthen the competitiveness of ThyssenKrupp long-term and the foundation for the strategic realignment ahead.
We went to work on this three-fold challenge immediately, drawing on the combined efforts of all employees at all levels of the Group to achieve our shared aims. We would like to thank everyone for their extremely hard work in the crucial first year of the new company.
Today we want to take stock and report to you, the owners of the Company, on the year of the merger. We also wish to explain to you how we see the future for ThyssenKrupp.
Merger completed in mere months
We succeeded quickly in combining Thyssen and Krupp. A detailed timetable and action plan for implementing the merger, early decisions on filling management positions and a policy of keeping employees fully informed were important factors in this. In summer 1999, mere months after the launch of ThyssenKrupp, the process was largely complete.
Speed was of the essence. The task was to bring the merger plan to life and prove it made sense, and there is no more persuasive argument than rapid success. Not least through the speed of the post-merger integration we proved that the merger was the right solution for Thyssen and Krupp.
Compared with combining our production and service capacities, optimizing our locations and uniting our workforces, the job of harmonizing our internal reporting and information systems will appear to many 4 LETTER TO STOCKHOLDERS
to be of secondary importance, but in fact it was key to managing the new company efficiently and meas- uring the success of the integration process.
We used the opportunity created by the harmonization of our reporting systems to take another step toward enhancing the transparency of our operations, internally and externally. ThyssenKrupp switched its accounting to US GAAP for the 1998/99 fiscal year and in doing so adopted the highest international stand- ard. Under US GAAP rules our merger has to be accounted for as if Thyssen had acquired Krupp. The date of the initial consolidation is December 4, 1998 – the date of the merger stockholders’ meeting of Thyssen AG – as the hypothetical date of acquisition. Krupp is included in the US GAAP figures as of this date only. This approach detracts materially from the comparability of the figures and presents an inadequate picture of the Group's actual performance. Therefore, in addition to the legally relevant US GAAP statements we have stat- ed key financial figures on a pro forma basis, both for 1998/99 and for 1997/98. For this reason, this year's annual report is a double offering: the Year One Report is based on the comparable pro forma figures on an annualized basis, while the Financial Report contains the US GAAP statements.
Business and earnings satisfactory
The economic weakness affecting many of the sectors and regions of importance to the Group left its mark on our books as well. On a like-for-like basis, sales in the reporting period fell ¤3.5 billion to ¤32.4 billion. Income before taxes and minority interests decreased from ¤1,335 million to ¤616 million.
The US GAAP consolidated statements for the first fiscal year show sales of ¤29.8 billion and income before taxes and minority interests of ¤624 million. This translates into earnings per share excluding non- recurrent items of ¤0.83 or DM1.62. Based on this we will be recommending the Annual Stockholders' Meeting on May 24, 2000 to approve the payment of a dividend of DM1.40 or ¤0.71581 per share for 1998/99.
Six strategic core businesses in future
The world keeps on turning. The merged Group therefore cannot afford to take a break. In fact business momentum has quickened even more with the new technologies and the increasingly global transfer of resources of all kinds. It is all the more important to face up to the challenges of competition. LETTER TO STOCKHOLDERS 5
In summer 1999 we carried out an analysis of the Group's extended portfolio of businesses after the merger, examining their strengths and weaknesses and assessing their potential for growth and value generation against their financing requirements. The result was clear – the merger has strengthened our market positions and opened new strategic opportunities. All our businesses are capable of expansion. However the available financial resources of the Group and the differences in growth potential between the businesses call for further concentration and focusing. Selection criteria are profitability and liquidity, growth in the market, competitive positioning, service share of sales and position in the life cycle. The core businesses in which ThyssenKrupp aims to rank among the best worldwide are Automotive, Elevators, Production Systems, Components, MaterialsServices and FacilitiesServices, plus the soon to be listed Steel business. The Real Estate activities do not meet our strict criteria for a core business but in view of their significance will also be continued.
For activities which we no longer see as core businesses we will be seeking development opportunities outside the Group. What we have in mind primarily are strategic partnerships in which the partner's core business is strengthened by our activities, but other possibilities are collaboration, sale or flotation.
ThyssenKrupp Steel to go public
The future realignment will include the floating off of the Steel segment as a listed stock company. Thyssen and Krupp grew up with steel. The combination of their steel activities in ThyssenKrupp Steel made the company into one of the world's foremost carbon steel flat-rolled manufacturers and the number one stainless flat-rolled producer worldwide.
The IPO planned for the current year will give ThyssenKrupp the opportunity to significantly reduce the cyclicality of its business. Clearly separated from the listed steel company – a straight steel stock – the Group's core businesses will in future be capable of being assessed on a more differentiated basis. In addition, we will be able to use the funds raised by floating 25 – 35% of the steel business to further strengthen the core businesses.
The steel business will also profit from the move. In future it will be able to develop new sources of finance for expansion and growth. In addition, with its shares it will have its own acquisition currency for further 6 LETTER TO STOCKHOLDERS
strategic options. High technological competence, an optimized cost structure and the successfully initiated globalization will make the Steel stock an attractive investment. The Group will continue to share in this.
Services for complete customer solutions
A key asset in our relationships with customers is our expertise in technologies, systems and services.
High-quality industrial products and services are our business, backed by advanced technologies. Whether it's remote-monitored elevators, electronically controlled shock absorbers, just-in-time supply of tai- lored materials, maintenance of industrial equipment or operation of customer care centers – we give our cli- ents individually customized solutions matched to the task in hand. The services side of our business is increasing all the time. Already services account for 15 – 20% of Group sales. We are working on increasing our involvement at more and more points along the value chain. Around the world we are developing and expanding long-term system and value partnerships.
An important role will be played in the future by e-commerce. It will affect all corporate functions – from buying to selling to services. In future more and more companies will purchase their raw materials on elec- tronic markets, farm out functions like service or maintenance to online experts and in doing so achieve major cost savings. ThyssenKrupp intends to seize this opportunity with an e-commerce drive, focusing both on our own products and on services for others.
The service business offers attractive earnings contributions and low capital intensity and thus delivers higher value-added, giving us an additional lever to increase the value of the Company.
High enterprise value for a secure future
Concentrating on and growing the six core segments, the planned flotation of Steel and a stronger focus on services are central planks of ThyssenKrupp's forward strategy. In some areas we are already world lead- ers today, while in others the strategic realignment marks out the path to leadership. LETTER TO STOCKHOLDERS 7
The faster we move down this path, the more successful we will be in raising and sharpening our profile in the financial community. In future ThyssenKrupp will be identified more and more clearly as a provider of advanced industrial products and services. Through the efforts of our employees around the globe and through systematic value management we will create added value for our customers and our stockholders.
This added value will give us the strength for future innovations, sustained profitability and further growth. Together, let us continue to develop this value-based partnership.
Dr. Gerhard Cromme Prof. Dr. Ekkehard Schulz Chairmen of the Executive Board 8
ThyssenKrupp shares.
The new ThyssenKrupp stock is a stock with potential. At the end of fiscal 1998/99 it was worth
¤18.70, almost 30% more than the Thyssen stock twelve months earlier. On the first day of trading
of the year 2000 its price had risen as high as ¤31.35. Many analysts and banks regard it as a buy
recommendation. Nor has it gone unrecognized by private investors. According to a recent stock-
holder survey they hold a significant 16% of the capital stock of ThyssenKrupp after the major stock-
holders, banks and funds.
Trading commences on March 25, 1999 the initial quotation of the new stock, exchange rights for ThyssenKrupp shares were traded to Trading in Thyssen and Krupp shares was ensure continuity. The interest of investors was ceased at the end of trading hours on March 17, reflected in stock market turnover. Trading in 1999. The new ThyssenKrupp stock was admitted ThyssenKrupp shares was lively from day one. On to the Frankfurt am Main and Düsseldorf stock average over 30 million shares were traded each exchanges on March 25, 1999. On the same day month. trading in the stock also began on the London Stock Exchange and the Swiss Stock Exchange in Zurich. In Germany the ThyssenKrupp stock is included Between the delistings on March 17, 1999 and in the electronic trading system Xetra. It is also one of the stocks on which options are traded on Main ThyssenKrupp stock data the Eurex Deutschland futures market (formerly Stock identification numbers Deutsche Terminbörse ). In addition, various Germany 750 000 issuers have launched numerous warrants on UK 5636927 the ThyssenKrupp stock. Switzerland 412 006 ISIN DE 000 750 0001 ThyssenKrupp is one of the 30 major listed (International Stock Identification Number) companies whose stock prices make up the Deutscher Aktienindex (DAX). Within the DAX our Symbols shares rank 19th in terms of market capitalization Stock TKA and 20th in terms of turnover. The ThyssenKrupp Reuters Frankfurt stock exchange TKAG.F stock is also included in major European stock Xetra TKAG.DE indexes, e.g. the Dow Jones Stoxx and Dow Jones Bloomberg TKA EuroStoxx and the MSCI Europe index. THYSSENKRUPP SHARES 9
Share exchange completed In connection with the integration of Thyssen Industrie AG into Thyssen AG various Thyssen With the beginning of trading in ThyssenKrupp Industrie stockholders filed for court examination of shares began the three-month period for swapping the fairness of the exchange ratio. Should the court Thyssen and Krupp shares for shares in Thyssen fix a higher cash payment as compensation, this Krupp AG according to the exchange ratios speci- will be granted to all stockholders who surrendered fied in the Merger Agreement. ThyssenKrupp their shares as a result of the integration. shares are no-par-value bearer shares. The capital stock is certificated in global certificates. Stockholders' rights to have their shares certifi- Capital stock divided into cated are excluded by the Articles of Association. no-par-value shares For official trading purposes, global certificates are deposited with Clearstream Banking AG (formerly The Merger Agreement of October 16, 1998 Deutsche Börse Clearing AG) in Frankfurt am Main. also specified the capital stock of Thyssen Krupp AG. The previous capital stock of Thyssen AG of Both former Thyssen stockholders and former DM1,715,000,000 at par was transferred to Krupp stockholders filed for court examination of Thyssen Krupp AG in full applying the exchange the exchange ratios in accordance with Arts 305 et ratio of one DM50 par value Thyssen share for ten seq. of the Reorganization Act (Umwandlungs- no-par-value shares in Thyssen Krupp AG. The gesetz). Should a cash consideration be fixed by capital stock of Fried. Krupp AG Hoesch-Krupp of the court, all former Thyssen or Krupp stockholders DM1,088,128,450 at par was transferred according will receive the payment, even if they did not file for to the exchange ratio of one DM50 par value Krupp court examination. share for 7.88 no-par-value shares in Thyssen Krupp AG. The capital stock of Thyssen Krupp AG thus amounts to DM2,572,445,220. It is divided Thyssen Industrie AG integrated into 514,489,044 no-par-value bearer shares each representing a theoretical share of DM5 in the capi- Before the merger of Thyssen and Krupp, tal stock. The changeover from par value shares to Thyssen Industrie AG was integrated into Thyssen no-par-value shares was thus completed. AG. The corresponding entry in the Commercial Register in Essen took place on January 26, 1999, A proposal will be made to the Annual Stock- making the integration legally effective. This was holders' Meeting on May 24, 2000 that the capital preceded by resolutions approving the integration stock be converted from DM to ¤. As a result of a by the extraordinary stockholders' meeting of capital increase of around ¤1.8 million from com- Thyssen AG on December 3/4, 1998 and the ex- pany funds, which will not affect the number of traordinary stockholders' meeting of Thyssen shares issued, the theoretical share of the capital Industrie AG on December 15, 1998. stock represented by each share of stock will be exactly ¤2.56. 10 THYSSENKRUPP SHARES
ThyssenKrupp stock outperforms the DAX At the end of the fiscal year on September 30 the stock was quoted at ¤18.70, which was ¤4.15 The ThyssenKrupp stock opened at ¤17.90 on or 28.5% higher than on September 30, 1998. its first day of trading on March 25, 1999. The offi- In the same period the DAX improved 15.1% while cial cash price was fixed at ¤18.15. the DJ STOXX index of major European stocks rose 31.1%.The market capitalization of ThyssenKrupp share prices* ThyssenKrupp at the end of the fiscal year was
in ¤ ¤9.6 billion.
30 Related to the 1999 calendar year 28 ThyssenKrupp's shares also outperformed the Dow 26 24.6 Jones STOXX. At December 30, 1999 they were 24 23.7 22.5 87.2% higher than a year earlier at ¤30.15. In the 22 21.5 21.5 20.4 same period the DAX rose 39.1% while the Dow 21.4 21.6 20 18.3 18.4 Jones STOXX advanced 38.2%. ThyssenKrupp's 18 18.6 16.9 18.2 18.3 market capitalization at December 31, 1999 was 17.8 16.0 16.1 16 15.2 16.1 ¤15.5 billion. 15.1 14 14.6 14.4 13.6 12 12.8
10 DM1.40 dividend OND J FMA MJJ AS
1998 1999 A proposal will be made to the Annual Stock- * up to March 24, 1999 Thyssen stock/exchange rights holders' Meeting to resolve the payment of a divi- dend of DM1.40 or ¤0.71581 per share. As signifi- The exchange ratio of one DM50 par value cant profits were generated outside Germany and Thyssen share to ten no-par-value Thyssen Krupp profits inside Germany could be offset against tax AG shares means that the performance of the new loss carryforwards, the dividend payment is not linked stock can be compared statistically with that of the with a tax credit. Related to the ThyssenKrupp previous Thyssen stock. To allow retrospective stock price of ¤18.70 on September 30, 1999 the comparison the Thyssen stock prices have been dividend yield is 3.8%. Against the background of divided by ten and converted into ¤. the general economic trend and the Group's busi- ness situation the dividend is at a high level on still In fiscal 1998/99 the stock performed positively. satisfactory earnings. On September 30, 1998 Thyssen shares were quoted at ¤14.55. After hitting a period low of ¤12.84 on October 8, Thyssen shares and later EPS excl. non-recurrent items: ThyssenKrupp shares embarked on a stable ¤0.79 on a pro forma basis upward trend. In early February 1999 they ad- vanced significantly and broke away from the DAX. Earnings per share (EPS) is calculated by di- On August 9, 1999 they reached their period high viding consolidated net income by the weighted at ¤24.55, only ¤0.66 behind Thyssen's all-time average number of shares issued. For 1998/99 EPS high of July 9, 1998. is ¤0.53 on a pro forma basis and ¤0.55 to US THYSSENKRUPP SHARES 11
Performance of ThyssenKrupp shares in fiscal 1998/99 against DAX and DJ STOXX
in %
180
170
160
150
140
130
120
110
100
90
80 O N D 1999 F M A M J J A S 0
ThyssenKrupp DJ STOXX DAX
indexed, from September 30, 1998 to September 30, 1999; up to March 24, 1999 Thyssen stock/exchange rights
GAAP. Unlike with German DVFA/SG earnings, one- 142,000 ThyssenKrupp stockholders off effects are not eliminated in computing EPS. In fiscal 1998/99 one-off charges from the merger ThyssenKrupp carried out a stockholder survey totaled ¤153 million. There were also additional as at September 30, 1999. The survey covered tax charges of ¤61 million resulting from the altogether 137,341 stockholders with a total 1999/2000/2002 Tax Relief Law. These expendi- holding of 496,546,102 shares. This represents tures would be eliminated in calculating DVFA/SG 96.5% of the 514,489,044 no-par-value shares of earnings. After eliminating them, EPS excl. non- the capital stock of DM2,572,445,220. The survey recurrent items is ¤0.79 per share on a pro forma delivered interesting findings: basis (¤0.83 per share under US GAAP). Other corrections, such as the elimination of minority ThyssenKrupp has around 142,000 stock- interests in profit, are already taken into account in holders. 135,000 private investors and 7,000 insti- the EPS number. Corrections for accounting tutional investors hold 16% and 84% of the capital measures, such as the change of expense stock, respectively. 67% of the capital stock is held accruals, are not necessary because under US by German investors and 33% by foreign investors. GAAP such accruals may not be recognized. Valuation changes, material disposal gains or reco- Five stockholders own larger holdings repre- gnition of restructuring accruals did not occur in senting in total 38.69% of the capital stock. These 1998/99. are the Alfried Krupp von Bohlen und Halbach Foundation (AKBH Foundation) with 17.36%, IFIC 12 THYSSENKRUPP SHARES
In terms of geography the biggest area after Stockholder structure 1999 Germany is the UK where 11.7% of the capital
Shares of capital stock in % stock is held. 6.1% of our shares are held by AKBH Foundation 17.36 owners in the USA. IFIC Holding AG/IFIC 7.69
TBV 7.00
Fritz Thyssen Foundation 4.96 Investor relations for more information and WestLB 1.68 transparency German funds and banks 18.70
Foreign funds and banks 23.80
Private investors 16.00 The open information policies pursued by both
Others 2.81 Thyssen and Krupp succeeded in strengthening trust among stockholders, potential investors and financial analysts. This transparent communi- Holding AG/IFIC with 7.69%, Thyssen Beteiligungs- cations approach was continued after the two verwaltung GmbH (TBV) with 7.00%, the Fritz companies merged. At ThyssenKrupp, too, investor Thyssen Foundation with 4.96% and Westdeutsche relations is all about meeting the diverse informa- Landesbank Girozentrale with 1.68%. The stock- tion needs of various target groups. A general over- holders of TBV are Allianz AG and Commerzbank view is provided by our website (www.thyssen- AG. In future they wish to hold their ThyssenKrupp krupp.com). Questions or comments can be shares directly. Therefore for legal and tax reasons e-mailed direct to [email protected] it will be necessary to dissolve TBV by merging it krupp.com. Our Investor Relations team can also into Thyssen Krupp AG. A resolution to this effect be contacted by fax (+49 211/824-3 64 67) or will be put to the Annual Stockholders' Meeting on phone (+49 211/824-3 64 64). May 24, 2000. For our stockholders the extraordinary stock- Funds and banks hold a total of 42.5% of our holders' meetings of Thyssen and Krupp in 1998 capital, with 23.8% held by foreign and 18.7% by provided the opportunity to discuss the forthcoming domestic funds and banks. Domestic and foreign merger in detail. The high level of interest was private investors directly hold 16% of the stock. reflected in the attendance and in the numerous Of the 135,000 private investors, employees form questions asked at the meetings in November and by far the biggest group numerically, followed December 1998 and at the ordinary stockholders' by pensioners and self-employed people. On meetings in February 1999. average each private investor owns nearly 600 ThyssenKrupp shares. Based on the stock market For financial analysts we organize presentations price on the date of the survey, this represents a and conference calls twice a year, after the publica- sum of around ¤11,000 per private investor. tion of the annual financial statements and the THYSSENKRUPP SHARES 13
interim report, respectively. These provide wide ThyssenKrupp stock statistics scope for explanations and discussion. 1998/99 Capital stock DM m 2,572.4 In addition we held numerous expert meetings Number of shares m 514.5 with institutional investors in Germany and abroad Market capitalization on September 30 ¤ bn 9.621 to discuss the Group's prospects. The launch of Cash price on September 30 ¤ 18.70 ThyssenKrupp was marked by roadshows at the High ¤ 24.55 most important financial centers in Europe and the Low ¤ 12.84 USA to present the merger plans.
Dividend ¤ 0.71581 The strategic realignment of the Group an- Total dividend payment ¤ m 368.3 nounced in November 1999 was the subject of Dividend yield % 3.8 further presentations and meetings with numerous investors worldwide. Earnings per share excl. non-recurrent items ¤ 0.79 14 YEAR ONE
The merger
Growing together
Communication in a new corporate design
Economic situation 1998/99
Start to the new fiscal year YEAR ONE 15
“The merging of competen- cies and the determination to suceed are integrating individual strengths into a global force.” 16
The merger.
Thyssen and Krupp begin talks on a The supervisory boards of Thyssen The European Commission approves After the valuation work is completed full merger of the two companies. and Krupp approve in principle the the merger. the executive boards of the two com- merger plan drawn up by the two panies initial the Merger Agreement executive boards and instruct them and announce the proposed ex- to bring the merger to a positive change ratios for shares in the new conclusion after clarifying the un- Thyssen Krupp AG. resolved issues.
The business strategy for ThyssenKrupp is presented to the public in a first joint press conference.
September 1997 January/February 1998 June 1998 September 1998
Only 18 months lay between the start of the merger talks and ThyssenKrupp's registration. During this
time opportunities and potential synergies were sounded out, the new company structure was drawn
up and a joint merger report prepared. The results were persuasive: the stockholders of Thyssen and
Krupp approved the merger by an overwhelming majority.
The stockholders of Thyssen and Krupp made Thyssen Krupp AG was entered in the Düssel- their decision on the merger of the two companies dorf Commercial Register on March 17, 1999. The to form Thyssen Krupp AG at extraordinary stock- merger took place with economic effect at October holders' meetings. Their vote was clear: 1, 1998.
The stockholders' meeting of Fried. Krupp AG Between the start of the merger talks and the Hoesch-Krupp approved the merger on stockholders' clear decision in favor of the merger November 30, 1998 with 99.97% of the capital lay a period of around 15 months in which task represented, or 90.67% of the capital stock. forces from both companies under the overall re- sponsibility of the executive boards carried out thor- The stockholders' meeting of Thyssen AG con- ough preparations. They determined the strategic sented to the merger on December 4, 1998 with opportunities and the potential operating synergies 99.95% of the capital represented, or 59.37% of the merger, drew up the business plan for the of the capital stock. new company and prepared the timetable for implementing the merger. The results of this work THE MERGER 17
The supervisory boards of both com- The extraordinary stockholders' Legal challenges are raised by The merger is cleared by the com- panies approve the merger. meetings of Krupp and Thyssen stockholders against the merger petent courts and Thyssen Krupp approve the merger. resolutions of the two stockholders' AG is registered in the Düsseldorf The Merger Agreement is notarized, meetings. Commercial Register. The new the merger report signed and the company begins work. audit report of the court-appointed merger auditor completed.
The public is informed at a joint press conference.
October 1998 November/December 1998 January 1999 March 1999
were the subject of detailed discussions in the The employees of the two companies were kept supervisory boards and employee representative up to date by means of a specially produced news- bodies of both companies. paper – “Fusion aktuell” (Merger Update) – which appeared a total of seven times up to March 1999. Throughout the merger preparations information was promptly communicated both internally and This extensive package of measures succeeded externally. When the negotiations were complete, firstly in presenting the merger to the public, the the executive boards of the two companies presen- business press and the financial community in a ted a joint merger report explaining the merger in transparent and understandable way and secondly detail and including sections on the business plan, in winning the support of both sets of employees the Merger Agreement, the Articles of Association for the merger and involving them in its success. of Thyssen Krupp AG and the share exchange ratios.
To inform the stockholders and the general public a brochure was prepared presenting the thinking behind the merger, introducing the seg- ments of the merged company and listing the key facts and figures regarding the exchange of shares. The brochure picked up on themes which had been developed for an image advertising campaign in connection with the merger. This campaign was run in selected newspapers and magazines ahead of the stockholders' meetings and met with a broad positive response. The websites of Thyssen and Krupp also recorded large increases in numbers of visitors. 18
Growing together.
The merger of Thyssen and Krupp created a grouping of more than 700 companies with over 180,000
employees worldwide. The main task in the first joint fiscal year was to combine the two groups of
companies efficiently and prepare them for their future together. Both externally and internally the
expectations were high as regards realizing the initial benefits – whether strategic or operating – as
quickly as possible and bringing the merger plan to life.
Starting organization implemented quickly ners. It provided for five segments in which the Group's activities were subdivided into a total of 23 The organizational structure of the merged business units. The segments were Steel, Group was an almost automatic consequence of Automotive, Industries, Engineering and Materials the great similarities between the two merger part- & Services. The real estate holdings of the two
Steel Automotive Industries Business units: Business units: Business units: Carbon Steel Flat-Rolled Body Elevators Stainless Chassis Production Systems Investments Powertrain Components Systems/Suspensions Plastics Machinery Shipyards Civil Engineering
Key figures 1998/99: Key figures 1998/99: Key figures 1998/99: Sales ¤10,452 m Sales ¤5,208 m Sales ¤6,554 m Income* ¤248 m Income* ¤291 m Income* ¤234 m Employees (Sept. 30) 54,388 Employees (Sept. 30) 37,594 Employees (Sept. 30) 51,090
Executive Board of the lead company Executive Board of the lead company Executive Board of the lead company Thyssen Krupp Steel AG: Thyssen Krupp Automotive AG: Thyssen Krupp Industries AG: Prof. Dr. Ekkehard Schulz (chairman) Dr. Gerhard Cromme (chairman) Prof. Dr. Eckhard Rohkamm Dr. Helmut G. Hadrys (vice chairman) Dr. h.c. (USA) Siegfried Buschmann (chairman) Dr. Wolfgang Kohler (vice chairman) (vice chairman) Dr. Gerd Weber (vice chairman) Dr. Christian Bormann Dr. Jürgen Harnisch (vice chairman) Gary Elliot Dr. Claus Hendricks Hans-Peter Breker Dr. Heinrich Igelbüscher Dieter Hennig Dr. Rainer Eisele Dr. Götz Sadtler Prof. Dr. Andreas Nordmeyer Winfried Haastert Herbert von Nitzsch Dr. Dirk Hoffmann Alfred Wern Ulrich Ziolkowski GROWING TOGETHER 19
“A thorough analysis companies were grouped together in the Real ThyssenKrupp Automotive can be found in all well- of the Group’s portfolio Estate sector. For the strategic and operating known makes of car. was the basis for a new strategic align- management of the segments, lead companies ment.” were formed, each domiciled at an important loca- Industries tion of the Group. ThyssenKrupp Industries supplies high-value capital goods, specialized machinery, systems and Steel components. The segment operates successfully in The Steel segment comprises all the Group's markets characterized by relatively low production steel activities. In its main fields of activity, carbon volumes and high technology content. steel flat-rolled and stainless, ThyssenKrupp Steel was an international leader from day one. Engineering The plant engineering activities were concen- Automotive trated in the Engineering segment. ThyssenKrupp The Automotive segment represents the Group's Engineering is one of the ten largest engineering technological capabilities as a systems partner contractors worldwide and holds leading market to the international automobile industry. Compo- positions in areas such as cokemaking equipment nents, assemblies and complete systems from and cement plants.
Engineering Materials & Services Real Estate Business units: Business units: Business units: Chemical Technology Materials Services Real Estate Management Cement Plants Industrial and Facility Services Real Estate Development Bulk Handling Equipment Project Management Real Estate Consulting Energy Technology Residential Real Estate Engineering India
Key figures 1998/99: Key figures 1998/99: Key figures 1998/99: Sales ¤1,816 m Sales ¤10,666 m Sales ¤426 m Income* ¤4 m Income* ¤121 m Income* ¤54 m Employees (Sept. 30) 9,594 Employees (Sept. 30) 30,571 Employees (Sept. 30) 831
Executive Board of the lead company Executive Board of the lead company Management of Thyssen Krupp Thyssen Krupp Engineering AG: Thyssen Krupp Materials & Services Immobilien GmbH: Tyark Allers (chairman) AG: Peter Lampe (chairman) Jürgen Bauer Dr. Hans-Erich Forster (chairman) Dr. Jochen Zech (vice chairman) Dr. Rainer Reichelt Reinhard Quint (vice chairman) Jürgen Best Herbert Stippel Hans-Ulrich Gruber Karl-Adolf Brunne Jochen Voß Dr. Thomas Ludwig Dr. Burkhardt Höper Heribert Wiedenhues Klaus Pannenbäcker Prof. Dr. Rolf Reppel
* before taxes and minority interests 20 GROWING TOGETHER
Materials & Services Based on these principles the Group's portfolio The activities of the Materials & Services seg- was further optimized in the reporting period and at ment are characterized by a broad range of servi- the start of the current fiscal year. ces. They include materials processing and distri- bution, complete industrial and facility services and The Steel segment expanded its European net- sophisticated IT capabilities. work of steel service centers with the acquisition of the French companies Coste S.A. and S.A. Lami- Real Estate noires et Ateliers de Jeumont. In the USA the steel Our Real Estate business under the manage- service activities formerly run by Thyssen Inc. were ment of Thyssen Krupp Immobilien GmbH has transferred to ThyssenKrupp North America Inc. made a name for itself as a leading service pro- in Detroit. The electrical sheet business will be vider on the real estate market. Core competencies strengthened by the purchase of a majority interest include real estate development, construction in France's Usinor Grains Orientés S.A.; regulatory project management, planning and consulting. A approval for the move was granted by the EU particularly important part of its work is managing Commission in October 1999. its own real estate portfolio and growing its range of services. The acquisition of Dover Elevators in the USA made the Elevators unit the world's third largest elevator manufacturer. The purchase of Elevadores Portfolio optimization continued Sûr in Brazil opens up new opportunities to broad- en the customer base in South America. Thanks A central element of our value-based manage- to the acquisition of Access Industries, USA, ment policy is active portfolio management, by ThyssenKrupp is now world market leader in stair which we mean strategic measures to increase the lifts. The light conveyor activities were sold. value of the company. We analyze our businesses systematically against defined criteria such as The Materials & Services segment further market performance, competitive situation, product expanded its international services business. The and customer value, innovation, profitability and acquisition of Mannesmann Handel AG strength- liquidity. If activities meet the criteria, they are ened the tube and rolled steel distribution activities systematically expanded – including through acqui- and the technical trading business. The purchase sitions which fit in with our industrial strategy. In of Vetchberry Steel Ltd. in the UK will permit other cases we look for so-called best-owner solu- expansion of the stainless steel service center tions to initiate a profitable withdrawal from activi- activities. Palmers Limited, one of the leading ties which have better development opportunities in suppliers of industrial services in the UK, was a different environment. Of particular importance acquired. The Nestrans Logistik group, including from the Group perspective is a sound balance of the inland waterway shipping business, was sold value generators and cash providers. This creates effective October 1, 1999. the framework for dividend continuity and con- tinuous growth in core business areas. GROWING TOGETHER 21
New Group segmentation Materials & Services. These activities, along with Engineering, will no longer be core businesses in In parallel with all these optimization measures future, and we will be looking for better develop- the Executive Board carried out a fundamental ment opportunities for them outside the Group. review of the Group's portfolio and in fall 1999 drew up the principles of a new strategic align- New organizational structure ment. Steel – in future listed Central to this realignment program is a further focusing of the core businesses. The Group has Automotive more promising business activities than it can Elevators afford to develop actively with the available finan- cial resources. For this reason ThyssenKrupp will in Production Systems future concentrate on a select number of core Components businesses where the available resources promise to deliver the greatest success. These are Automo- MaterialsServices tive, Elevators, Production Systems, Components, FacilitiesServices MaterialsServices and FacilitiesServices. Alongside these core businesses there will be the segments Real Estate Steel (listed in future), Real Estate and Others. Because of its special significance, Engineering will Engineering be presented as a separate segment and not as Others part of Others.
The Steel, Automotive and Engineering seg- The strategy for a strong and internationally ments are the same as those existing hitherto. competitive ThyssenKrupp Group is covered in the Elevators, Production Systems and Components, section “Strategy for the future”, which sets out the hitherto business units of the Industries segment, perspectives for growth and outlines the restructur- will become segments in their own right. Materials ing that will be necessary to achieve the target Services and Industrial and Facility Services, up to structure. now business units of the Materials & Services seg- ment, become the MaterialsServices and Facilities- Services segments. In addition, all the real estate activities will be joined together in the Real Estate segment. The remaining activities of the Group will be pooled in the Others segment, comprising essentially the former Industries units Plastics Machinery, Shipyards and Civil Engineering, and the Project Management unit, formerly part of 22
Communication in a new corporate design.
Communications work in the year under review was dominated by the task of making the new
ThyssenKrupp brand known worldwide as a synonym for the Group's products and services. The
strategy chosen is to utilize the established "good names" of the two merger partners and carry them
on in a new, distinct brand. This will allow us to retain proven assets and at the same time place the
new brand in a modern, forward-looking context. As a linking element the new corporate design is an
important step in this process.
Corporate design as a symbol The Group's subsidiaries around the world of the fresh start shape their own communications identity within this design framework. Established names and all they Following the stockholders' approval of the stand for in the market have been retained and merger the focus of communications work shifted supplemented with the ThyssenKrupp logo to to the question of a new corporate design for underline membership of the Group. ThyssenKrupp. The central task was to develop a new logo as a symbol of the fresh start. The logo The clearly structured, graphically appealing had to symbolize capability and quality, innovation corporate design characterizes all the Group's com- and globality and at the same time bring together munications – from business correspondence to the internationally famous logos of the merger websites, brochures to employee magazines, trade partners. It had to be appealing and it had to be show booths to building signs. capable of functioning as an element of identifica- tion for our employees. Logically, therefore, we invited our employees to enter a competition to Worldwide communications network design the new logo. The response exceeded all expectations. Altogether more than 5,000 entries The other key areas of communications work were received from Thyssen and Krupp companies are closely linked with the Group's general strategic in and outside Germany. Working on this basis, goals. For example, the strengthening of the internal and external communications experts Group's global focus is being supported by further developed the ThyssenKrupp logo. expansion of the company intranet and the Group's internet presence. The aim is to create a worldwide With the logo developed, the centerpiece of the communications network to exchange information new corporate design was in place. In addition, and data, not just within the Group but also characteristic ThyssenKrupp colors and a special with customers, suppliers, investors and other corporate font were introduced. All these elements interested parties. contribute to establishing a distinct visual identity for the Group. COMMUNICATION IN A NEW CORPORATE DESIGN 23
“Maintaining identity Trade fairs to enhance the Company's image through the merger: and customer contacts the ThyssenKrupp logo as a symbol of the fresh start.” In the past fiscal year the companies of the ThyssenKrupp Group took part in 144 trade shows and exhibitions, 98 of them outside Germany. The ThyssenKrupp pavilion attracted more than 23,000 visitors at the Hanover fair in spring 1999. The most important international fair was the Techno- germa show in Jakarta.
Expo 2000: pavilion as international youth forum
To represent our Company at the Expo 2000 world exposition in Hanover together with Expo- Beteiligungsgesellschaft we have developed a concept targeted specifically at young people. As sponsors we will be making the ThyssenKrupp pavilion available for young people from all over the world to use as an official Youth Infotainment Forum. As part of a “Future of Work” theme park the pavilion will give youngsters a forum to discuss current and future-related work issues. In this we are supporting the German Government's initiative to combat youth unemployment.
The youngsters will be able to talk to young employees from the ThyssenKrupp Group on an equal footing to raise acceptance and credibility. As well as an internet café and a forum for creative work, the pavilion will feature an activity stage and a graffiti zone. ThyssenKrupp is also involved in other Expo 2000 activities, for example as a stockholder in Expo-Beteiligungsgesellschaft. 24
Economic situation 1998/99.
Large parts of ThyssenKrupp's first fiscal year were characterized by difficult business conditions.
The economic slowdown in numerous countries of Europe, Asia and Latin America placed a consider-
able burden on our business. Sales in 1998/99 totaled ¤32.4 billion. Earnings at ¤616 million were
well below the record figures achieved by Thyssen and Krupp a year earlier. We are proposing the
payment of a dividend of DM1.40 or ¤0.71581 per share.
Business impacted by economic slowdown enced by competitors. In Stainless, sales were like- wise down on the prior-year figure. The fall here Orders received by ThyssenKrupp in the repor- was due exclusively to the unsatisfactory price ting period amounted to ¤32.0 billion, a drop level, particularly as a result of the sharp fall in of 12% on the comparable prior-year figure. The alloying element prices; shipments were slightly Group's sales reached ¤32.4 billion in 1998/99, a higher than a year earlier. decrease of ¤3.5 billion or 10% caused mainly by weaker German business. The foreign share of Sales of the Automotive segment matched the sales was 63%. high prior-year level at ¤5.2 billion. Continuing healthy auto sector activity in North America and ThyssenKrupp in figures Germany had a positive effect. Market-related de- Pro forma figures 1998/99 1997/98 clines at the plants in the UK and Brazil were offset Order intake ¤ m 31,964 36,265 by higher sales in other countries. Sales ¤ m 32,378 35,884 EBITDA ¤ m 2,552 3,043 In the Elevators segment sales increased 14% Income* ¤ m 616 1,335 to ¤2.8 billion. The growth was achieved Employees (Sept. 30) 184,770 183,937 particularly in North America, but also on the * before taxes and minority interests European markets.
In the Steel segment sales decreased 15% to At ¤1.3 billion, sales of the Production Systems ¤10.5 billion. In the Carbon Steel Flat-Rolled unit segment were down nearly 6%. The main reason this was mainly due to significantly lower ship- was weak demand for machine tools in North ments. Thanks to selective order booking and the America. However, the body-in-white and assembly high proportion of contract business, the fall in equipment businesses improved on last year's revenues was less pronounced than that experi- good figures. ECONOMIC SITUATION 1998/99 25
“Business was impact- Despite weak activity in its main market, the mation services unit, which operates computing ed by difficult interna- construction industry, the Components segment centers, client-server architectures and customized tional conditions in 1998/99, but a managed on the whole to hold its high level of communications systems for industry and public second-half recovery sales. Some areas such as the Novoferm group authorities. raises expectations of earnings growth in the achieved revenue growth. future.” The Real Estate segment achieved sales of ¤0.4 Sales by segment billion, an increase of 19%. The main sources of Pro forma figures in ¤ m 1998/99 1997/98 revenue were the residential real estate and real Steel 10,452 12,312 estate management businesses. Automotive 5,208 5,095 Elevators 2,756 2,415 The Engineering segment held up well despite Production Systems 1,257 1,334 the uncertainties caused by the currency and finan- Components 1,184 1,162 cial crises in Southeast Asia. Sales were down 3% MaterialsServices 8,886 10,412 at ¤1.8 billion. Orders dropped to ¤1.7 billion. FacilitiesServices 1,298 1,078 Real Estate 426 358 Others groups together activities which like Engineering 1,816 1,879 Engineering are no longer regarded as core busi- Others 2,108 3,342 nesses. They include in particular Shipyards, Segment sales 35,391 39,387 Plastics Machinery and Project Management. In Intersegment sales –3,013 –3,503 1998/99 the sales of this segment amounted to Group 32,378 35,884 ¤2.1 billion, 37% less than a year earlier.
In MaterialsServices, sales amounted to ¤8.9 billion, a drop of 15% against the previous year. High dividend on still satisfactory earnings Shipments and revenues fell significantly in the first half particularly in Europe and in export business. In fiscal 1998/99 ThyssenKrupp achieved In North America the segment strengthened its income before taxes and minority interests of ¤624 market position. Against the market trend, German million. On a pro forma basis the figure is ¤616 business almost matched the sales level of the pre- million. The difference results from the accumu- vious year. lated earnings of the former Krupp companies for October and November 1998, the earnings of FacilitiesServices increased its sales 20% to Dover Elevators for October to December 1998 and ¤1.3 billion. Industrial service business expanded the earnings of the Mannesmann Handel group for despite the subdued domestic market. A major fac- October 1998 to March 1999. Compared with last tor in this was the targeted expansion and integra- year's earnings calculated on a pro forma basis tion of individual service elements. There was a this represents a decrease of ¤719 million. disproportionate increase in business at the infor- 26 ECONOMIC SITUATION 1998/99
Income by segment* proposing to the Annual Stockholders' Meeting that after appropriating ¤113 million to retained earn- Pro forma figures in ¤ m 1998/99 1997/98 ings we use ¤368 million to pay a dividend of Steel 248 667 DM1.40 or ¤0.71581 per share. Automotive 291 265 Elevators 145 81 Production Systems –6 68 Mixed earnings trend in the segments Components 76 109 MaterialsServices 80 108 The following comments on segment earnings FacilitiesServices 71 192 are made exclusively on a pro forma basis. Real Estate 54 80 Engineering 4 11 Steel achieved a profit of ¤248 million, a drop of Others – 291 – 100 ¤419 million against the previous year. Despite the Consolidation –56 – 146 poor market situation the Carbon Steel Flat-Rolled Group 616 1,335 unit made a profit of ¤170 million. This includes a * before taxes and minority interests stockholder contribution of ¤116 million. After deducting this contribution the profit was ¤54 The earnings figure for 1998/99 includes good- million. The earnings of the Stainless unit were will amortization of ¤164 million, of which ¤71 mil- marked by the unsatisfactory price level in the lion relates to goodwill in connection with the mer- reporting period. All businesses made positive ger and ¤23 million to goodwill arising on the contributions to the profit of ¤84 million. The other acquisition of the Dover Elevators group. On a pro companies made a loss in total of ¤2 million. forma basis goodwill amortization from the merger amounts to ¤85 million and from the acquisition of Automotive increased its earnings ¤26 million to Dover to ¤30 million. Pro forma EBITDA (earnings ¤291 million. The encouraging results of the Body before taxes, minority interests, interest, depreciati- and Chassis units were based on good auto sector on and amortization) is ¤2.6 billion compared with activity in the US and were additionally helped by ¤3.0 billion last time. the strong US dollar. Both units also benefited from an upturn in demand on the German market. As The 1998/99 earnings figure includes one-off part of a portfolio restructuring, Schalker Verein charges of ¤153 million including ¤136 million from Rohrsysteme GmbH was sold. The Powertrain unit the revaluation of the inventories of Krupp at the recorded pleasing earnings on the German market acquisition date and ¤17 million in merger costs. in engine components and heavy vehicles. Due to the sales situation at Rover and Ford there was a In the parent company statements Thyssen drop in profits in the UK. In addition, the slump in Krupp AG reports net income including subsidiary the market for cars and commercial vehicles in and investment income of ¤481 million. We will be ECONOMIC SITUATION 1998/99 27
Brazil and a 30% drop in the value of the Brazilian The MaterialsServices segment recorded earn- Real meant that earnings failed to reach the high ings of ¤80 million, a good result considering the level of 1997/98. The Systems/Suspensions unit poor state of the market. The ¤28 million decrease recorded a drop in earnings overall as a result of compared with the previous year affected the the crisis in Brazil and market problems in the MaterialsServices North America and Materials United Kingdom. Another factor were startup losses Trading units and was due mainly to declining for a new axle assembly plant for VW in Curitiba. foreign demand and sharp price falls in the rolled Encouraging developments in the European steel business together with considerable volume systems business, for instance in the assembly of decreases in some areas. rear axles for the Porsche Boxster and corner modules for the Landrover Freelander, could not The ¤121 million slide in earnings to ¤71 million fully offset these negative effects. in the FacilitiesServices segment is due entirely to exceptional effects in fiscal 1997/98. Facilities- The biggest earnings improvement was made Services comprises the two units Industrial by Elevators where profits increased ¤64 million to Services – which includes facility-related services ¤145 million. A particularly positive factor was the for ThyssenKrupp Real Estate – and Information improvement in the USA, Canada and Australia, Services. Industrial Services achieved a distinct rise resulting among other things from the success in in earnings overall thanks to an expansion of integrating Dover. business and the improved cost situation resulting from restructuring measures. While the Information The Production Systems segment missed its Services unit achieved a profit, it was below last earnings targets by a clear margin. Sharply falling year's very good figure owing to significantly lower demand for machine tools, particularly in the USA, disposal gains. resulted in a large drop in profits. The body-in- white equipment and assembly system units After deducting the service revenues attributable managed to largely hold their profits. Overall the to FacilitiesServices, Real Estate posted a profit of earnings of Production Systems dropped by ¤74 ¤54 million. The main contributors were the rental million, producing a loss of ¤6 million. and consulting businesses.
In the Components segment all units returned The profit of ¤4 million posted by the lower profits than a year earlier. Particularly Engineering segment is heavily affected by special affected was the Berco group where profits de- factors. On the one hand restructuring expenses of creased significantly due to continuing sluggish the past were assumed by the parent company, building activity and temporary in-house production while on the other the earnings figure includes by Asian construction equipment manufacturers. charges for the restructuring measures initiated in Segment income was ¤76 million. the reporting period – particularly at Krupp Fördertechnik and B+V Industrietechnik. 28 ECONOMIC SITUATION 1998/99
The Others segment groups together the in a new strip caster to make stainless hot band Shipyards, Plastics Machinery, Civil Engineering and in the construction of a new finishing center and Project Management businesses, the insurance in Krefeld. At Acciai Speciali Terni (Italy) capital and financing companies, the national holding spending focused on a new Sendzimir cold rolling companies and Thyssen Krupp AG. Shipyards held mill and a bright annealing line. Mexinox (Mexico) up well, reporting a profit of ¤42 million only ¤1 built a new pickling line for hot-rolled chromium million down on last year's good result. Plastics steel strip. Machinery increased its earnings ¤10 million to ¤17 million despite weaker demand. Civil Capital spending by segment 1998/99 Engineering recorded a loss of ¤16 million. Project in % Management achieved a profit of ¤6 million. Steel 32 Excluding investment income from consolidated Automotive 12
companies Thyssen Krupp AG reports a loss of Elevators 33
¤141 million. Production Systems 2
Components 3 Investment in core businesses MaterialsServices 5 FacilitiesServices 4 ThyssenKrupp invested ¤3.8 billion in the year Real Estate 2 Engineering 1 under review. Spending on tangible and intangible Others 6 fixed assets totaled ¤2.2 billion, while ¤1.6 billion was spent on acquiring companies and equity in- terests. The aim of investment was to strengthen the core businesses worldwide. As a result of the Capital spending in the Automotive segment high capital spending the Group's debts have totaled ¤0.4 billion. In Hopkinsville, Kentucky/USA, increased. a new plant for chassis components was built. Gray and ductile iron casting capacities were significantly Capital spending in the Steel segment amount- expanded. A new hydroforming facility with down- ed to ¤1.2 billion. In the Carbon Steel Flat-Rolled stream machining and welding capabilities is under unit most of the spending went on optimizing the construction. plant configuration. The casting-rolling line in Duisburg, the biggest investment project of recent years, was completed on schedule in April 1999. In the Stainless unit Krupp Thyssen Nirosta invested ECONOMIC SITUATION 1998/99 29
In the Elevators segment investment focused on further expanding the international market posi- tion. Dover Elevators and Access Industries were acquired in the USA, and Elevadores Sûr in Brazil.
In the Components segment Novoferm built a new plant in Dortmund.
With the acquisition of Mannesmann Handel AG, MaterialsServices strengthened its tube and rolled steel business and technical trading activities. The stainless business was expanded in the UK through the purchase of Vetchberry Steel Ltd. with its stain- less steel service center. In Richburg/South Carolina, USA, a new processing and distribution center went into operation. Investment in Germany centered on the expansion of the new stainless ser- vice center in Dortmund.
The FacilitiesServices segment broadened its company base by acquiring Palmers Limited, one of the UK's leading suppliers of industrial services. 30
Start to the new fiscal year.
The brightening economic picture will deliver added stimulus to our business in the current fiscal
year. Important customer groups such as the automobile and mechanical engineering industries are
expecting high sales figures worldwide in the year 2000. This will result in significantly higher sales
and earnings at ThyssenKrupp too. In addition, the restructuring of the Group is bearing fruit. The
strategic realignment is increasing the Company’s value and earning power.
Economic outlook positive Gross domestic product 2000*
Business conditions are improving. The world Real change against the previous year (%) economy is growing faster, with regional differ- ences becoming less pronounced. North America Germany 2.5 remains strong, while Western Europe looks set to France 3.0 catch up. For the most part the economic crises in United Kingdom 3.0 the Far East and Latin America were overcome faster than expected. We believe that the world Italy 2.5 economy will grow 3.5% in real terms in the year C./E. Europe 3.0
2000. Russia 1.5
USA 3.5 The domestic economy in Germany is gradually Brazil 2.0 gaining momentum. However our growth forecast Latin America 2.5 of 2.5% is based on the assumption that exports (excl. Brazil) will again provide the main impetus. Japan 1.5
China 7.0 Asia (excl. China 4.0 and Japan) World 3.5
*Estimate START TO THE NEW FISCAL YEAR 31
“World economic On the markets important to ThyssenKrupp the factor in the forecast earnings improvement is the growth is accelerating. positive signals predominate. The international further realization of synergy effects. Overall we ThyssenKrupp will share in this and steel cycle is on an upward trend. In the year 2000 expect to achieve a profit which will again allow us increase its value and earnings power.” we expect world raw steel production to approach to pay an appropriate dividend. 800 mt. German steel output is expected to reach 45 mt. The capital spending program for the current fis- cal year will help strengthen the future earnings Our largest customers, the automobile firms in base. In December 1999 ThyssenKrupp resolved North America and Germany, again look set to additional investment of ¤1.5 billion. Around 95% achieve high production and sales figures, although of this will go on the Group’s core businesses. the levels achieved in 1999 will not be repeated in Regionally, the main areas of investment will every case. In the mechanical engineering sector remain Europe and North America. the period of worldwide weak demand seems to be over.
Construction activity in Germany is picking up, with the exception of the east of the country. Overall however, we forecast only a slight increase in building output in the year 2000.
ThyssenKrupp sales and earnings set to increase in 1999/2000
The continuing recovery in important customer sectors will increase demand for our products and give ThyssenKrupp added momentum. In 1999/2000 we expect sales to increase a good 10% - before portfolio changes. The forecast improvement is strongest in Steel and Materials- Services. The recovery will also be reflected in the Group’s earnings. With the exception of Production Systems we expect profits in all segments. Another 32 STRATEGY FOR THE FUTURE
6-point program to increase value
Steel flotation
Focus on customers
The world market in our sights
People at ThyssenKrupp
Technological capability as a competitive factor STRATEGY FOR THE FUTURE 33
“By concentrating on core competencies and adding to the portfolio, we are creating the basis for growth and value generation.” 34
6-point program to increase value.
Securing the future of the Company in a global environment involves constantly re-examining our
market positions, our strategic goals and the measures we take to achieve them. Meeting the
demands of ever-changing markets is an ongoing challenge. Only companies that can rise to the
challenge can deliver value on a sustained basis, offer stockholders an appropriate return on their
investment and provide secure jobs for their employees.
Value management continued ThyssenKrupp is perceived as a steel-dominated conglomerate with a highly complex, difficult-to- In the years prior to the merger both Thyssen communicate portfolio. and Krupp had their own value management strategies. In each case the central idea was to Earnings in some businesses are subject to focus on core businesses and expand them inter- wide cyclical variations and the profitability of nationally. This concentration on core businesses individual areas does not match the Group’s went hand in hand with the disposal of non-core high expectations. activities. Both Thyssen and Krupp parted com- pany with numerous businesses representing a Certain businesses have attractive returns and a considerable volume of sales. good cash situation but offer too little growth potential. ThyssenKrupp is continuing this strategic approach. Even at the time of the merger it was In its starting line-up ThyssenKrupp consisted of clear that the merger alone was not enough to 23 business units, 21 of them assigned to the five answer the challenges of globalization. Rather it segments Steel, Automotive, Industries, Engi- was the platform on which the merged company neering, and Materials & Services. The majority of could be strategically realigned. our activities already hold strong competitive posi- tions and good development potential. However, even the ¤6 billion in investment earmarked for the Portfolio analysis shows need for action next three years is not enough to develop the exi- sting growth opportunities in all areas. The guiding The basis for our strategic plans was a com- principle behind ThyssenKrupp’s future strategic prehensive portfolio analysis carried out by the alignment is therefore a growth-oriented restruc- Executive Board in mid-1999 on the basis of de- turing of the Group to optimize resource utilization. fined target criteria. Despite the clear strengthening of many activities brought about by the merger, there is still a need for action: 6-POINT PROGRAM TO INCREASE VALUE 35
“Value management Forward strategy underway include the Steel investments as part of the focus opens up new pros- on flat-rolled, the non-core Automotive activities, pects: from a steel- dominated conglome- The strategic realignment program drawn up the Engineering segment, the Industries units rate to a focused capital goods producer by the Executive Board and approved by the Plastics Machinery, Shipyards and Civil Engi- and service provider.” Supervisory Board comprises the following six neering, and the Project Management business of points: Materials & Services. Conceivable solutions include sale to a best owner or cooperation with a strong 1. Focusing of businesses partner wishing to strengthen its core business with our activity. However in a few isolated cases clo- 2. Strengthening of ThyssenKrupp through Steel sure will have to be considered. flotation Strengthening of ThyssenKrupp 3. Increased service orientation through Steel flotation
4. Organizational restructuring The initial public offering planned for the Steel segment in the year 2000 will bring significant 5. Introduction of US GAAP advantages for both ThyssenKrupp and ThyssenKrupp Steel. The cash accruing to both 6. Stock options program companies will be available for additional invest- ment in the core businesses and in steel. The Focusing of businesses separate forward strategies of the Group and its then listed subsidiary, each geared to growth and In the future the Group will concentrate on core value generation, will be given added impetus. For businesses which can deliver higher-than-average more details see the section “Steel flotation”. value through continuous growth and leading market positions. According to the results of the Increased service orientation portfolio analysis these criteria are met by the six segments Automotive, Elevators, Production Service is increasingly becoming a success Systems, Components, MaterialsServices and factor that can decide the future of a company. FacilitiesServices. In addition, the Steel segment Thanks to its expertise in sales, technology and will be the subject of an initial public offering this organization, ThyssenKrupp sees good growth year, which will strengthen it significantly. The Real opportunities here for single-source service of- Estate business will also be continued as an inde- ferings that allow our customers to concentrate on pendent segment. their core activities. In performing more and more specialized services along the supply chain we For other activities with total annual sales in create added value for our customers. A value part- excess of ¤5 billion ThyssenKrupp is seeking de- nership arises that puts both sides in a win/win velopment opportunities outside the Group. These situation, particularly in the know-how-intensive capital goods business. 36 6-POINT PROGRAM TO INCREASE VALUE
Tele-maintenance of elevators and escalators, pendent lead companies, and large businesses will steel trading and processing in service centers, or be represented by their chairmen on the Executive remote wear diagnosis for large-diameter bearings Board of Thyssen Krupp AG. The current system of are just some examples of ThyssenKrupp’s current management will therefore be retained in a leaner capabilities. Others include industrial maintenance, form. facility management, formwork and scaffolding ser- vices, computer center services and communica- Introduction of US GAAP tions systems. As a global company ThyssenKrupp is meas- In the future we will utilize our know-how in- ured against its international competitors – and not creasingly outside the Group – either as part of our just by our customers, suppliers and employees product-oriented business or through the establish- around the world. Stockholders, international in- ment or acquisition of completely new service- vestors and analysts are demanding greater trans- based businesses. This will include rapid expansion parency and international comparability. For this in the e-commerce sector. ThyssenKrupp Infor- reason we have brought our accounting into line mation Services is one of Germany’s largest ven- with international standards by using US Generally dor-independent IT companies and has already Accepted Accounting Principles (US GAAP) for the successfully implemented several internet-based first time in 1998/99. solutions including electronic catalogues, shops, shopping malls and other applications. The com- US GAAP accounting gives us direct access to pany is also active on the education & training the US capital market. The largest capital market in market with a wide range of training programs, par- the world offers us the widest range of financing ticularly in the IT area. The establishment of an opportunities. In addition, North America is already “eBusiness Academy” is one example of our ThyssenKrupp's most important market next to aggressive expansion into knowledge-based servi- Europe, accounting for around 20% of its sales. ces. Many international companies in Europe, Asia and Latin America already use US GAAP. Full US GAAP Organizational restructuring financial statements meeting the rules of the US Security and Exchange Commission (SEC) are also In the Group’s starting organization the seg- a precondition for the listing of a stock on the New ments are the second tier of management below York Stock Exchange. the parent company and the business units the third. In the course of the focusing on the six core In addition, the Group-wide switch to US GAAP businesses plus Steel and Real Estate these two forms the basis for a standard internal and external tiers will be combined step by step. The operating reporting system. This will increase transparency units will continue to be managed by legally inde- and acceptance internally as well. 6-POINT PROGRAM TO INCREASE VALUE 37
Stock options program ties will create the basis for continuous growth in the core businesses. At the same time the non- An important precondition for achieving our core activities will be given the chance to realize strategic goals quickly and growing the value of the their development potential in future-oriented Company continuously is a capital market-based partnerships outside the Group. incentive system for management.
Against this background ThyssenKrupp intro- duced a Long Term Management Incentive Plan in December 1999. Under the plan around 200 of the Group’s top executives will in future receive on top of their fixed salary and individual bonuses an additional element of compensation based on the performance of ThyssenKrupp shares. The model chosen is one widely used by major international companies. Key factors determining the amount of the compensation are the absolute performance of the ThyssenKrupp stock and its performance rela- tive to the DJ STOXX index.
The purpose of the ThyssenKrupp Long Term Management Incentive Plan is to help tie managers more closely to the Company and bring their in- terests more into line with those of stockholders. At the same time the program will help make the Group more attractive as an employer for interna- tional managers.
Continuous growth
By implementing these six measures swiftly and consistently we will significantly strengthen the Group’s earning power and increase the value of the Company. The improved earnings together with the revenues from the disposal of non-core activi- 38
Steel flotation.
The planned flotation of the Steel segment is an important element of the Group’s strategic realign-
ment. Both ThyssenKrupp and ThyssenKrupp Steel will benefit long term from the move. The flotation
will generate a cash inflow to the Group and to the Steel segment and create the framework for a pro-
active forward strategy for the core businesses and Steel.
With its core businesses Carbon Steel Flat-Rolled Thyssen Krupp Steel AG is wholly owned by and Stainless ThyssenKrupp Steel is a steel produ- ThyssenKrupp. This year we will float off 25-35% cer of world rank – European No 2. and world No. of its shares in an initial public offering (IPO). 4 in carbon steel flat-rolled and world market ThyssenKrupp will remain the majority stockholder leader in stainless flat-rolled products. The concen- for the time being. Most of the shares for the flota- tration on carbon and stainless flat products is the tion will come from Thyssen Krupp AG’s holding result of restructuring, growth, acquisitions and and a smaller portion from a capital increase at mergers over recent years. The merger of Thyssen Thyssen Krupp Steel AG. and Krupp additionally removed the complex stock- holder structure and made flotation possible. What are the advantages of the flotation – for the parent and the subsidiary? For both companies they are essentially:
better positioning on the capital market,
new possibilities for financing expansion and growth, and
the ability to pursue a forward strategy tailored to the core businesses.
We firmly believe that especially in this case going separate ways is the best solution. STEEL FLOTATION 39
“The flotation will Despite its diverse industrial activities, up to strengthen our position now ThyssenKrupp – like Thyssen and Krupp in the on the capital market so that we can realize past – has been primarily associated with steel. On our global growth the stock market ThyssenKrupp has often been targets more quickly.” regarded as a steel stock. The Steel flotation offers ThyssenKrupp a unique chance to sharpen its pro- file as a global supplier of sophisticated industrial products and services. We already hold strong market positions worldwide and significant develop- ment potential. The flotation will facilitate a more accurate analysis of our core businesses – Auto- motive, Elevators, Production Systems, Compo- nents, MaterialsServices and Facilities-Services – which we believe will deliver persuasive arguments for an appropriate valuation of ThyssenKrupp’s stock. The funds generated by the flotation will be invested in the further expansion of the core businesses.
For ThyssenKrupp Steel the flotation opens up new possibilities to finance the implementation of its expansion and growth goals. The planned capi- tal increase will generate a cash inflow that can also be used for strategic projects. In addition the Steel shares will be available for use as an acquisi- tion currency for further strategic options. Strengthened in this way, the Steel segment will be in a position to continue to actively shape the ongoing consolidation process in the European and world steel industry. With these prospects, ThyssenKrupp Steel is ideally placed for a suc- cessful flotation. 40
Focus on customers.
Satisfied and loyal customers are the basis for sustained business success – a maxim that applies to
services, capital goods and basic materials just as it does to consumer goods. Our goal is an ambi-
tious one: We want our customers to associate ThyssenKrupp products and services, more than those
of competitors, with superior value.
Advanced technology and cost leadership are Recognizing that a systematic Group-wide essential success factors in an increasingly global approach can strengthen customer focus and marketplace. A basic prerequisite therefore is a improve customer retention, we have drawn up a portfolio of high-value products and services that "sales leadership" program, the main aims of which is constantly being updated and improved. But are summarized below: sooner or later competitors can catch up on a lead in quality or cost. To achieve and hold leading identify customer requirements through custo- market positions, a third key strategic necessity is mer surveys and analyses, customer loyalty. develop improvements together with customers, Retaining customers long-term calls for opti- mum customer care. At ThyssenKrupp we con- establish a powerful, customer-focused sales tinuously research the needs and demands of our organization through internal fitness programs customers in order to develop ever better solutions. and restructurings, Increasingly we are doing this by integrating ser- vices into our range, either in connection with our constantly review the quality of our sales work. own products or those of others. At the same time we are expanding our distribution and service net- To deliver the goal of sales leadership numerous works so that we are on call, ready to act whenever projects have been initiated at Group companies in and wherever our global customers need us. We Germany and abroad. The speed of delivery is utilize all the possibilities of the electronic age to increased by the exchange of best practices. optimize our customer relationships. The goal is Standard working methods permit the companies clear – to offer our customers the best distribution to carry out internationally comparable self-assess- and service on the market at the lowest cost. ments based on the European Foundation for Quality Management model. FOCUS ON CUSTOMERS 41
ThyssenKrupp has a broad customer base. We Sales by customer group 1998/99 have customers in every major sector – in Germany and worldwide. Alongside large companies we are in % making particular efforts to grow our business with Automobile industry 23 small and medium-size enterprises to create inde- Steel and steel- related processing 15 pendence and make us less vulnerable should Construction industry 12 large customers suddenly change their buying Mech. engineering and policy. plant construction 11 Trading 10
Transport technology 3 Our most important customer is the world auto- Packaging industry 3 mobile industry, accounting for 23% of Group sales Public sector 3 in 1998/99, or in absolute figures more than ¤7.6 Energy and utilities 2 billion. The major part of this business was done Other customers 18 with our Automotive segment, but other parts of the Group such as Steel, Production Systems, MaterialsServices or FacilitiesServices also have close business relationships with virtually all major 11% of our sales in the last fiscal year were to automobile manufacturers. companies in the mechanical and plant engineering sectors. They included for example the high-value Customers from the steel and steel processing engineering materials, most of them processed, industries account for 15% of our sales, for that our MaterialsServices Segment supplies to example buying steel semi-finished products for customers all around the world, and the large-dia- further processing. meter bearings produced by our Components seg- ment. The construction industry is our third largest customer group with 12% of sales. Products here Whether it’s rails for Deutsche Bahn, special include elevators and escalators from the Elevators polymer products from our materials trading activi- segment, garage doors from the Components seg- ty for an advertising studio in New York or high- ment, lightweight steel roof and wall panels from quality tinplate for a beverage can manufacturer in the Steel segment and other materials and the UK – our aim is to convert our capabilities into building-related services from MaterialsServices a competitive edge for our clients. We can only be and FacilitiesServices. The Engineering segment successful in concert with our customers. designs and builds turnkey cement lines for custo- mers throughout the world. The Real Estate seg- ment is a leading partner to the construction indus- try, offering turnkey management of large and highly complex building projects. 42
The world market in our sights.
The world market is becoming increasingly important for all segments of ThyssenKrupp, in terms of
sales, earnings, jobs and not least capital. We see ourselves today as an international company incor-
porated in Germany, with Europe as its home market and with stockholders, customers, suppliers and
employees throughout the world.
At present, purchasing power and economic of tomorrow. Not every business unit needs to have production capacity are still concentrated firmly in its own production capacities at every location, but the highly developed regions such as North product availability has to be ensured on all rele- America and Western Europe. In the foreseeable vant markets. Not infrequently it is our customers future they will be able to hold on to their leading who determine where we should locate. positions. In the long run however the fast growing markets of Southeast Asia, Latin America and ThyssenKrupp already has a broad international Central and Eastern Europe will gain in importance. base today, allowing us to cushion within the Group Their favorable prospects are not altered in any the effects of regional business fluctuations. way by temporary disruptions. ThyssenKrupp's presence and activities outside Sales by region 1998/99 Germany stand up to comparison:
in % Our customers come from more than 160 coun- Germany 37 tries; easily the most important regions are Other EU countries 24
Rest of Europe/CIS 5 Western Europe and North America.
NAFTA 24 South America 2 ThyssenKrupp companies based outside Asia/Middle East 5 Germany generated sales of ¤13.4 billion in Rest of world 3 1998/99, around 41% of total Group sales.
We have companies, branches and offices in over 80 countries. Against this background our strategy must be internationally based if we are to succeed in play- Our globalization is also reflected in the number ing a leading role on the global market. On our tra- of employees outside Germany. On September ditional markets we must consolidate and wherever 30, 1999 76,601 employees were based possible expand our positions. This will make it abroad, 6% more than a year earlier. Four out of easier to participate quickly in the growth markets ten employees work outside Germany. THE WORLD MARKET IN OUR SIGHTS 43
“Consolidating and One in three ThyssenKrupp shares is held by consolidating existing Group offices and com- expanding our positions foreign stockholders – mainly funds and banks. bining smaller subsidiaries and offices in so- on our traditional markets, advancing into called “Casa ThyssenKrupp”. the growth markets of tomorrow.” In all areas the internationalization of the Group will increase further in the future. Acquisitions pooling administrative functions and external abroad and alliances with foreign partners will play services including cash management. “Shared a growing role in the strengthening of our core Services” is the motto for greater efficiency in businesses. day-to-day business.
We have reached a particularly high level of optimizing the Group structure by forming na- internationalization in the Automotive segment, tional holding companies. where 75% of sales are generated abroad and only one in four out of a total of 113 production sites is promoting customer loyalty and better exploiting in Germany. In the Elevators segment too, the main customer potential through stronger sales and area of business is abroad. In the past fiscal year customer service organizations. foreign customers accounted for around 85% of sales. Elevators and escalators from ThyssenKrupp This international network is supported by sys- are used in almost every country in the world. tematic knowledge transfer. Last year regional North America, the Iberian peninsula and, in- management meetings were held focusing on: creasingly, Southeast Asia and China are our most important foreign markets. All our production op- tapping the potential created by the merger erations are linked in a global network allowing us (sales and cost synergies) to exploit specific local advantages to optimize pro- ductivity and costs. communicating the regional and country strate- gies developed by the segments In Asia and South America we currently have more than 120 bases, of which 34 are production exchanging experience and information among sites. The Group's presence is to be expanded the regions. through further growth in these regions. Meetings of this type were held for South To optimize the Group's structure outside America, Asia and Europe last year, chaired by the Germany – and to realize synergies from the mer- respective regional supervisors on the Executive ger – ThyssenKrupp has introduced a foreign op- Board of Thyssen Krupp AG. A meeting for the erations strategy based on a concrete package of Nafta region is currently being prepared. measures. The worldwide network of Group Representatives supports the Group companies in developing new markets and realizing cost-reduc- tion potential. In concrete terms this involves: 44
People at ThyssenKrupp.
With their specialist knowledge, commitment and their individual personalities, our more than
180,000 employees are the human face of the Group. ThyssenKrupp's products can only be as suc-
cessful as the people who make them. We will continue to promote the career development and skills
of our employees – through a flexible internal job market, continuing high levels of apprenticeship
training, intensive further education and appropriate performance incentives.
Number of employees slightly up 108,169. The proportion of foreign employees at the Group's German operations remained ThyssenKrupp had 184,770 employees world- unchanged at 12%. wide on September 30, 1999 – 833 or under 1% more than a year earlier. Outside Germany, ThyssenKrupp employed 76,601 people at the end Group job market successfully launched of the year under review, 6% more than the year before. In Germany the number decreased 3% to In view of the fast changes taking place in the Company's structure, mobility and flexibility are becoming increasingly important employee quali- Employees by segment ties. Whenever and wherever attractive jobs be- pro forma figures Sept. 30, Sept. 30, come vacant at ThyssenKrupp, our employees at 1999 1998 other Group locations find out about them as quick- Steel 54,388 56,140 ly as possible. Following the good experience so Automotive 37,594 37,836 far, the Group's internal job market is to be further Elevators 26,126 24,427 expanded and will increasingly offer posts outside Production Systems 8,383 8,627 as well as in Germany. This restructured, demand- Components 9,191 8,726 based personnel exchange program has laid the MaterialsServices 12,815 12,806 foundations for improved personal and career FacilitiesServices 15,378 13,928 development opportunities for our staff. The good Real Estate 831 749 news for the Company is that more posts are being Engineering 9,594 9,745 filled internally and that recruitment costs have Others 10,470 10,953 decreased. of which: Thyssen Krupp AG 419 510
Group 184,770 183,937 In addition to regular publications, employees of which: in Germany 108,169 111,781 can also search the Company intranet for job outside Germany 76,601 72,156 openings. Around 500 hits are recorded every day PEOPLE AT THYSSENKRUPP 45
“The commitment and from employees interested in the some 400 vacan- Partial retirement for solidarity creativity of employees cies advertised. 40% of the vacancies published between the generations have accelerated the integration process.” last year were filled internally. The personnel departments of the individual companies also have In August 1999 the Executive Board decided to intranet access to an internal application advertiser introduce the possibility of partial retirement in the containing employee résumés. In 1998/99 a total Group. Currently negotiations are taking place with of 1,400 employees changed their jobs within the the Group works council with a view to concluding Group. a Group agreement based on the collective partial retirement agreement for the iron, metal and elec- trical industries in North Rhine-Westphalia. Partial New approach to company pensions retirement gives older employees the opportunity to retire gradually before the age of 65. At the same The pension system for the domestic Group time it promotes the recruitment of young employ- companies has been restructured and moved ees. toward an earnings-related, contribution-based system known as the Kombi-Pakt. This new benefit The partial retirement model used in the Group system is designed to replace the differing com- is made additionally attractive by the fact that pany pension arrangements in different parts of the employees can offset some of the deductions that Group. are made when they take up their statutory pen- sions prematurely by converting a choice of various The new Kombi-Pakt consists of several mod- company and collectively agreed benefits into an ules. The basis is formed by earnings-related additional post-retirement benefit. employer contributions, on top of which come voluntary employee contributions which can be topped up by the company with an additional con- 290 suggestions per 1,000 employees tribution. The payout is in the form of a capital sum, which means that the future financial risks The creativity and keenness of employees are a associated with the present pension system are reliable indicator for the success of post-merger avoided. At present, employees' rising life expec- integration. The many ideas and suggestions for tancies extend the length of time company pen- improvements received last year therefore speak of sions are paid. The payment of a capital sum good progress in this area. The outcome were makes the long-term cost of company pensions annual savings of more than ¤23 million as a result easier to calculate and control. Another feature of of entries in the suggestion scheme and many the Kombi-Pakt, as well as pension and survivor other ideas which helped produce continual quality benefits, is an attractive term insurance package improvements. for young people in their early years of employ- ment. 46 PEOPLE AT THYSSENKRUPP
The prizes paid for implemented suggestions in processes/kaizen are examples of programs de- 1998/99 totaled almost ¤5 million. The best sug- signed to support the companies of the Group. gestion came from a group of seven employees from Thyssen Krupp Stahl AG. Their idea, which The efficiency improvement programs encour- earned them around ¤50,000, was to alter the age and train employees to enhance relationships sequence of operations on the hot strip mill entry with customers and suppliers, optimize business table, thereby shortening the cycle and increasing processes or push through smaller improvement output significantly. The suggestion will result in an measures. Subsequent performance measure- annual saving of ¤200,000. ments show whether the desired objectives such as cost reductions or sales improvements have been In the future ThyssenKrupp will continue to sup- achieved. port employee innovation through the company suggestion scheme and special innovation pro- As well as actively continuing projects which grams. Around the world a number of initiatives are began before the merger, several Group companies involving employees in the work organization pro- have launched new initiatives on this basis. In addi- cess. This increases motivation, team skills and tion to the programs used so far we intend to intro- responsibility. Modern forms of work organization duce the innovative and internationally proven reconcile the interests of employees with the mar- methodology of the European Foundation for ket's requirements for flexibility, rapid response and Quality Management to tap further potential for high quality. improvement.
Involving all employees Management staff: commitment in increasing efficiency and responsibility
Whereas suggestions are usually made by Identifying market and technology trends in single employees or smaller groups, programs to good time, making and implementing decisions increase business efficiency are geared toward the involving risks, motivating staff for their work – workforces and managements of whole depart- these are qualities displayed by managers at ments, plants and companies. Following an inten- ThyssenKrupp. With their personal efforts and com- sive exchange of experience, the programs pre- mitment, responsibility and outstanding qualifica- viously used with success by Thyssen and Krupp tions they symbolize the expertise and performance have been further developed and will in future be capabilities of our Company. Management staff used increasingly throughout the Group. Customer hold key positions. ThyssenKrupp therefore takes relationship management, process optimization, particular care in training suitable employees for supplier integration and continuous improvement such tasks or recruiting them from outside. PEOPLE AT THYSSENKRUPP 47
The current fiscal year has seen the introduction which applies to selected executives, principles for of a demand-matched Group-wide system of suc- bonus payments in the ThyssenKrupp Group have cessor planning for top management positions. It been adopted which set the framework for aligning involves a systematic potential assessment pro- the annual bonuses of all management staff. The gram to increase transparency regarding suitable principles tie bonuses firmly to business success successor candidates from within the Group. and personal performance based on clear annually Qualified candidates take part in strategically ori- agreed targets. ented courses designed to develop specific mana- gement skills. Executive Letter for targeted communication Potential assessment and development courses will in future be geared toward a set of specific An important informational and integrational ThyssenKrupp management competencies current- function is performed by the Executive Letter, which ly being worked on. These competencies were de- has been sent out to all ThyssenKrupp managers fined in a Group-wide workshop process involving worldwide since the middle of last year. The news- executives from Germany and abroad as well as letter focuses on business policy decisions made employee representatives. The results of the pro- by the Executive Board and issues of fundamental cess will feed into the instruments of management importance to the Group. One example of its use is and executive development. to communicate regularly the progress of the stra- tegic realignment. At the same time we will step up our efforts to attract junior managers to the Group who have acquired social skills and an international outlook as well as the relevant specialist abilities during their studies. These high potentials go through trainee programs involving assignments at various points in the Group's subsidiaries or lead compa- nies. As soon as their potential for managerial tasks is identifiable they are trained specifically using the instruments of management develop- ment.
Executive bonuses are to be placed on a uni- form basis throughout the Group in future. In addi- tion to the Long Term Management Incentive Plan, 48
Technological capability as a competitive factor.
To ensure the market success of tomorrow, ThyssenKrupp is researching today into new and im-
proved products and processes in areas such as software, electronics, mechanical engineering,
process technology, metallurgy and materials science. Our customers' requirements challenge us to
look for new solutions. Through constant attention to detail we aim to achieve the highest possible
quality in development and manufacturing. Innovation and outstanding production and service quality
give us the lead we need in the international market.
Some 3,000 scientists, engineers and techni- has 30 in-house development centers which form a cians are currently working on over 2,000 research network to collaborate on joint projects. We also and development projects and quality assurance work closely with universities, research institutes programs. Expenditure for this in the past fiscal and the research departments of our suppliers and year alone totaled ¤468 million. customers and participate in national and interna- tional research programs. 1998/99 research and development expenditure by segment Successful research partnerships in %
Steel 44 ThyssenKrupp Stahl has set up the “Dortmunder Automotive 23
Elevators 5 OberflächenCentrum” (DOC) to pool development
Production Systems 10 activities in surface engineering and sheet coating Components 3 technology. A major equipment manufacturer is to Other segments 15 be brought in as an industrial partner. The DOC will also integrate applied research institutes from the Fraunhofer-Gesellschaft.
Partnerships are also driving the development of the strip casting process to production maturity. All research projects are aimed at strengthening ThyssenKrupp Steel has formed an alliance with our core capabilities in products and processes. To the French steel producer Usinor and the Austrian stay close to customers, the projects are carried equipment manufacturer Voest-Alpine. The Euro- out by our operating companies directly. The Group strip project combines the process experience TECHNOLOGICAL CAPABILITY AS A COMPETITIVE FACTOR 49
“Innovative services and gained in Isbergues/France, Terni/Italy and Krefeld/ good market success with new high-strength and outstanding quality Germany with Voest-Alpine's expertise in plant ultrahigh-strength steels that are being used secure our lead in the international market- construction. In the strip casting process, carbon or increasingly in car panels. Stainless steel is now an place.” stainless steel is cast and rolled directly to wide economically attractive alternative to aluminum strip of the required gauge in a single operation. thanks to its high strength, formability, crash ener- gy absorption and corrosion resistance. A new Close cooperation between the Steel and lightweight sandwich material of Nirosta stainless Automotive segments is driving progress in the steel delivers low weight, high stiffness and good auto sector. Both are partners in the international silencing properties. development projects ULSAS (Ultra Light Steel Auto Suspension) and ULSAC (Ultra Light Steel Auto In 1998/99 our developments for international Closures), designing attractive lightweight steel automotive customers included numerous struc- automotive parts. High-strength steels, tailored tural components, complete floor assemblies, blanks combining different steel grades and new doors, engine hoods and tailgates through to com- manufacturing processes such as hydroforming plete loading areas. The segments Steel, Auto- and laser welding play a central part in these motive and Production Systems collaborated close- efforts. Successes achieved to date include ultra- ly on these projects and contributed their specific light vehicle axles, the design of a stainless steel expertise. Although steel was the dominant ma- fuel tank and hydroformed door frames. terial, aluminum and SMC were also used. For example Automotive developed a complete van The findings of these two projects will feed into body made of aluminum. Prototype all-aluminum the new ULSAB-AVC program started in 1999 by a car bodies were also developed in close coopera- new international steel industry consortium now tion with a US automaker. Together with external comprising 33 members. ULSAB stands for Ultra institutes, tests were carried out on high-purity Light Steel Auto Body and AVC for Advanced magnesium die casting alloys and into the laser Vehicle Concept. Working from a flexible platform weldability of aluminum. concept, the program aims to develop solutions which satisfy requirements both for mid-size Automotive developed complete steering col- sedans in the US and for the key compact car mar- umns for six auto manufacturers, some with elec- ket segment in Europe and Asia. tric reach and rake adjustment. Also new are steer- ing columns with electromagnetic rather than hydraulic power steering. Magnesium and alumi- Competing materials num components were used along with newly developed precision cold forgings to harness Newly developed steel grades are providing weight reduction potential. Innovative air spring scope for innovation in suspension and chassis systems were developed in partnership with other components. The carbon steel unit is achieving companies. New high-performance shock ab- 50 TECHNOLOGICAL CAPABILITY AS A COMPETITIVE FACTOR
sorbers featuring a range of tuning settings were room; systems are already available which run at supplied for motor sport applications. 1.6 m/s, and this speed will be further increased in the near future to allow the development of an additional high-tech market segment. The unit Centers of excellence takes up less space, is easier to install and offers in mechanical engineering greater architectural freedom. It is even possible to service the elevator while in operation without Research and development in the Production causing any disturbance to passengers. Systems segment has been reorganized. There are now nine worldwide centers of excellence concen- Increasing the safety of elevator systems is an trating on key areas such as special machines, uni- ongoing task. The Elevators segment has devel- versal machining centers, measuring machines and oped an additional stop mechanism to satisfy con- machine control units including software. A product tinuously rising safety requirements. Furthermore, development council coordinates the activities as a newly introduced tele-service system – more effi- part of an optimally balanced research strategy. cient and less costly than previous remote systems - means that if an elevator breaks down, voice An important example of innovation in mechani- contact with trapped passengers is ensured around cal engineering is a new joining technique for car the clock. More than 13,000 elevator systems are doors which substitutes 3D laser welding for the currently linked to the segment's service centers. conventional seamed joints between the door inner and outer panels. This method significantly improves component stiffness and passenger Artificial intelligence detects hidden defects compartment safety while reducing weight and lowering noise levels in the vehicle. Using numerical simulation techniques, the Plastics Machinery business unit was able to create The Elevators segment came up with a world three-dimensional models of the material flows first in the form of the glass fiber escalator step. inside plastics compounding equipment. The soft- Manufactured by injection molding, these steps ware developed on this basis makes it possible to contain a high proportion of very short glass fibers, match compounders even more accurately to giving the treads an improved non-slip surface and customer specifications. The fiscal year also saw greater abrasion resistance than aluminum steps. the successful launch of artificial image-processing Escalators with these steps run very quietly and are intelligence which permits automatic inspection and easier to service. Another advantage is that cus- final checking of crawler links for earth-moving tomers can choose steps in a variety of different machines. By analyzing image sequences, the soft- colors. Particularly successful was the launch of ware is capable of detecting hidden defects in com- our "Evolution" elevator concept without machine ponents. TECHNOLOGICAL CAPABILITY AS A COMPETITIVE FACTOR 51
Advanced information and communication tech- A new innovation competition is being run in the nologies play a key role in plant construction along- current fiscal year. This time the focus is on “servi- side process technology. The plant management ces and e-commerce”. The competition aims to system developed by the Engineering segment for promote new service solutions and the innovative ammonia plants guarantees optimum results even use of the international data network in the Group when a plant is being run under sub-optimal condi- for commercial purposes. tions. In addition to plant management, the system includes maintenance, repair, production planning, billing and operator training functions. For the cement industry a completely new roller mill was developed and successfully launched.
First innovation competition
In November 1999 ThyssenKrupp launched its first Group-wide innovation competition with attrac- tive prizes for researchers and development teams coming up with new and improved products and manufacturing technologies. The assessment cri- teria were customer benefit, cost savings, inno- vativeness and market potential. From the 33 entries submitted, first prize was awarded to Dr.-Ing. Peter Schwibinger and the development team at Krupp Bilstein for the development and successful implementation of the air spring damper module for the Mercedes S-class. The major bene- fits to the customer are enhanced ride comfort and improved safety. Further prizes were awarded for the development of passenger car side impact beams from complex and martensite-phase steels, a stamped wheel knuckle of a newly developed Nirosta material, and glass fiber-reinforced PVC elevator steps. 52 THE GROUP'S SEGMENTS
Steel
Automotive
Elevators
Production Systems
Components
MaterialsServices
FacilitiesServices
Real Estate
Engineering
Others THE GROUP'S SEGMENTS 53
“Central to our business goals are market and technological leadership.” 54
Steel. World-class materials.
Technical capabilities and innovative products have made our Steel segment into a leading supplier of
flat-rolled products with strong market positions. The Carbon Steel Flat-Rolled business unit ranks
fourth in the world, while our Stainless business unit has advanced in the course of just a few years
from a national producer to world market leader with facilities in Europe, America and Asia.
ThyssenKrupp Steel remained comfortably in profit even during the recent steel slump – a clear sign
of the company's high efficiency and excellent productivity. Its products are now being sold on the
internet. STEEL 55
In fiscal 1998/99 Steel generated sales of ¤10.5 Steel segment in figures* billion, 15% down on the previous year. The value Pro forma figures 1998/99 1997/98 of order intake fell 13% to ¤10.4 billion. In the first Order intake ¤ m 10,351 11,898 half of the reporting period, the steel market was Sales ¤ m 10,452 12,312 still characterized by declining volumes and a EBITDA ¤ m 1,202 1,529 drastic fall in prices. The subsequent revival in Income* ¤ m 248 667 international steel sector activity led to a distinct Employees (Sept. 30) 54,388 56,140 increase in orders. In the final months of 1998/99 it *before taxes and minority interests was also possible to push through price increases for new steel business. Despite the largely difficult review, almost all core equipment units at the Steel market environment, ThyssenKrupp Steel made a companies were once again working to full capacity. profit of ¤248 million in 1998/99.
On September 30, 1999 the Steel segment's Carbon Steel Flat-Rolled: workforce stood at 54,388, including 15% at non- price before quantity German companies. In the Stainless business unit, the share of employees outside Germany was more ThyssenKrupp Stahl is the center of our Carbon than 45%. Overall the Steel headcount fell 3% in Steel Flat-Rolled business. Its products range from the year under review. hot-rolled strip and plate to coated sheet and coil. The proportion of value-added products is on the rise; already 75% of sheet output is coated. Return to normal capacity utilization Sales of the Carbon Steel Flat-Rolled business The total raw steel output of the Steel segment unit fell by almost 16% to ¤6.6 billion. At ¤4.9 bil- in 1998/99 was 16.1 million tonnes, a drop of lion, Thyssen Krupp Stahl AG's sales were down 14%. As steel demand picked up from spring 17%. In addition to the significant decline in ship- 1999, operations returned gradually to a normal ments, revenues were also lower than the previous level of activity. Towards the end of the year under year. For example, in the reporting period the aver- age net revenue per tonne of flat-rolled steel at ThyssenKrupp Steel raw steel output Thyssen Krupp Stahl AG showed a 5% year-on- year drop. A selective sales policy and a high per- mt centage of long-term price agreements with key 4.8 4.8 4.8 4.3 4.3 customer groups ensured that this fall in revenue 4.0 4.1 3.7 was less pronounced than at major competitors.
The most serious volume and revenue losses affected hot-rolled and uncoated cold-rolled pro- ducts. In contrast, business in coated flat products I II III IV I II III IV was relatively favorable due to strong demand from 1997/98 1998/99 the auto industry. The Tailored Products unit in- Carbon Steel Flat-Rolled Stainless Investments creased its sales by more than a third thanks to 56 STEEL
high call-off orders from automotive customers and Sales and income by business unit
the development of new markets in Sweden, Pro forma figures, ¤ m 1998/99 1997/98 France and the UK. Sales Income Sales Income Carbon Steel Flat-Rolled 6,585 170 7,794 497 Our companies in the Construction Elements Stainless 3,198 84 3,546 150 unit held up relatively well under increasingly diffi- Investments 919 –2 1,155 13 cult market conditions. The steel service centers Total 10,702 252 12,495 660 were impacted in particular by the strong drop in Consolidation –250 –4 –183 7 revenues resulting from falling input prices. Sales Steel 10,452 248 12,312 667 at the ThyssenKrupp Steel North America proces- sing center showed a clear improvement on the hot band thickness in a single production step – previous year. In contrast sales of tinplate/black giving us a technological lead in flat-rolled produc- plate and electrical sheet were down. tion.
Optimizing locations and equipment Going global
A key element of the plans to optimize the A primary objective for the Carbon Steel Flat- Carbon Steel Flat-Rolled business unit is the con- Rolled unit is greater internationalization of produc- centration of iron and steelmaking activities on the tion and sales. ThyssenKrupp Stahl is concen- Rhine in Duisburg, one of the most favorable steel trating on downstream concepts with local partners locations worldwide. In the year under review two in Europe, America and Asia. The GalvaSud joint blast furnaces were closed down in Dortmund and venture with the Brazilian Companhia Siderúrgica the oxygen steelmaking plant there was scaled Nacional (CSN) is making progress. The hot-dip back to one-converter operation. Of increasing galvanizing facility, steel service center and joining importance for the future plant configuration are operations will commence operation at the end of the production links with the 50% investment 2000. The intention is to develop further market Hüttenwerke Krupp Mannesmann (HKM). In mid- opportunities through similar projects in North 1999 HKM decided to replace one of its two con- America, Central Europe and Asia. A further joint tinuous casters with a new line. This will increase venture serving the Iberian market has already slab production capacity, with the result that the been running since 1992; located in the Spanish single-line operation in Dortmund can be discon- town of Sagunto, Galmed S.A. operates a suc- tinued once the new HKM continuous caster comes cessful hot-dip galvanizing line. on stream.
The new casting-rolling plant in Duisburg com- Stainless: record shipments menced production on schedule on April 2, 1999. This innovative production line, the first of its kind The core competencies of Krupp Thyssen in Germany, will reach its full capacity of 2 million Stainless with its German and international subsi- tpy of hot band in October 2000, after which the diaries are the manufacture and marketing of stain- hot strip mill in Dortmund will be closed down. The less flat products. Around 90% of production is new plant casts and rolls steel to less than 1 mm cold-rolled, with a growing part of this in bright STEEL 57
annealed finishes. Stainless activities also include Consolidating world market leadership high-performance nickel and cobalt base alloys and titanium. The main strategic focus of the Stainless busi- ness unit is to strengthen its leading world market In 1998/99 the Stainless business unit achieved position. The sales organization and the steel ser- sales of ¤3.2 billion, a 10% drop against the prior vice center network are being expanded. Krupp year. Over 70% of sales were accounted for by Thyssen Stainless aims to continue to participate in stainless flat-rolled products - largely cold-rolled the world stainless market's growth of 5 to 6% per coil and sheet. year.
Shipments at 2.4 million tonnes reached a new Just to hold market share will require an ex- record level. Stainless flat-rolled products made up pansion of cold-rolling capacities by around 75,000 a disproportionately high share, with tonnages tonnes. The capacity expansion will take place in increasing 5%. The drop in sales was due exclu- high-growth regions, especially areas where Krupp sively to the unsatisfactory price level, attributable Thyssen Stainless is currently underrepresented to the temporary heavy fall in alloying element such as Asia and North America. Work has begun prices. The final months of the fiscal year saw a on the construction of a stainless cold-rolling mill in definite upward trend, strengthened by the con- Shanghai, China, which will start producing for the tinuous rise in nickel prices since the beginning of Chinese market in late 2001. Our European sites the year. will focus more strongly on their home markets. In addition to technology leadership, a key objective is to attain and secure cost leadership. Progress with processes and products
All companies in the Stainless business unit achieved further improvements in productivity. Krupp Thyssen Nirosta started construction of a new state-of-the-art bright annealing facility in Dillenburg, Germany. This will provide the platform for a greater focus on bright annealed production in high-quality finishes. A start was also made on combining the finishing shops of the Benrath and Krefeld plants.
The Stainless unit started operation of a new strip caster in Krefeld that casts stainless steel strip directly in thicknesses from 1.5 to 4.5 mm. Unlike the carbon steel casting-rolling plant there is no subsequent rolling operation. The new process is faster and more cost-effective than conventional continuous casting. 58
Automotive. Global network for mobility.
Our Automotive segment is one of the world's leading partners to the international auto industry. Four
business units – Body, Chassis, Powertrain and Systems/Suspensions – with 113 production sites in
15 countries form a global network delivering components and increasingly systems and modules on
a just in time basis to all major auto manufacturers. As a systems partner and full-service supplier we
are closely involved in all phases of automobile development and manufacture. Our services range
from design and materials recommendations through to ready-to-fit high-tech assemblies. AUTOMOTIVE 59
75% of business outside Germany Automotive segment in figures
Pro forma figures 1998/99 1997/98 The improved competitive position brought Order intake ¤ m 5,115 5,146 about by the merger coupled with new innovative Sales ¤ m 5,208 5,095 products enabled the Automotive segment to gen- EBITDA ¤ m 590 539 erate sales of ¤5.2 billion, matching the high level Income* ¤ m 291 265 of the previous fiscal year. Around 75% of business Employees (Sept. 30) 37,594 37,836 was with non-German customers: 52% in the Nafta *before taxes and minority interests region, 20% in the rest of Europe and 3% in South America. The German market accounted for the Germany more than made up for the drop in sales remaining 25%. The order situation was stable. in the UK. Automotive received orders worth ¤5.1 billion in 1998/99. The high quality of our body outer panels prompted DaimlerChrysler to present The Budd The segment's earnings amounted to ¤291 mil- Company not only with a Penta Star Award but also lion, representing an improvement of 10%. Over with an order for stampings for a minivan. Ford half of the profit was earned in the Nafta region. awarded Budd a major body panel order for a sport utility vehicle which further secured the workload of At 37,594, the number of employees at the end the Detroit plant. The Ludwigsfelde stamping plant of September 1999 was roughly the same as a in Germany made the breakthrough from spare part year earlier, but the structure had continued to supplier to production part supplier with a body com- change: 68% of employees now work at companies ponents order for a city car from DaimlerChrysler. outside Germany – more than ever before. The Brackwede plant in Bielefeld, Germany continued the successful introduction of side impact beams and B-pillars made of high-strength Body: higher sales steel.
The Body unit includes in particular the plants of The Budd Company and Thyssen Umformtechnik + Chassis: market position strengthened Guss. The main products are body components such as engine hoods, tailgates and side panels, The Chassis business unit concentrates on the while materials capabilities extend from steel and development and manufacture of parts and assem- aluminum to glass fiber-reinforced plastics (SMC). blies for chassis and suspensions. We are one of Budd subsidiary Milford Fabricating is a leading the market leaders in the relatively new technology developer of prototypes. of hydroforming. The foundries in North America and Europe produce chassis components in iron, In the past fiscal year the Body unit achieved aluminum and magnesium. The Budd plant in sales of ¤1.2 billion, 7% more than the prior year. Kitchener, Canada specializes in the manufacture of The positive auto sector trend in North America and complete frames for light trucks. 60 AUTOMOTIVE
subsidiaries in the USA, Mexico and France, are Sales by business unit among the world market leaders for forged and Pro forma figures, ¤ m 1998/99 1997/98 machined crankshafts. Body 1,198 1,124 Chassis 1,826 1,935 In fiscal 1998/99 Powertrain generated sales of Powertrain 1,316 1,282 around ¤1.3 billion, an increase of 3%. Lower sales Systems/Suspensions 834 754 in Brazil as a result of weak market conditions were Total 5,174 5,095 more than offset by improved business in Europe Consolidation 34 0 and North America, primarily with camshafts and Automotive 5,208 5,095 steering columns.
The Chassis unit achieved sales of ¤1.8 billion, Krupp Gerlach and Krupp Presta performed par- almost 6% down on the previous year. Falling reve- ticularly well, winning major orders for forged, cast nues in the UK resulting from the sales problems of and machined crankshafts from around the world local auto manufacturers were offset by the positive for their plants in Europe, the USA, Mexico and market trend in North America. Particularly pleasing Brazil. Krupp Presta's assembled camshafts have were the sales increases at Krupp Fabco in Canada established themselves on the market and at- and the plants of Waupaca Foundry in the USA, tracted further new orders. Krupp Presta also part of The Budd Company. enjoyed success with reach and rake adjustable steering columns. In car and light truck chassis, the business unit's position was reinforced by new orders. General Motors placed an order for rear axle mod- Systems/Suspensions: ules. The unit will also supply axle modules, axle success as a systems supplier components and body assemblies for Ford and for a General Motors/Renault joint venture. Larger The Systems/Suspensions business unit orders were also received for front axle brackets achieved sales of ¤0.8 billion in 1998/99, 10% and side members; we will also be producing inte- more than a year earlier. Key contributions to this gral subframes for the new DaimlerChrysler city success were made by the innovative air spring car. and shock absorber units. Comprising Krupp Hoesch Federn, Krupp Bilstein, Krupp Drauz, Krupp Automotive Systems and Walter Hundhausen, the Powertrain: improved business business unit has established itself successfully as in Europe and North America a systems supplier to the international auto in- dustry. The Powertrain business unit manufactures engine components such as crankshafts, cam- Systems/Suspensions made a breakthrough in shafts and connecting rods. Krupp Gerlach and the marketing of a new cab suspension system for Krupp Metalúrgica Campo Limpo, Brazil, with their commercial vehicles, winning orders from Volvo AUTOMOTIVE 61
and Iveco. Prototype orders for air suspension plastic. For example, cross members can be manu- systems were also placed by Jaguar and factured in aluminum or steel, body parts in steel DaimlerChrysler for the E-class; these systems or plastic, and steering column components in already feature as standard in DaimlerChrysler's magnesium or steel. S-class. Our position as a world leading springs manufacturer was underlined by orders for General The Automotive segment is also geared up for Motors' gamma, delta and epsilon platforms and the change from component to systems supplier for the successor model to the Ford Transit. demanded by many vehicle manufacturers. Rather than producing parts to car designers' specifica- tions, this involves taking on defined engineering Profile with perspectives tasks and then offering a complete systems solu- tion. For us as an automotive supplier this extends The Automotive segment has a strong starting the value chain and naturally also improves our platform for success as an international producer earnings. and service provider on the keenly contested inter- national automotive supplies market. We are world leaders in many products, such as body compo- Sales target: ¤10 billion nents, cast brake parts, forged and cast crank- shafts, assembled camshafts or air springs for The Automotive segment with sales of ¤5.2 passenger cars. But technical progress is also part billion in 1998/99 aims to achieve a sales target of the segment's profile; we play a major role in of around ¤8 billion by 2003/4 through organic shaping and driving technological advancements in growth. Acquisitions in Germany and abroad auto construction with innovative developments together with an expansion of the segment's such as hollow crankshafts, air spring systems or presence in Asia and South America will further body outer panels. push sales to over ¤10 billion. An important pre- requisite is the full integration of auto electronics in Just as important as innovation to the Auto- the product range; in addition, greater emphasis is motive segment is the goal of cost efficiency. We to be attached to engineering services. aim to achieve cost leadership on the relevant seg- ments of the automotive supplies market through high volumes, optimized production processes, automated manufacture and standardized designs. To reduce transport costs and put us close to customers we will increasingly be seeking produc- tion facilities outside Germany in the future.
Automotive can also boast impressive materials capabilities, giving us the ability to offer alternative solutions in steel, aluminum, magnesium and 62
Elevators. World in motion.
The Elevators segment has a broad range of capabilities focused on the transportation of passengers
and freight. Its core business is the manufacture, modernization and servicing of elevators, escala-
tors, stair lifts and passenger boarding bridges. Following the acquisition of Dover Elevators, Thyssen
Aufzüge is now the world's third biggest elevator manufacturer. Services are becoming more and
more important. Over 13,000 elevators are linked to the segment's service centers. ELEVATORS 63
Sales up 14% Elevators segment in figures
Pro forma figures 1998/99 1997/98 The Elevators segment kept up the high pace of Order intake ¤ m 2,758 2,488 expansion set in recent years and improved its Sales ¤ m 2,756 2,415 sales 14% to ¤2.8 billion. The regional picture was EBITDA ¤ m 301 247 mixed. The US market continued to expand and Income* ¤ m 145 81 business in Europe stabilized. However in Germany Employees (Sept. 30) 26,126 24,427 construction activity was sluggish, compounded by *before taxes and minority interests considerable price pressure here as on other mar- kets. The Southeast Asian market showed a signifi- cant drop in demand. The segment achieved a pro- Access Industries in the USA the segment is now fit of ¤145 million, an improvement of 79% on the the world's leading supplier of stair lifts. Its market previous year. presence in South America was significantly im- proved by the takeover of Elevadores Sûr in Brazil. New business was generally positive, with orders received worth ¤2.8 billion. Major new pro- jects included 95 elevators for San Francisco air- Expanding services port, more than a hundred escalators, moving walkways and elevators for the Istanbul subway Elevators will continue its current expansion system and eleven passenger boarding bridges for drive. Acquisitions and an even stronger emphasis Madrid airport. The longest escalator in Central on services will push sales higher. Maintenance Europe was installed in the Prague subway system. and servicing of existing equipment will become an The Debis building on Potsdamer Platz in Berlin increasingly important part of our business, with was fitted with the fastest elevator in Europe. corresponding growth in our service networks. In the medium term we plan to achieve sales of over At the end of September 1999 the Elevators ¤3 billion. segment had 26,126 employees, 1,699 or 7% more than a year earlier. 17% of employees were based in Germany and 36% in the USA, our Sales of the Elevators segment by region 1998/99 biggest location.
in %
Germany 17 Elevators: world number 3 Rest of Europe 37 North America 43
Latin America 1 The acquisition of Dover Elevators, North Rest of world 2 American market leader in hydraulic elevators and number two in traction elevators, raised the seg- ment to third place in the world league table of ele- vator manufacturers. Thanks to the purchase of 64
Production Systems. Think global, act local.
Think global, act local is the motto of our Production Systems activities. This segment comprises
companies which are international leaders in their lines of business – machine tools, assembly equip-
ment and body-in-white systems. The number one customer for these products, manufactured at
locations in Europe, North and South America and Southeast Asia, is the auto industry. Service busi-
ness is being expanded on a worldwide scale. PRODUCTION SYSTEMS 65
Mixed business developments Production Systems segment in figures
Pro forma figures 1998/99 1997/98 Sales of the Production Systems segment fell Order intake ¤ m 1,249 1,391 almost 6% to just under ¤1.3 billion in 1998/99. Sales ¤ m 1,257 1,334 The decline related exclusively to the machine EBITDA ¤ m 91 160 tool business, with both the body-in-white and Income* ¤ m – 6 68 assembly equipment activities performing Employees (Sept. 30.) 8,383 8,627 positively. Following the good profit of a year *before taxes and minority interests earlier the segment made a loss of ¤6 million.
On September 30, 1999 Production Systems welding lines, tooling, prototype production and had 8,383 employees, 3% fewer than the previous planning. The companies of Johann A. Krause year. 42% of the workforce was employed outside focus on assembly equipment. Germany. In contrast to the machine tools unit, the body- in-white and assembly equipment businesses Decline in machine tools recorded an increase in sales. In fiscal 1998/99 Nothelfer and Johann A. Krause benefited from The machine tool unit chiefly comprises the buoyant auto sector activity and significantly ex- machine tool manufacturers Hüller Hille, Witzig & ceeded the previous year's good results. Frank and Giddings & Lewis, which have production facilities in Europe, North and South America and Asia. Their products include machines and systems Expanding market position for turning, drilling and milling. The machine tool companies in the Production In the past fiscal year the unit suffered signifi- Systems segment already enjoy leading world cant drops in orders and sales, primarily due to market positions. The assembly equipment and decreased demand for machine tools in North body-in-white activities will further strengthen their America. Worst affected was Giddings & Lewis in good market positions through innovation and cost the USA. An extensive restructuring program there leadership. The trend is toward systems part- includes closing and combining production sites nerships – from stand-alone machines to flexible along with an intensive technology transfer within manufacturing systems. In the coming years, the unit. In addition, particular importance is being production business will be supplemented to an attached to expanding the high-potential after-sales ever increasing extent by services. In the medium business. term Production Systems aims to increase sales to ¤2 billion.
Improvements in body-in-white and assembly equipment
In the body-in-white business Nothelfer special- izes in car body assembly systems, including laser 66
Components. Leading market positions.
Whether it's large-diameter bearings and rings, undercarriages for tracked earth-moving machinery,
garage and industrial doors or PVC profile systems, the companies of the Components segment are
ideally positioned on their specialized markets with technologically advanced products. In constant
contact with their clients they develop tailored components for integration into customer products. COMPONENTS 67
Sales high again Components segment in figures
Pro forma figures 1998/99 1997/98 Despite the difficult environment in their main Order intake ¤ m 1,147 1,166 customer sector, the construction industry, the Sales ¤ m 1,184 1,162 companies of the Components segment generated EBITDA ¤ m 161 187 sales of ¤1.2 billion and thus matched last year's Income* ¤ m 76 109 high level. Orders were also on a par with last time. Employees (Sept. 30) 9,191 8,726 Profits decreased to ¤76 million as a result of *before taxes and minority interests weaknesses in somemarkets and increasing competitive pressure. Berco: sales virtually unchanged The number of employees at September 30, 1999 was 9,191, a year-on-year increase of 5%. Business at Berco, a supplier of undercarriage components for the construction equipment in- dustry, was sluggish in the year under review Sales higher at Thyssen Polymer reflecting the state of the construction market. Despite temporary in-house production by Asian Thyssen Polymer manufactures PVC profile manufacturers, Berco was able to almost match systems for windows and conservatories. Despite last year's high sales figure. strong competitive pressure and the lateness of the recovery in the German windows market, sales were up. In the USA sales fell just short of the year- Novoferm: new plant in Dortmund earlier figure. Novoferm, a specialist in steel doors and door frames, achieved a clear improvement in sales Hoesch Rothe Erde: thanks to the first-time consolidation of Riexinger Asian crisis takes its toll GmbH. A new plant in Dortmund, Germany com- menced production of sectional doors. Hoesch Rothe Erde produces large-diameter bearings for construction machinery, bulk handling equipment and many other applications. In Good prospects 1998/99 the company, while matching the previous year's sales, was unable to maintain the high pace The companies of the Components segment of growth set in the past. The crisis in Asia weak- satisfy all the main criteria of a core business in ened the market for large-diameter bearings – in respect of market and competitive position and particular in offshore applications and tunneling earning power. However, ThyssenKrupp is prepared machines. In contrast, Western European demand to support interesting opportunities for develop- for bearings and rings for use in wind power ment outside the Group if they are in the better stations rose strongly. interests of the individual activities. 68
MaterialsServices. One-stop shopping.
The name says it all – MaterialsServices is one of the world's biggest full-service suppliers of carbon
steel, tubes, stainless and tool steel, nonferrous metals and plastics. Beyond the products themselves
we offer customers a comprehensive package of services including warehousing, first-stage pro-
cessing, distribution and information logistics and inventory management. Our service centers hold
leading positions in Europe and North America. MATERIALSSERVICES 69
Cyclical fall in sales MaterialsServices segment in figures
Pro forma figures 1998/99 1997/98 The performance of the MaterialsServices seg- Order intake ¤ m 9,056 10,449 ment in the year under review was held back by Sales ¤ m 8,886 10,412 cyclical problems. Sales totaled ¤8.9 billion and EBITDA ¤ m 204 252 thus fell short of the previous year's high figure. Income* ¤ m 80 108 While the service-oriented activities grew faster Employees (Sept. 30) 12,815 12,806 than the market, trading business suffered badly *before taxes and minority interests from weak demand and low prices. At 61%, the share of foreign business reached a new record level. Profits slipped 26% to ¤80 million. Against the market trend, the business in- creased its shipments and held the previous year's At the end of the fiscal year, the segment had sales figure. We significantly expanded warehouse 12,815 employees worldwide, roughly the same as sales of steel and stainless steel and consolidated a year earlier. Almost half the workforce is now our market position. In nonferrous metals the wid- employed outside Germany. ening of the range at the Dortmund central ware- house and the installation of additional processing capacities had a positive effect. Plastics business MaterialsServices Europe: domestic business also increased in Germany and abroad. stronger than the market trend The rolled steel and tube business of Thyssen The core of the European service business is Mannesmann Handel, part of MaterialsServices Thyssen Schulte. The systematic widening of the Europe, was heavily affected by the international product and service range in recent years and the market weakness and suffered falls in shipments focus on a broad customer base have had a and revenues. positive impact on shipments, sales and earnings. An efficient central warehouse for the entire pro- duct range – around 120,000 articles – is the basis Sales by business unit for modern distribution and information logistics. Pro forma figures in ¤ m 1998/99 1997/98 MaterialsServices Europe 4,561 4,978 MaterialsServices North America 1,553 1,776 Materials Trading 2,898 3,723 Total 9,012 10,477 Consolidation – 126 – 65 MaterialsServices 8,886 10,412 70 MATERIALSSERVICES
Sales by product 1998/99* MaterialsServices North America: position strengthened
in % Carbon steel 24 Through the targeted expansion of its activities Stainless and tool steel 24 in the fields of processing, logistics and ware- Nonferrous metals 24 housing, Thyssen Inc. was able to strengthen its Plastics 15 market position in North America despite falling pri- Tubes 3 ces and margins. The acquisitions of recent years – Other special products 10 Copper and Brass, Clark Metals, Ken-Mac and Ain Plastics – were a major factor in this. The rolled steel business benefited from continuing high *Warehouse sales demand from the auto sector. The firm focus on warehouse business and first-stage processing had The special materials unit consolidated its mar- a positive effect in stainless steel and nonferrous ket position as a supplier of technical systems. metals. Special civil engineering products and rail business with German rail operator Deutsche Bahn and local transport companies were expanded. The alloyed Materials Trading: exports and international raw materials business improved in the course of business down the year, thanks particularly to a marked rise in nickel prices. International materials trading is mainly handled by ThyssenKrupp Stahlunion with its worldwide net- work of companies, bases and agencies. Stiff com- petition and drastic price falls, especially in the first half of the fiscal year, had a detrimental effect on exports and international trading; sales decreases in rolled steel trading were only partly offset by continuing high demand from the automobile sec- tor. In specialty steel, particularly stainless, acid and heat resistant products, revenues were down MATERIALSSERVICES 71
on the previous year despite higher shipments. The tube export business reported lower sales due to the poor world market situation. With the exception of Spain, shipments and revenues decreased vir- tually everywhere in Europe.
Customer retention through clear service orientation
MaterialsServices will continue to evolve into an integrated materials supplier. Part of this is the systematic pursuit of the one-stop shopping princi- ple, with the European warehouse and logistics organization being integrated along the lines of the German materials business. The same applies to the extensive materials services offered in the USA. Overall, cyclical price dependency will be reduced by further expansion of the service business. The share of less profitable out-and-out trading business will continue to decline. Sales should grow considerably in the mid-term, accompanied by improved returns. 72
FacilitiesServices. Full service from a single source.
The competencies of the ThyssenKrupp Group in industrial services, facility management and IT ser-
vices are combined in the FacilitiesServices segment. By developing service chains and integrated
service networks we provide not just individual services for factories and buildings but a full support
capability for entire locations and industrial plants – from planning to operation and maintenance. It
is a virtually unique offering on the European market. FACILITIESSERVICES 73
Business expanded FacilitiesServices segment in figures
Pro forma figures 1998/99 1997/98 In 1998/99 the FacilitiesServices segment with Order intake ¤ m 1,264 1,078 its business units Industrial Services and Informa- Sales ¤ m 1,298 1,078 tion Services generated sales of ¤1.3 billion, an EBITDA ¤ m 207 230 improvement of 20%. At ¤71 million, profits were Income* ¤ m 71 192 down 63% on the previous year. On September Employees (Sept. 30) 15,378 13,928 30, 1999 the segment had 15,378 employees, *before taxes and minority interests 10% more than a year earlier.
Information Services Targeted expansion of Industrial Services with higher-than-average growth
The Industrial Services business unit – man- The Information Services business unit achieved aged by the lead company Thyssen Krupp a large increase in sales in 1998/99. ThyssenKrupp Industrieservice GmbH – increased its sales sub- Information Services now has a leading position on stantially in the year under review. Along with the the German market for vendor-independent IT and inclusion of new companies, a major contribution media services. Its activities range from the opera- to this came from services going beyond classic tion of computing centers and company-specific maintenance and installation – such as production communications networks through SAP/R3 applica- support services, in-plant logistics and engineering. tions and satellite communications to a variety of International business was stepped up by the es- e-business and call center solutions. A new Tele- tablishment and development of subsidiaries in Management Center was opened in September Hungary and France. 1999 which is linked to 400 facilities throughout Europe. Industrial Services also includes the Formwork and Scaffolding unit of Thyssen Hünnebeck. The production and warehouse organization in Germany Further expansion was streamlined. The internationalization process was continued with the acquisition of Palmers in In the coming years the FacilitiesServices seg- the UK, new startups and acquisitions, particularly ment aims to build on its leading position in in- in Poland and Sweden. In the USA Safway now has dustrial services and continue its drive towards a leading position in scaffolding services. greater internationalization. Particular importance will be attached to the Information Services unit, The technical and infrastructural facility man- which is already achieving double-digit growth. In agement services combined in Thyssen Facility the medium term FacilitiesServices plans to double Management GmbH were reorganized and ex- its current sales of ¤1.3 billion. panded with new facility system services. While sales of facilities systems weakened due to the deferral of major projects, the service activities enjoyed a clear improvement. 74
Real Estate. Comprehensive services for all aspects of real estate.
The Real Estate segment comprises Thyssen Krupp Immobilien GmbH which is one of Germany's
biggest industry-based real estate companies and is organized in four business units. The Real Estate
Management unit controls the use of the Group's real estate. Real Estate Development operates as
a property developer and general contractor. Project control, general planning, architecture and
industrial function planning are the specialties of Real Estate Consulting. The Residential Real Estate
unit manages the Group's stock of housing units. REAL ESTATE 75
19% rise in sales Real Estate segment in figures
Pro forma figures 1998/99 1997/98 The Real Estate segment generated sales of Order intake ¤ m 426 358 ¤426 million in 1998/99, 19% up on the previous Sales ¤ m 426 358 year. Profits amounted to ¤54 million. On Septem- EBITDA ¤ m 119 134 ber 30, 1999 the segment's companies had 831 Income* ¤ m 54 80 employees, 11% more than a year before. Employees (Sept. 30) 831 749
*before taxes and minority interests
Higher profile The Residential Real Estate business unit conti- nues to generate the highest sales in the Real In managing the Group's non-operating proper- Estate segment. At the end of September 1999 it ties, the Real Estate Management unit contributed managed 55,591 housing units in the Rhine/Ruhr to easing the cost burden on the Group. Concepts region, 53,636 of them Group-owned. The mod- for real estate management are being further de- ernization and maintenance program continued to veloped. In the year under review a decision was schedule. taken to set up a Group-wide real estate clearing system as part of an ambitious corporate real estate management program. The real estate Collaboration with Commerzbank managed in Germany alone covers an area of some 8,000 hectares. In December 1999 CommerzLeasing und Immobilien GmbH, a subsidiary of Commerzbank The projects of the Real Estate Development AG, and Thyssen Krupp Immobilien GmbH estab- business unit relate to both Group-owned and third- lished the joint company COMUNITHY Immobilien party property. Projects involving around 600 AG. ThyssenKrupp Immobilien has a 49% share in housing units are currently being developed and this venture, which will concentrate on acquiring, realized. The Real Estate Consulting unit is en- managing and selling residential properties and gaged in planning and consulting, focusing on participating in development projects. In the investment consulting, works structure planning, coming years the company will build up a portfolio logistics, factory planning, architecture and facility of residential and commercial real estate through systems. Particular specialties are project acquisitions in Germany and other euro-zone coun- management and construction supervision. Its tries. A stock market flotation is planned for the clientele includes major companies from the medium term. pharmaceuticals, logistics, catering, automotive and banking sectors. 76
Engineering. High-tech close to customers – worldwide.
The companies of our Engineering segment provide their international customers with comprehensive
know-how for complex industrial solutions. They engineer and build plants for the chemical, petro-
chemical, cement and sugar industries as well as supplying cokemaking and power generating equip-
ment and continuous mining and handling systems. Global presence is a must in this complex inter-
national business. ENGINEERING 77
Sales level almost maintained Engineering segment in figures
Pro forma figures 1998/99 1997/98 At ¤1.8 billion, sales of the Engineering seg- Order intake ¤ m 1,724 1,946 ment in 1998/99 were 3% lower than a year earlier. Sales ¤ m 1,816 1,879 Order intake was down 11% to ¤1.7 billion. Orders EBITDA ¤ m 23 22 in hand on September 30, 1999 totaled ¤2.4 bil- Income* ¤ m 4 11 lion. The currency and financial crisis in Southeast Employees (Sept. 30) 9,594 9,745 Asia caused numerous award-ready projects to be *before taxes and minority interests deferred or cancelled. Business was better in the Middle East and the USA. The profit of ¤4 million Thyssen Still Otto Anlagentechnik. Although the posted for 1998/99 is heavily affected by special company holds a very good position on the world factors. On September 30, 1999 the companies in market for coke-oven plant, this sector has been the Engineering segment employed 9,594 people, stagnant for several years. Sales were down 2%. a drop of just under 2% on the previous year. Sales at B+V Industrietechnik climbed 19%. While the performance of the ships' equipment unit Widely varying performance was steady, the market for energy technology equipment has become increasingly difficult. Due Krupp Uhde's sales were up 8%. The order in- to a lack of follow-up orders and the failure of a take in the year under review was once again very proposed sale, the power generating equipment high. The biggest new project won by the company unit has to be closed down. is for the construction of a chlorine and vinyl chlo- ride plant in Qatar. The workload at Krupp Uhde is The range of Krupp Industries India comprises good; all worldwide engineering capacities are fully sugar and cement plants, bulk handling equipment utilized. and components. Sales dipped 7% against the pre- vious year. Sales at Krupp Polysius dropped 20%. In the year under review three major projects were booked in Argentina and the USA, along with an order for Wanted: partners or best owners the expansion of a cement plant in Egypt. Despite holding leading positions in its spe- Krupp Fördertechnik builds systems and equip- cialized fields, our Engineering segment is not big ment for mining, materials processing and bulk enough to meet all the requirements of the world handling. The weakness of the international raw market in future. A partner is therefore being materials markets led to a 9% drop in sales in sought who can contribute a larger volume of 1998/99. The low level of order intake, the me- business and complementary activities. The colla- dium-term business expectations and the strong boration could take the form of a joint venture or a price pressure call for a change in the company's sale: ThyssenKrupp is open to both alternatives on strategy. the condition that growth opportunities and pros- pects are better in the new set-up than in the ThyssenKrupp EnCoke brings together the coke- Group. oven activities of Krupp Uhde and the former 78
Others. Better opportunities outside the Group.
The Others segment has been created for activities which are not classified as core businesses and
for which industrial partners or potential buyers are being sought. These activities include Plastics
Machinery, Shipyards and Project Management.
Sales of the Others segment in fiscal 1998/99 Others segment in figures totaled ¤2.1 billion, a decrease of 37%, due mainly Pro forma figures 1998/99 1997/98 to the sale of our logistics and construction equip- Order intake ¤ m 1,949 3,523 ment trading activities. A ¤291 million loss was Sales ¤ m 2,108 3,342 made on these sales. The aggregated workforce EBITDA ¤ m – 289 – 120 of 10,470 on September 30, 1999 represented a Income* ¤ m – 291 – 100 drop of 4% on the previous year. Employees (Sept. 30) 10,470 10,953
*before taxes and minority interests
Capacity utilization of the Shipyards secured marines and three container ships. In addition to Our long-standing German shipyards Blohm + newbuilds, shipyard business also includes repair Voss in Hamburg and Thyssen Nordseewerke in work; Blohm + Voss Repair enjoyed a successful Emden are innovative partners in naval and mer- year in this sector. chant shipbuilding whose activities also include repairs, conversions and service. The merchant shipbuilding activities of Thyssen Nordseewerke Plastics Machinery holds up well center on high-grade specialized vessels. Frigates and corvettes for the naval sector are built in The companies in the Plastics Machinery unit Hamburg; the Emden location builds frigates and develop processes and design and build first-class submarines. equipment for the production, compounding, refining, processing and recycling of plastics and The Shipyards once again put in a pleasing per- elastomers. Krupp Kunststofftechnik is a market formance in 1998/99, with sales of ¤668 million and earnings of ¤42 million. The order backlog of Sales by business unit ¤2.4 billion will secure shipbuilding capacity utiliza- tion until 2006. Outstanding orders on Blohm + Pro forma figures in ¤ m 1998/99 1997/98 Voss's books include two cruise ships, material Shipyards 668 530 supplies for Turkey and involvement in the German Plastics Machinery 559 552 F 124 frigate program. The order backlog at Project Management 201 265 Thyssen Nordseewerke also includes a share of the Miscellaneous 680 1.995 F 124 frigate program along with several sub- Others 2,108 3,342 OTHERS 79
leader in extrusion blow molders and machines for shipbuilding components and technical systems. the production of PET bottles. The good develop- The unit's activities also include trading in and ser- ment in extrusion blow molders continued at Krupp vicing machine tools. Kautex Maschinenbau and Fischer-W. Müller Blas- formtechnik. Krupp Corpoplast Maschinenbau Sales of the Project Management unit declined expects to expand its volume of PET business 24% in the past fiscal year for invoice timing rea- thanks to its newly developed range of machinery sons, resulting in a profit of ¤6 million. Materials and growth in the market. Krupp Werner & Pflei- were supplied to an Indonesian shipyard for the derer is world market leader in plastics com- construction of five container ships. The ship- pounding technology. Krupp Elastomertechnik's building orders for the Turkish navy will be com- expertise in rubber compounding and the manufac- pleted on schedule in collaboration with Blohm + ture of tires and industrial rubber products is in Voss. There were also pleasing developments in demand the world over. the construction of new wind energy plants. Following the handover of the Emsland wind farm In fiscal 1998/99 sales in the Plastics Machinery in December 1998, a 13 megawatt wind farm was unit were on a par with the previous year at ¤559 set up in the German state of Rhineland-Palatinate million, while income climbed to ¤17 million. Due with 13 generating units. Trading and service to the difficulties on Asian markets, Krupp Kunst- business for technical systems and components, in stofftechnik was unable to match its prior-year particular for power generation and the transport sales. The improvement in stretch blow molder sector, improved above all in the USA and Eastern business - profiting from the trend toward PET Europe. beverage bottles - was countered by weak demand for extrusion blow molders. In contrast, Krupp Werner & Pfleiderer was able to improve on its high sales of a year earlier despite weakening demand from plastics producers and processors. At Krupp Elastomertechnik sales turned down as a result of the Asian crisis and subdued investing activity in Europe.
Project Management sales down
From profitability analysis to financial engi- neering through to commissioning - the Project Management unit realizes extensive industrial facili- ties and is independent in its choice of partners and technologies. The focus is on refinery com- plexes, renewable energy facilities and municipal services along with the worldwide sale of ships, 80
Supervisory Board.
Prof. Dr. h.c. mult. Berthold Beitz, Essen Prof. Dr. Günter Vogelsang, Düsseldorf Honorary Chairman Honorary Chairman Chairman of the Board of Trustees of the Alfried Krupp von Bohlen und Halbach Foundation
Dr. Heinz Kriwet, Düsseldorf Gerd Kappelhoff, Witten Chairman Trade union secretary at the Düsseldorf branch office of IG Metall Dieter Schulte, Duisburg Vice Chairman Dieter Kroll, Duisburg Chairman of the German Trade Skilled steel mill worker Union Federation Chairman of the Group Works Council of Thyssen Krupp AG and Chairman of the Dr. Karl-Hermann Baumann, Munich Works Council of Thyssen Krupp Stahl AG Chairman of the Supervisory Board of Siemens AG Reinhard Kuhlmann, Frankfurt/Main Secretary General of the European Wilfried Behrend, Kassel Metalworkers' Trade Union Federation (until September 30, 1999) Production planning engineer Dr. Manfred Lennings, Essen Vice Chairman of the Works Council of Independent industrial consultant Thyssen Henschel GmbH Werner Nass, Dortmund Wolfgang Boczek, Bochum Salaried employee (from October 28, 1999) Chairman of the European Works Council Materials tester of Thyssen Krupp AG Chairman of the Works Council Union of Thyssen Umformtechnik + Guss Dr. Mohamad-Mehdi Navab-Motlagh, Tehran Vice Minister for International Affairs Carl L. von Boehm-Bezing, Bad Soden and Foreign Investment and President of the Member of the Executive Board of Organization for Investment, Economic and Deutsche Bank AG Technical Assistance of Iran
Dr. Klaus Götte, Munich Dr. Friedel Neuber, Duisburg Chairman of the Supervisory Board of MAN AG Chairman of the Executive Board of Westdeutsche Landesbank Girozentrale SUPERVISORY BOARD 81
Paul Ring, Hagen Bernhard Walter, Bad Homburg (until December 31, 1999) Speaker of the Executive Board of Industrial electrician Dresdner Bank AG Chairman of the Group Works Council of Thyssen Krupp AG Dieter Wittenberg, Dortmund Director of Thyssen Krupp Industries AG Thomas Schlenz, Hamminkeln Shift foreman Supervisory Board Committees Chairman of the Works Council Union of ThyssenKrupp Materials & Services Executive Committee (Präsidium) Dr. Heinz Kriwet (Chairman) Dr. Henning Schulte-Noelle, Munich Dieter Schulte Chairman of the Executive Board of Allianz AG Dieter Kroll Dr. Friedel Neuber Wilhelm Segerath, Duisburg Automotive bodymaker Committee in accordance with Art. 27 para. 3 Chairman of the General Works Council German Codetermination Act of Thyssen Krupp Stahl AG Dr. Heinz Kriwet (Chairman) Dieter Schulte Dr. Walter Seipp, Königstein i. Ts. Dieter Kroll Honorary Chairman of the Supervisory Board Dr. Friedel Neuber of Commerzbank AG Personnel Committee Ernst-Otto Tetau, Brietlingen Dr. Heinz Kriwet (Chairman) (from February 16, 2000) Dieter Schulte Machine fitter Dieter Kroll Chairman of the Works Council of Dr. Friedel Neuber Blohm + Voss GmbH and Chairman of the Works Council Union Accounting and Investment Committee of ThyssenKrupp Industries Dr. Heinz Kriwet (Chairman) Dieter Schulte Dr. Klaus Götte Werner Nass Dr. Mohamad-Mehdi Navab-Motlagh Wilhelm Segerath 82
Report by the Supervisory Board.
The merger of Thyssen AG and Fried. Krupp AG Hoesch-Krupp to form Thyssen Krupp AG came into effect
on entry in the Düsseldorf Commercial Register on March 17, 1999 with economic effect at October 1, 1998.
In the Merger Deed of October 16, 1998, Thyssen AG and Fried. Krupp AG Hoesch-Krupp appointed
Dr. Karl-Hermann Baumann, Carl L. von Boehm-Bezing, Dr. Klaus Götte, Dr. Heinz Kriwet, Dr. Manfred
Lennings, Dr. Mohamad-Mehdi Navab-Motlagh, Dr. Friedel Neuber, Dr. Henning Schulte-Noelle, Dr. Walter
Seipp and Bernhard Walter as members of the founding Supervisory Board of Thyssen Krupp AG – comprising
stockholder representatives only – pursuant to Art. 36 para. 2 of the German Reorganization Act (“Umwand-
lungsgesetz”) in conjunction with Art. 31 of the German Stock Corporation Act (“Aktiengesetz”). The appoint-
ment of the stockholder representatives was approved by the merger stockholders' meetings of Fried. Krupp
AG Hoesch-Krupp on November 30, 1998 and Thyssen AG on December 3 and 4, 1998.
Upon completion of a so-called status procedure initiated after the official registration of the merger,
Wilfried Behrend, Gerd Kappelhoff, Dieter Kroll, Reinhard Kuhlmann, Werner Nass, Paul Ring, Thomas
Schlenz, Dieter Schulte, Wilhelm Segerath and Dieter Wittenberg were appointed members of the Supervisory
Board of Thyssen Krupp AG as employee representatives by decision of Düsseldorf local court on April 27,
1999.
In its constituent meeting on April 28, 1999 the Supervisory Board elected Dr. Heinz Kriwet as Chairman
and Dieter Schulte as Vice Chairman of the Supervisory Board. At the same meeting an Executive Committee
(“Präsidium”), a committee in accordance with Art. 27 para. 3 of the German Codetermination Act
(“Mitbestimmungsgesetz”), a Personnel Committee and an Accounting and Investment Committee were es-
tablished and their members elected. The composition of the individual committees is presented in the list of
the Supervisory Board members.
The Executive Board provided regular written and oral reports to the Supervisory Board on the develop-
ment of business, the situation of the Group and all major transactions. All important events were discussed
in detail in meetings of the Executive Board with the Supervisory Board Chairman, in the Executive Committee REPORT BY THE SUPERVISORY BOARD 83
of the Supervisory Board and in the Supervisory Board itself. Since Thyssen Krupp AG was registered on
March 17, 1999 there have been two Supervisory Board meetings – on April 28 and July 28, 1999. The
Supervisory Board was also informed about projects and events of particular significance or urgency out- side the scheduled meetings and its approval requested if necessary.
Of the four Supervisory Board committees, the Executive Committee and the Personnel Committee
(which have exactly the same members) met once in the year under review, dealing primarily with Executive
Board personnel matters and questions relating to future corporate development. There were no meetings of the committee in accordance with Art. 27 Codetermination Act in the reporting period. The Accounting and Investment Committee met on November 24, 1999 to discuss the investment program and the effects of first-time consolidation under US GAAP. The annual financial statements of Thyssen Krupp AG – drawn up under German GAAP – and the US GAAP consolidated financial statements were discussed on March
16, 2000. The parent-company statements were recommended to the full Supervisory Board for approval.
A major part of discussions in the Supervisory Board centered on updated and detailed information on sales, earnings and workload developments in the Group and its segments and the financial situation of the Group. In its meeting on April 28, 1999 the Supervisory Board approved the Group's starting organiza- tion. Further topics of discussion in this and the subsequent meeting on July 28, 1999 were the future strategic alignment of the Group and the development of the Group portfolio. In the meeting on July 28,
1999 the Supervisory Board was informed at length about the changeover of the consolidated financial statements to US GAAP.
In accordance with resolutions passed by the merger stockholders' meetings of Fried. Krupp AG
Hoesch-Krupp and Thyssen AG, the financial statements for the fiscal year from October 1, 1998 to
September 30, 1999 drawn up by the Executive Board under German GAAP rules and the Management
Report of Thyssen Krupp AG were audited jointly by C&L Deutsche Revision Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft, Essen, and KPMG Deutsche Treuhandgesellschaft Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft, Berlin and Frankfurt am Main. The auditors passed an unqualified audit opinion. 84 REPORT BY THE SUPERVISORY BOARD
The first consolidated statements of Thyssen Krupp AG were drawn up under US GAAP rules. Invoking the
exemption clause in Art. 292a of the German Commercial Code (“HGB”), no consolidated financial state-
ments were drawn up to German GAAP rules. The US GAAP statements were drawn up in German marks and
subsequently translated into euros. Furthermore, the Management Report on the Group was extended with
additional explanations in accordance with Art. 292a HGB. The US GAAP consolidated financial statements
and the Management Report likewise received an unqualified audit opinion, with one exception. The qualifica-
tion relates to the equity valuation of the investment in RAG Aktiengesellschaft, which is available only on the
basis of the share of German GAAP equity of RAG and not on the basis of the US GAAP equity as prescribed
under US GAAP rules.
The Supervisory Board assigned to the auditors to examine the parent company and consolidated
financial statements. In addition, the audit focused on the changeover to the Year 2000 and the early warning
system for risks. The final changeover measures were completed on schedule. The assigned auditors delivered
the following opinion on the existing early warning system for risks:
“With reference to the early warning system for risks, the auditors declare that the Executive Board has
carried out the measures required under Art. 91 para. 2 of the German Stock Corporation Act, in particular
the installation of a monitoring system. The early warning system for risks in place in the ThyssenKrupp
Group is suitable to recognize at an early stage developments which could jeopardize the continued existence
of the Company.”
The annual financial statement documents and the audit reports were distributed to all Supervisory Board
members. The auditors were present during the discussion of the parent company and consolidated financial
statements in the Supervisory Board, reported in detail on the conduct of their examinations and were availa-
ble to provide supplementary information. On the basis of its own examination of the parent company state-
ments, the consolidated statements, the management report, management report on the Group, and the pro-
posal on the disposition of the unappropriated profit, the Supervisory Board approved the result of the
examination by the auditors. It approved the parent company financial statements which are thus established.
The Supervisory Board was in agreement with the proposal of the Executive Board concerning the disposition
of the unappropriated profit. REPORT BY THE SUPERVISORY BOARD 85
Company managements, employees and the employee representative bodies cooperated responsibly and constructively in the first joint fiscal year of the ThyssenKrupp Group. The merger of Thyssen and Krupp called for great personal commitment. The Supervisory Board would like to express its thanks and appreciation to the Executive Board and all employees for their great dedication and successful work.
Düsseldorf, March 31, 2000
The Supervisory Board
Dr. Heinz Kriwet
Chairman 86
Major subsidiaries and investments. as of September 30, 1999
Share- Share- holding holding Name in %1) Name in %1)
Steel Milford Fabricating Company, Detroit/MI/USA 100.0 Thyssen Krupp Steel AG, Duisburg 100.0 Tallent Engineering Ltd., Durham/UK 100.0 Acciai Speciali Terni S.p.A., Terni/Italy 90.0 The Budd Company, Troy/MI/USA 100.0 EBG Gesellschaft für elektromagnetische Werkstoffe Thyssen Umformtechnik + Guss GmbH, Remscheid 99.5 mbH, Bochum 99.5 Waupaca Foundry Inc., Waupaca/WI/USA 100.0 Edelstahl Witten-Krefeld GmbH, Witten 99.5 Edelstahlwerk Witten AG, Witten 98.8 Ferteco Mineração S.A., Rio de Janeiro/Brazil 100.0 Elevators Hoesch Hohenlimburg GmbH, Hagen 99.5 Thyssen Aufzüge GmbH, Neuhausen a.d.F. 100.0 Krupp Edelstahlprofile GmbH, Siegen 100.0 Compagnie Générale d'Applications Ascenseurs S.A.S. Krupp Thyssen Nirosta GmbH, Krefeld 100.0 'C.G.2A.', La Plaine Saint-Denis/France 100.0 Krupp VDM GmbH, Werdohl 98.0 Elevadores Sûr, S.A. Indústria e Comércio., Mexinox S.A. de C.V., San Luis Potosi/Mexico 95.5 São Paulo/Brazil 100.0 Mexinox USA Inc., Dallas/TX/USA 100.0 Northern Elevator Ltd., Scarborough/Ontario/Canada 100.0 Rasselstein Hoesch GmbH, Andernach 99.5 Thyssen Ascenseurs S.A.S., Angers/France 100.0 Shanghai Krupp Stainless Co. Ltd., Shanghai, China 60.0 Thyssen Aufzüge Ltd., Nottingham/UK 100.0 Stahlwerke Bochum AG, Bochum 97.0 Thyssen Boetticher S.A., Madrid/Spain 99.9 Thyssen Bausysteme GmbH, Dinslaken 100.0 Thyssen Elevator Company, Horn Lake/DE/USA 100.0 Thyssen Fügetechnik GmbH, Dortmund 100.0 Thyssen Elevator Systems Inc., Horn Lake/DE/USA 100.0 Thyssen Krupp Stahl AG, Düsseldorf 99.5 Thyssen Stahl-Service-Center GmbH, Leverkusen 99.5 Titania S.p.A., Terni, Italy 100.0 Production Systems Hüttenwerke Krupp Mannesmann GmbH, Duisburg 50.0 Fadal Engineering Company Inc., Chatsworth/CA/USA 100.0 Thyssen Ros Casares S.A., Valencia/Spain 50.0 Giddings & Lewis LLC, Janesville/WI/USA 100.0 Giddings & Lewis Ltd., Merseyside/UK 100.0 Hüller Hille GmbH, Ludwigsburg 99.5 Automotive Johann A. Krause Maschinenfabrik GmbH, Bremen 100.0 Thyssen Krupp Automotive AG, Bochum 100.0 Kearney & Trecker Corp., Fond du Lac/WI/USA 100.0 Budd Canada Inc., Kitchener/Ontario/Canada 77.3 Nothelfer GmbH, Ravensburg 99.5 Krupp Bilstein GmbH, Ennepetal 99.5 Krupp Fabco Comp., Halifax/Nova Scotia/Canada 100.0 Krupp Gerlach GmbH, Homburg/Saar 90.0 Components Krupp Hoesch Automotive of America Inc., Troy/MI/USA 100.0 Berco S.p.A., Copparo, Italy 100.0 Krupp Hoesch Federn GmbH, Werdohl 99.3 Krupp Berco Bautechnik GmbH, Essen 100.0 Krupp Metalúrgica Campo Limpo Ltda., Hoesch Rothe Erde GmbH, Dortmund 99.5 Campo Limpo/Brazil 59.8 Novoferm GmbH, Isselburg 100.0 Krupp Presta AG, Eschen/Liechtenstein 100.0 Thyssen Polymer GmbH, Bogen 100.0 MAJOR SUBSIDIARIES AND INVESTMENTS 87
Share- Share- holding holding Name in %1) Name in %1)
MaterialsServices Engineering Thyssen Krupp Werkstoffe GmbH, Düsseldorf 99.5 Thyssen Krupp Engineering AG, Essen 100.0 Copper and Brass Sales, Inc., Eastpointe/MI/USA 100.0 Krupp Fördertechnik GmbH, Essen 100.0 Ken-Mac Metals Inc., Cleveland/OH/USA 100.0 Krupp Industries India Ltd., Pimpri/India 53.7 Krupp GfT Gesellschaft für Anlagen-, Bau- und Krupp Polysius AG, Beckum 100.0 Gleistechnik mbH, Essen 100.0 Krupp Uhde GmbH, Dortmund 99.9 Mannesmann Handel AG, Düsseldorf 99.5 Polysius S.A., Aix-en-Provence/France 100.0 Otto Wolff Handelsgesellschaft mbH, Düsseldorf 99.6 Thyssen Krupp EnCoke GmbH, Bochum 99.2 Thyssen Canada Ltd., Rexdale/Ontario/Canada 100.0 Thyssen France S.A., Maurepas/France 100.0 Thyssen Inc., Dover/DE/USA 100.0 Others Thyssen Krupp Metallurgie GmbH, Essen 100.0 Shipyards Thyssen Nederland B.V., Veghel/Netherlands 100.0 Blohm + Voss GmbH, Hamburg 99.5 Thyssen Sonnenberg Metallurgie GmbH, Düsseldorf 100.0 Blohm + Voss Repair GmbH, Hamburg 100.0 Finox S.p.A., Milan/Italy 40.0 Thyssen Nordseewerke GmbH, Emden 99.5 Plastics Machinery Krupp Kunststofftechnik GmbH, Essen 99.5 FacilitiesServices Krupp Werner & Pfleiderer GmbH, Stuttgart 99.5 Thyssen Krupp Industrieservice GmbH, Düsseldorf 100.0 Project Management Krupp Druckereibetriebe GmbH, Essen 100.0 Thyssen Rheinstahl Technik GmbH, Düsseldorf 100.0 Thyssen Facility Management GmbH, Düsseldorf 100.0 National holding companies Thyssen Krupp Information Services GmbH, Düsseldorf 100.0 Grupo ThyssenKrupp S.A., Madrid/Spain 100.0 Thyssen Krupp Information Systems GmbH, Krefeld 100.0 ThyssenKrupp France S.A., Rueil-Malmaison/France 100.0 Thyssen Krupp Multimedia GmbH, Krefeld 100.0 Thyssen Krupp Italia S.p.A., Milan/Italy 100.0 Thyssen Hünnebeck GmbH, Ratingen 96.0 ThyssenKrupp UK PLC., Solihull/UK 100.0 WIG Industrieinstandhaltung GmbH, Cologne 100.0 ThyssenKrupp USA, Inc., Atlanta/GA/USA 100.0 THP United Enterprises, Inc., Dover/DE/USA 50.0 ThyssenKrupp Nederland B.V., Rotterdam/Netherlands 100.0 Shareholdings Kone Oy, Helsinki, Finland 10.0 Real Estate Mannesmannröhren-Werke AG, Mülheim/Ruhr 21.0 Thyssen Krupp Immobilien GmbH, Essen 100.0 RAG Aktiengesellschaft, Essen 20.62) Krupp Hoesch Immobilien GmbH, Essen 100.0 Ruhrgas AG, Essen 4.72) Krupp Stahl AG & Co Liegenschaftsverwaltung, Bochum 100.0 Thyssen-Elf Oil GmbH, Hamburg 50.0 Thyssen Krupp Immobilien Development GmbH, Oberhausen 100.0 Thyssen Krupp Wohnimmobilien AG, Essen 99.7
1) related to the respective parent company. 2) share calculated through 88
Contact ThyssenKrupp.
Thyssen Krupp AG August-Thyssen-Strasse 1 40211 Düsseldorf, Germany Postfach 10 10 10 40001 Düsseldorf, Germany Telephone +49 211 824-1 Fax +49 211 824-36000 Telex 8 582 827 thyd d E-mail info@tk.thyssenkrupp.com
This report is available in German and English; both versions can be downloaded from the internet at http://www.thyssenkrupp.com.
Please address queries to:
Corporate Communication Telephone +49 211 824-36007 Fax +49 211 824-36041 E-mail [email protected]
Corporate Investor Relations Telephone +49 211 824-36464 Fax +49 211 824-36467 E-mail [email protected]
On request we would be pleased to send you further copies of this report and additional information on the ThyssenKrupp Group free of charge. Telephone +49 211 824-38382 and +49 211 824-38371 Fax +49 211 824-38512 E-mail [email protected]
TK 60 e 1.20.03.00 DP
GLOSSARY
CIP (continuous improvement process) Purchase accounting Involvement of all employees in the continuous improve- US GAAP method of accounting for the acquisition of a ment of workflows and workplaces. Small groups of company employees address questions in the workplace such as improving the plant environment, improving quality, Return on equity optimizing workflows and reducing costs. Earnings before taxes and minority interests divided by average equity Dow Jones STOXX European share index of Stoxx Ltd. Stoxx was established ROCE by Deutsche Börse AG, Bourse de Paris, the Swiss stock Abbreviation for return on capital employed; central exchange and the publishers Dow Jones and Company performance measure
EBITDA Sandwich plate Abbreviation for Earnings Before Taxes, minority interests, Newly developed material comprising two thin steel Interest, Depreciation and Amortization sheets with an interim layer of plastic Glossary,index
Economic value added (EVA) Slab Difference between ROCE and cost of capital, multiplied Primary product in the production of flat-rolled steel by capital employed; if EVA is positive, returns are higher than the cost of capital SMC Abbreviation for sheet molding compound, a fiber-reinfor- Gearing ced plastic material Net financial payables divided by equity Tailored blank IT Metal blank comprising individual steel sheets of different Abbreviation for information technology grade, gauge and finish which are welded together and are suitable for deep drawing. Kaizen “Changing for the better”: methodology originated in ULSAB Japan for the initiation and methodical support of a conti- Abbreviation for Ultralight Steel Auto Body, development nuous improvement process (CIP) project by the international steel industry with the aim of weight reduction in auto construction; related projects MSCI include ULSAC (Ultra Light Steel Auto Closures) and Abbreviation for Morgan Stanley Capital International, one ULSAS (Ultra Light Steel Auto Suspensions) of the leading providers of global stock exchange indices US GAAP Plastics blow molding US accounting rules; GAAP is an abbreviation for Various processes (extrusion, stretch blow molding) for Generally Accepted Accounting Principles manufacturing hollow plastic articles such as beverage bottles or fuel tanks
Pro forma figures All figures in this report are presented on a pro forma basis. For both fiscal years these pro forma figures inclu- de figures for Krupp, Dover Elevators and Mannesmann Handel as well as those for Thyssen. This applies inde- pendently of the initial consolidation date. INDEX
A Automotive 21, 24, 26, 58 N No-par-value share 9 B Business situation 24 O Others 21, 25, 27, 78 C Capital expenditure 28 Outlook 30 Capital stock 9 P Partial retirement 45 Carbon Steel Flat-Rolled 55 Plastics Machinery 21, 78 Committees of the Supervisory Board 81 Portfolio management 34 Company suggestion scheme 45 Production Systems 21, 25, 64 Components 21, 25, 27, 66 Project Management 21, 79 Corporate design 22 R Real Estate 19, 25, 28, 74 D Degree of internationalization 42 Research and development 48 Dividend 4, 26 Risk early warning systems 84 E E-commerce 6, 36 S Segments 18, 21 Elevators 21, 24, 26, 62 Service orientation 6, 35 Employees 44 Shipyards 21, 78 Engineering 19, 25, 27, 76 Stainless 56 Enterprise value 7 Steel 18, 24, 29, 54 Euro 84 Steel flotation 5, 35, 38 Exchange ratios 9 Stock market trading 8 Executive Board/Executive Board directorates 2 Stock options program 37 Executive development 46 Stock performance 10 Expo 2000 23 Stockholder structure 12 F FacilitiesServices 21, 25, 27, 72 Strategic realignment 5 I Income 25 Supervisory Board 80 Industries 18 U US GAAP 4, 36, 83 Innovation competition 51 V Value generation, management 5, 20, 34 Investor relations 12 U K Key share figures 13 L Logo 22 M Materials & Services 19 MaterialsServices 21, 25, 27, 68 Merger 3, 16 FINANCIAL CALENDAR
May 24, 2000
Annual Stockholders' Meeting Interim report October 1, 1999 - March 31, 2000
May 25, 2000
Payment of the dividend for the 1998/99 fiscal year Conference call with financial analysts
December 8, 2000
Initial overview of fiscal 1999/2000
January 15, 2001
Annual press conference Analysts' meeting
March 2, 2001
Annual Stockholders' Meeting ThyssenKrupp stands for high-quality industrial products and services, valuable know-how along the entire value chain, and highly skilled employees. This is the basis for continuous growth in product business and a value-oriented services drive.