Page 1

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

ThyssenKrupp

0


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Agenda

{

Group Overview and Strategy Ulrich Middelmann Vice Chairman of the Executive Board and CFO of ThyssenKrupp AG

{

ThyssenKrupp Steel Karl-Ulrich Köhler CEO ThyssenKrupp Steel AG and Executive Board Member of ThyssenKrupp AG

{

ThyssenKrupp Stainless Jürgen H. Fechter CEO ThyssenKrupp Stainless AG and Executive Board Member of ThyssenKrupp AG

ThyssenKrupp

1


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

What the ThyssenKrupp Group is About {

Strong commitment to sustainable profit and cash generation as well as value enhancement across business cycles

{

Value creation for shareholders not only by profitable growth initiatives, but also by stable and sustainable dividend payment

{

Continuation of systematic value management by concentrating only on high-performance business areas and active portfolio management

{

Further expansion of service orientation as well as fostering technological and innovative capabilities

ThyssenKrupp

2


3

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

ThyssenKrupp Continues the Delta EVA® Story ROCE and TKVA (incl. major nonrecurring items) ROCE

% / million €

Δ TKVA

TKVA

23.4%

1,510 997 572

Δ14% 513

17.9%

9M: 1,930

Δ 425 14.4%

12.0%

Δ 924 WACC: 9%

7.2%

7.0%

Δ 62

(414) 2001/02

ThyssenKrupp

incl. major nonrecurring items

(352)

2002/03

2003/04

2004/05

2005/06

2006/07


4

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

EBT Track Record EBT (as reported)

million â‚Ź

3,200 CAGR: 58.0% p.a.

2,623 619

1,477

9M: 2,853 1,219

1,677 806 572

800

773

421

1,062 425

2001/02

2002/03

2003/04

2004/05

2005/06

2006/07 incl. major nonrecurring items

ThyssenKrupp


5

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

EPS Track Record Earnings per share (as reported)

â‚Ź

CAGR: 66.7% p.a.

3.24

9M: 3.25

1.04 1.81

1.49

2.08 0.87

1.09 0.84 0.42

0.45 1.31

0.49 2001/02

2002/03

2003/04

2004/05

2005/06

2006/07 incl. major nonrecurring items

ThyssenKrupp


7 6

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Track Record of Dividend Payment Dividend payment and payout ratio

€/%

1.00 0.80* 0.60 0.50

≥30%

0.40

2001/02

2002/03

2003/04 DPS (€)

ThyssenKrupp

2004/05 Payout ratio

2005/06

2006/07 * incl. special dividend of €0.10


7

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

ThyssenKrupp Management Approach Success Factors for Industrial Top Positions Value-based management system Efficiency improvement culture

Product and process innovation Industrial top position

Portfolio optimization

Customer orientation Excellence in human resources

ThyssenKrupp


8

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

ThyssenKrupp Value-Based Management: Focus on Value TKVA Value Driver Tree Quantities

High share of deliveries to “valuable“ customers

Selling prices

Customer penetration (service, cross-selling)

Sales EBIT Quantities Costs

Input factor prices

TKVA Fixed assets Capital Employed

X

WACC Net working capital

ThyssenKrupp

Service initiative/ increase customer value e-Commerce Permanent reengineering process

Fixed assets

Dominant volumes, market shares

Non-operating assets

Value added

Inventories

Disposal

Receivables

Processes, cycle times

Non interestbearing liabilities

Payment terms


9

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

ThyssenKrupp Value-Based Management: Focus on Cash Flow Control Levers for the Cash Flow Income/loss before income taxes Cash flow (gross) Cash flow (net) Operating cash flow

- Increase of net working capital + Decrease of net working capital

Free cash flow

Cash flow from investing activities

ThyssenKrupp

- Investments in intangible assets and PPE - Investments in financial assets - Disinvestment of fixed assets

+

Depreciation/ amortization

- Income taxes w/o deferred taxes

+/- Δ Accrued pension and similar obligations

+/- Δ Funds tied down in operating assets

+/- Δ Inventories +/- Δ Trade accounts receivables +/- Δ Other operating assets

+/- Δ Trade accounts payable +/- Δ Other payables +/- Δ Other provisions/ accruals


10

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

A Corporate Culture for Continuous Performance Enhancement is Established

ThyssenKrupp

best

In FY 2005/06 almost 2,000* new projects initiated 7.000 7,000 6.500 6.000 6,000 5.500 5,000 5.000 4.500 4,000 4.000 3.500 3,000 3.000 2.500 2,000 2.000 1.500 1,000 1.000

All in all 6,798* projects started in ThyssenKrupp best

500 0 FY 2001/02 Number of projects

ThyssenKrupp

FY 2002/03 in concept

FY 2003/04 in implementation

FY 2004/05 finished

FY 2005/06 in discontinued operations


11

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Project Landscape in Initiatives

ThyssenKrupp

Increase in share of purchasing projects in last fiscal year Operating efficiency, 43%

best

Corporate organization, 3% Knowledge management, 3% Employees, 4%

Performance quality, 6%

Capital productivity, 7% Purchasing, 16% Service orientation, 5% Sales, 13%

ThyssenKrupp


12

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Project Potentials

ThyssenKrupp

EBIT and Capital employed plans clearly surpassed

best

EBIT potential in million € Plan

> 600

Act

> 500 > 600

> 600

Plan 03/04

Act 03/04

< -400

~ -400

Plan 04/05

< -300

~ 400

~ 600

Act 04/05

~ -400

Plan 05/06

~ -200

Capital Employed potential in million €

ThyssenKrupp

> 700

Act 05/06

< -200

Plan 06/07

~ -100


13

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Movements in Sales and Capital Employed Indicator for Efficiency Improvements Sales in â&#x201A;Źbn

50

Capital Employed 22 in â&#x201A;Źbn

21.002 19.530

45

18.870

20 18.388

40

17.056

18

35

16

30

14 36.928

33.487

37.303

42.927

47.125

25

12

20

10 2001/02

2002/03 Sales

ThyssenKrupp

2003/04

2004/05

Capital Employed (CE, average)

2005/06


14

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Portfolio Management: Balance of Value and Cash providers Balanced business portfolio

ThyssenKrupp Value Added II

III

Value driverCash consumer

Value driverCash provider

Watchlist for Growth

Growth

0 I

IV

UnderperformerCash consumer

UnderperformerCash provider

Watchlist for Disposals

Performance Program 0

ThyssenKrupp

Free Cash Flow


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

15

Value Drivers and Cash Providers Development from FY 2004/05 to FY 2005/06

Size of disks reflects capital employed

ThyssenKrupp


16

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Active Portfolio Management at ThyssenKrupp Significant change in portfolio since the merger (as at September 2007) Disposals Acquisitions

(Total: €9.1 billion) (Total: €8.2 billion)

Steel

455

2,005

Stainless Automotive* Technologies

95 2,105

1,155

2,420

1,955

Elevator Services Others Sales in €m

ThyssenKrupp

235

130

1,375 3,010

1,435 910

* since Oct 1, 2006 integrated into Technologies segment


17

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

24 Portfolio Optimizations in 2006/2007 Corporate Commercial Real Estate Portfolio (DE) Steel Auto Chassis do Brasil (BR)

Elevator Disposal

Acquisition

Stainless no relevant transactions to date Technologies Fundicoes (BR) BVI Defense Technology (DE) DRE/CON Slewing Bearings (DE) Mechatronics Kassel plant (DE) Intecsa-Uhde (ES)* A-C Equipment Services (US) ForTeq (IT) Rolling Stock Company (GR)

Sele & Colla (IT) Sabia (IT) Elevator Sales & Services (US) Končar Dizala i Servis (HR) LWDO Lift Service (PL)** Massidda (IT) Vertrans Elevator (US)

Acquisition Acquisition Acquisition Acquisition Disposal Acquisition Acquisition

Services Disposal Disposal Acquisition Disposal Disposal Acquisition Acquisition Disposal+

AT.PRO tec (DE)*** TK Servicios Técnicos (ES) Schöbel Technik & Service (DE) TK Materials Vietnam [JV] (VN)**** SIR Industrieservice (DE) Ferostav (SK)**** Stokvis Plastics (NL/BE)

Acquisition Disposal Acquisition Acquisition Disposal Acquisition Acquisition

* 50% / ** 93% / *** 61% / **** 80% / + closing not yet completed

ThyssenKrupp


18

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Significant Leading Market Positions (I) Steel Flat Carbon Steel

Stainless

(hot-rolled)

Top 2 (Europe)

Stainless Flat

Top 1

Tinplate

Top 3 (Europe)

Nickel Alloys

Top 2

Electrical Steel

Top 2

Titanium

Top 1 (Europe)

Coated Products

Top 2 (Europe)

Stainless Processing (Forgings, Tubes) Top 1 (Europe)

Tailored Blanks

Top 1

ThyssenKrupp


19

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Significant Leading Market Positions (II) Technologies

Elevator

Uhde Polysius Fรถrdertechnik

Top 1-3 Top 1-2 Top 1

Marine Systems

Top 1

Rothe Erde Berco Camshafts Crankshafts Waupaca

Top 1 Top 1 Top 1 Top 1-3 Top 1 (USA)

Steering (steering column)

Top 1

Transrapid

USP

ThyssenKrupp

Elevator (Elevator/Escalator)

Top 3

Services Mat. Services Intern.

Top 1 (Europe)

Mat. Services NA

Top 3

Industrial Services

Top 1-3 (Eur.)


20

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Group Targets 2009/10 and 2011/12 Sales, EBT and EPS (as reported)

billion € / million € / €

Sales:

>50

60

65

Target 4,500-5,000 4,000 3,200* 2,623 1,477 421 2001/02

1,677

9M: 2,853

EPS 5.30

tax rate: 33%

800

2002/03

2003/04

* incl. major nonrecurring items

ThyssenKrupp

2004/05

EPS 6.00-6.60

2005/06

2006/07

Mid-term 2009/10

Long-term 2011/12


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Key Drivers for Investment Strategy International expansion of our focused business company concept

Steel

Transfer of the successful European premium strategy to the Americas growth market

Stainless

Build on and expand global leading market position by performance improvement in European core markets and expansion in NAFTA

Technologies

Strengthen cash generating activities driven by secular trends of increasing demand for infrastructure, raw materials, renewable energy, nutrition and safety

Elevator

Performance program and continuous acquisitions to bridge margin gap and optimize portfolio of maintenance contracts

Services

Capture growth opportunities in Materials Distribution and Industrial Services

ThyssenKrupp

21


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Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

ThyssenKrupp Accelerates Growth by Investment Program Investments 2005/06-2009/10

Comments

Steel

€8.9 bn

Greenfield NAFTA, Greenfield Brazil, capacity increase Duisburg, substance-preserving and value-based investments, acquisitions

Stainless

€2.0 bn

Greenfield NAFTA, substance-preserving and value-based investments

Technologies

€4.1 bn

Project-related investments, substance-preserving and value-based investments, acquisitions

Elevator

€1.2 bn

Projects for efficiency improvement in new installations and services as well as growth by acquisitions

Services

€1.7 bn

New service centers globally and in Eastern Europe, growth in raw materials, other investments and growth by acquisitions

Other

up to €2.1 bn

Other investments and growth by acquisitions

Total

€1820 bn

€14-16 bn, i.e. >75% growth capex, entirely based on value-driven criteria, €4 bn substance-preserving investments* * 45% of the average depreciation / amortization in the segments

ThyssenKrupp


23

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Investment Grade Rating with Every Rating Agency is Key The underlying principle for all our growth initiatives High degree of flexibility due to {

Cash

(€2.7 bn as of Jun 30, 2007)

{

Available credit lines (€4.3 bn as of Sep 30, 2006)

{

Treasury stock

(25.7 m shares at market value* of €1,017 m)

{

Authorized capital

(€500 m)

{

Estimated OCF

(approx. €18 bn from 2005/06 - 2009/10)

and {

Continuous revision of current business portfolio remains top priority for management

ThyssenKrupp

* as at August 8, 2007


24

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Wrap-Up: ThyssenKrupp Continues the Delta EVA® Story ROCE and TKVA (incl. major nonrecurring items)

ROCE

% / million €

Target

TKVA

3,000

2,500 9M: 1,930 1,510 997 572

21.4%

22%

Mid-term 2009/10

Long-term 2011/12

17.9%

14.4%

12.0%

WACC: 9% 7.0%

23.4%

7.2%

(414)

(352)

2001/02

2002/03

ThyssenKrupp

incl. major nonrecurring items 2003/04

2004/05

2005/06

2006/07


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Agenda

{

Group Overview and Strategy Ulrich Middelmann Vice Chairman of the Executive Board and CFO of ThyssenKrupp AG

{

ThyssenKrupp Steel Karl-Ulrich Köhler CEO ThyssenKrupp Steel AG and Executive Board Member of ThyssenKrupp AG

{

ThyssenKrupp Stainless Jürgen H. Fechter CEO ThyssenKrupp Stainless AG and Executive Board Member of ThyssenKrupp AG

ThyssenKrupp

1


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

2

Track Record ThyssenKrupp Steel

2001/021)

2002/031)

2003/041)

2004/052)

2005/063)

2006/073) 9M

€m

6,861

7,448

8,387

9,568

12,087

9,920

1,000 t

13,145

13,557

13,978

13,826

13,837

10,795

€m

15

243

608

1,094

1,406

1,298

ROCE

%

2.6

7.0

13.0

19.6

23.2

27.9

TKVA

€m

(417)

(162)

164

600

876

907

∅ Capital Employed

€m

5,623

5,430

5,520

5,965

6,380

4,919

#

29,222

29,249

30,618

31,634

38,840

38,950

Sales Crude steel prod. EBT

Employees (Sept. 30)

1) Business Unit Carbon Steel, incl. discontinued operations US GAAP

ThyssenKrupp

2) ThyssenKrupp Steel (new) IFRS

3) incl. Metal Forming


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

3

EBT Track Record ThyssenKrupp Steel EBT (as reported)

million €

1,406 1,094

9M: 1,298

327 428*) 386

608

471 424

243 269

15 2001/02

2002/03

2003/04

2004/05

2005/06

399 2006/07

*) incl. €76 m impairment charges at Metal Forming

ThyssenKrupp


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

4

Delta EVA® Track Record ThyssenKrupp Steel ROCE and TKVA (incl. major nonrecurring items) ROCE

TKVA

% / million €

Δ TKVA

876 27.9%

600

23.2%

9M: 907*)

2005/06

2006/07

19.6% Δ 276

164 Δ 436 7.0% Δ 326

WACC

13.0%

Δ 255 (162) 2.6%

(417) 2001/02

2002/03

2003/04

2004/05

*) incl. €76 m impairment charges at Metal Forming

ThyssenKrupp


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

5

Our Current Focus of Business is Europe â&#x20AC;Ś Europe

Sweden Germany France USA

North-East Asia Changchun

Poland Italy

Spain

Wuhan

Turkey Nashik

Mexico

Brazil Steel mill

Coating

Rolling facilities (USA incl. coating)

ThyssenKrupp

Tailored blank production

Strategic Alliance

Steel service center

Projects/under construction

Dalian


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

6

â&#x20AC;Ś with Almost 90% of Sales Generated in Our European Market Sales by Region FY 2005/06 *)

in %

Germany

6

52

33

87% of Sales

Other Europe w/o Germany

54

NAFTA Asia

Europe

Sweden

Other

Germany France USA

Spain

Brazil

ThyssenKrupp

Changchun

Italy

Wuhan

Turkey Nashik

Mexico

*) excl. Metal Forming

North-East Asia

Poland

Dalian


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

7

Premium Product Portfolio Generates Above-Average Revenues Product Portfolio Steel FY 2005/06*)

4% 3% 13% 13% 10%

26%

6%

Tailored blanks Construction elements Steel service Tinplate Electrical steels Coated products

Heavy plate

6% 6%

Medium-wide strip

*) sales of flat products only

ThyssenKrupp

Revenue per Tonne

900

Hot strip

â&#x201A;Ź/t

ThyssenKrupp Steel**)

800 700 *)

600 500

major European competitors

Cold strip

7%

12%

in %

400 300 2001

2002

*) data not yet available

2003

2004

**) excl. Metal Forming

2005

2006

2007 H1


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

8

Long Term Customer Relations Establish Lower Volatility Sales by Maturity FY 2005/06 Spot 10 Quarterly

in %

Index (Q3 1997 = 100)

200

Multi-year

ThyssenKrupp Steel

180

15

22

160

42

11

Half-year

Price Index Flat Steel

140

Annual

120 100

Sales by Industry FY 2005/06 Others Construction Packaging Mechanical Engineering

9

3

10 29

in %

Automotive industry (incl. suppliers)

11

80

CRU

60 1997 Q3

Price index flat carbon steel ThyssenKrupp Steel Price index flat steel, world (CRU)

14 Trade

ThyssenKrupp

24

Steel and steelrelated processing

2007 Q2

All data incl. Q2 2007 Sources: CRU and own calculations based on CRU, TKS


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

9

Strong Market Positions and Leading Profitability Market Positions

by production 2005

{ Total Flat Carbon Steel

EBITDA per Tonne

# 2 Europe 200

{ Tailored Blanks

â&#x201A;Ź/t

ThyssenKrupp Steel**)

# 1 World 150

{ Tinplate

# 3 Europe 100

{ Electrical Steel

# 2 World / # 1 Europe

*)

50

{ Coated Products

# 2 Europe

major European competitors

0

{ Heavy Plate, quenched & tempered { Medium-wide Strip

# 2 Europe

-50 2001

2002

2004

# 1 / USP *) data not yet available

ThyssenKrupp

2003

**) excl. Metal Forming

2005

2006

2007 H1


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

10

Strategic Guidelines ThyssenKrupp Steel

Sustainable value growth

Efficiency improvement

Technology leadership

Focus on attractive markets for premium flat steel products ThyssenKrupp

Profitable growth


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

11

Further Significant Earnings Improvements Expected from Well Established Efficieny Enhancement Program “TK best“ Project landscape over time

number of projects

Completed In process

241

198 73 125 Mar. 04

678

287

502

568

388

444

138

211

282

349

376

94 147

111 176

250

233

220

219

302

Sept. 04

Mar. 05

Sept. 05

Mar. 06

Sept. 06

Mar. 07

Sept. 07

Project landscape by initiatives (Top 5)

%

Highlights

{ Since start of ThyssenKrupp best in fall 2001 678 projects have been launched in the Steel segment { Continuous efficiency enhancement programs under ThyssenKrupp best are continued with great intensity across all Business Units

Operating efficiency

5

10

Quality enhancements

10

Sales initiative

58

8 9

Purchasing initiative Organization Other initiatives

Source(s): best plaza; excl. Metal Forming

ThyssenKrupp

Ö Additional earnings improvements of +Δ €135 million per year!


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

12

Innovative High-End-Steel X-IP® Leadership in technology through competence in materials, once again from TKS The new dimension in developing materials { Highest strength and energy absorption { Better elongation compared to mild steels { New possibilities for the designing of assembly parts

{

Possible reduction of steel thickness for the optimization of weight compared to Multiphase steels 0%

80

-10%

X-IP® 70

-20%

60

up to -45%

conventional steels Konventionelle Stähle -30% DP RA

40

Bruchdehnung A80 (%) A elongation

80

(%)

50

up to -55%

-40%

30

20

MS-W®

-60%

FB-W®

10 0 200

-50%

CP

-70% 300

400

500

ThyssenKrupp

600

700

800

900

Zugfestigkeit m (MPa) tensile strengthRR m (MPa)

1400

1500

Multiphase steels

X-IP® steels


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

13

Leadership in technology as a factor of success Continuous Know-how from the basic material to the serial part Materials and

Surfaces Technology and

Engineering Production and

Service

ƒ Innovative steels ƒ New materials ƒ Surface coatings ƒ Support in applications ƒ Simultaneous Engineering ƒ Tailored Blanks ƒ Parts and components ƒ Solutions for auto bodies ƒ Chassis systems

ƒ hot-rolled strip with cold performance

ƒ Zink Magnesium ƒ X-IP-Steels

Innovations ƒ BONDAL®

Leadership in technology

ƒ Tailored Blanks

ƒ T³ -Technique® ƒ NewSteelBody®

► Overall competence in automobile market as a basis for leadership in technology ThyssenKrupp


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

14

Hot stamping as an integrated process chain… Through leadership in technology being ahead in the market {

Competence in production { {

{

VW Passat

Competence in processing { {

{

Being ahead with innovative coatings (x-tec®) Being ahead with Tailored Blanks

Hot stamped parts in

Evaluation of optimum process parameters Re-creation of the customers‘ production process

Competence in manufactoring {

Leading in the production of hot stamped parts: Sofedit, a company of ThyssenKrupp Steel

► First global successful commercialisation of hot stamped parts with MBW+x-tec® for VW Passat ► First global hot stamped Tailored Blank for Audi A5 ThyssenKrupp

18%

15%

67%


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

15

Pioneer and Innovation Leader in Tailored Products Strategic Milestones and Product Examples

2007:

First to supply Tailored Blanks for hot forming

2006:

Tailored Strips

2003: 1999: 1998: Start of Tailored Blanks

1985

NSB® New Steel Body

Thyssen Engineered Blanks®

Thyssen Tailored Tubes® 1st generation

in n o i va t o n n I us o u n i t C on 2001: 1991:

Linear Tailored Blanks with differential thickness

ThyssenKrupp

an d

s t c u Prod

P

s e s s e c ro 2006:

Tailored Orbitals

2005:

Thyssen Tailored Tubes® 3rd generation

Thyssen Tailored Tubes® 2nd generation


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

16

World Premiere IAA 2007: Tailored Blanks for Hot Forming Tailored Tubes® - T3

Tailored Strips®

Tailored Blanks for Hot Forming

► Deformable base – Ultra-High-Strength head – Only one piece

Engineered Blanks®

B-pillar Tailored Strips®

Tailored Tubes®

► Tailored products technique: milestones of section-intensive construction ThyssenKrupp


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

17

Premium Flat Carbon Steel Market with Above-Average Growth Global Market Development: Market Forecasts up to 2015 Global Demand for Premium Products* Premium Products Commodities

+3.7% p.a.

637 523

million tons p.a.

751

RoW**

+6.1% p.a.

8%

290

220

Asia***

160

NAFTA 20%

22% 220 m t p.a. 24% 19%

China 2005

2010

4% CIS

2015

3% South America

Europe and NAFTA with almost 45% Share in Global Demand for Premium Products * Flat steel products with above-average quality requirements and technological properties ** esp. India Source(s): CRU MerchantSlabMarket 2006-Q4 â&#x20AC;&#x201C; absolute numbers, WSD Global Steel Product Matrix

ThyssenKrupp

*** esp. Japan and South Korea

Europe


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

18

Investment Strategy Steel: The Transatlantic Concept Targeted major transatlantic production capacities

“Herkules”

Greenfield ~3 m t

~2 m t TK CSA

Capacity in m metric tons p.a.

Brazil

NAFTA

Europe **

Slabs

5

-

15

Hot-rolled

-

5.2*

17.5

Cold-rolled

-

2.5

10

Coated

-

1.8

8

* incl. 0.9 million t for Stainless ** slabs incl. share in HKM; hot-rolled incl. heavy plate and medium-wide strip; coated incl. EG, HDG and tinplate

Utilizing low-cost slabs from Brazil Build on and expand strong European market position Clear strategy to enter NAFTA market with focus on high value-added products

ThyssenKrupp

Ö Significant dilution of cost base by highly competitive steel mill in Brazil Ö De-bottlenecking and modernization to process 2 m t of additional slabs from Brazil (“Herkules”) Ö Transfer of proven business model into the modern industrial center of the U.S.


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

19

Significant Net Imports Reflect Structural Supply Shortage in NAFTA Flat carbon steel imports, exports and trade balance Canada, U.S., Mexico Canada Canada

million t p.a. 18 12

2.7

6

0.9

0.6

0.5

1.8

1.6

2.1

0 -6

United States

2000 2001 2002 2003 2004 2005 2006

United States

million t p.a.

18 12 6

9.7

0

Mexico

-6

6.0

6.9

7.7

4.7

10.9

2.1

2000 2001 2002 2003 2004 2005 2006

Mexico

million t p.a. 18 12

Source(s): WV Stahl. All data in mn t Flat carbon steel (welded tubes excluded) Imports Exports Trade Balance (net imports counted positive)

ThyssenKrupp

6

2.3

2.4

2.4

2.2

2.2

2.1

3.3

0 -6

2000 2001 2002 2003 2004 2005 2006


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

20

Southern U.S. Exhibits Growing Demand and Local Supply Shortage Typical demand flat carbon steel vs. local capacity south central U.S. in m t p.a. Hot-rolled* Canada

million t p.a. Outlook 2010

+ Greenfield Steel 4.3

5.7

North Central 13.9

West

8.2

Typical Demand** East

Local Capacity

Cold-rolled

South Central

million t p.a. Outlook 2010

+ Greenfield Steel

3.2

2.5

7.4

4.2

Mexico Typical Demand**

Local Capacity

Coated products

million t p.a.

Outlook 2010

Source(s): TKS analysis, Metal Strategies, status as of 2006 * excl. heavy plate ** incl. intermediate products

ThyssenKrupp

4.1

+ Greenfield Steel

2.1

1.8 2.0

Typical Demand**

Local Capacity


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

21

Demanding Customers Drive Demand in Premium Products Example: Light-vehicle production/assemblies 2010 forecast NAFTA in m units Canada 2.7 m

{ Demanding customers from the

2% 31%

67%

ƒ automotive

North Central 7.6 m

West 0.4 m

2%

ƒ construction

24%

85%

74%

South Central 3.1 m

East 1.5 m

ƒ engineering

15% 85%

ƒ pipe and tube

5%

ƒ appliance industry

39% 56%

Mexico 1.7 m

drive demand in premium products

19% 25% 56%

NAFTA total: 17 m (2010f) 5% 30% 65%

Big three (GM, Ford, Chrysler) Asian transplants European transplants, others

ThyssenKrupp

Source(s): Polk Marketing Systems, TKS analysis, status as of 2006

{ South Central U.S. and Mexico exhibit strong position of growing Asian and European transplants


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

22

U.S. Greenfield Ideally Positioned to Leverage Favorable Market Trends and Competitive Advantages Market Trends {

NAFTA characterized by high demand for premium flat carbon steels and significant net imports needs

{

Increasing environmental awareness and gas prices drive demand of automotive industry for innovative lightweight steel solutions

{

Migration from North to South: South Central as the modern industrial center of the U.S. exhibiting growing demand and local supply shortage

Cost Advantages

Market Expertise

{

Low-cost slabs ex Brazil

{

{

State-of-the-art production facilities with low operating costs (energy, personnel, â&#x20AC;Ś)

Well-known target customers with demanding applications

{

Technological expertise ThyssenKrupp Steel

{

Optimum logistics

{

Reputation and brand ThyssenKrupp

{

No legacy costs

{

High-quality slabs from own production in Brazil

ThyssenKrupp


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

23

Transatlantic Strategy Leads to Premium Prices and Lowest Costs USD/t

Premium quality & technology leadership

Ø Prices Greenfield TK Steel Ø Prices NAFTA

Margin leadership ! Ø Production cost HRC p&o NAFTA

Cost competitiveness

Source(s): WSD World Cost Curve 2005; BCG analysis; MEPS; own research TKS

ThyssenKrupp

Target Greenfield TK Steel

Existing Hot rolling capacities NAFTA


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

24

U.S. Greenfield Proceeding to Schedule and Budget May 2007

July 2007

ThyssenKrupp


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Project ”Herkules” Proceeding to Schedule and Budget

ThyssenKrupp

25


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

26

ThyssenKrupp CSA Proceeding to Schedule and Budget Hot Blast Stove 1 Blast Furnace 1

Blast Furnace 2

ThyssenKrupp


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

27

Excellent Positioned and on Track to Meet Increasing Demand for Premium Products Steel Shipments ThyssenKrupp Steel

million tons p.a.

~20 ~18 +6% p.a. 13.9

~14

05/06

06/07F

09/10E

11/12E

Shipments to Increase by more than 40% by 2011/12

ThyssenKrupp


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

28

Growth Complemented by Significant Cost Dilution and Flexibility Transatlantic Forward Strategy

Target Structure 2012: Slab Production and Consumption million t p.a.

~5

“Herkules”

~15

Greenfield

~15 ~2

~2 m t

~3 m t

TK CSA ~5 m t

~4.5 German Operations

TK CSA

Slab Production

German Operations incl. Herkules

~1.5

US Greenfield

Slab Consumption

Ext. Slabs

Significant cost dilution

Ö based on 5 m t of high-quality and low-cost slabs

Optimized sourcing of external slabs

Ö based on logistics cost and availability

Maximum cost degression through mini cycles Further growth opportunities

ThyssenKrupp

from TK CSA (adjust slab supply ex CSA to Europe and U.S.)

Ö based on adjustment of external slab purchases (at maximum utilization of own upstream facilities)

Ö based on expansion options to further increase slab capacity at TK CSA (+Δ 2.5 m t / +Δ 5 m t)


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

29

Forward Strategy Creates Potential For Significant Value Growth Strong Organic Growth Based on Proven Business Model

Sustainable value growth

Efficiency improvement

Technology leadership

Profitable growth

Focus on attractive markets for premium flat steel products

{ Capex y Forward Strategy Europe y Forward Strategy NAFTA y Forward Strategy Brazil

â&#x201A;Ź5.7bn

{ Return hurdle for growth investments

â&#x2030;Ľ 15 %

{ Committed to y Reliable and significant profit contribution y Drive value for the Group !

The best is yet to come !

ThyssenKrupp


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Agenda

{

Group Overview and Strategy Ulrich Middelmann Vice Chairman of the Executive Board and CFO of ThyssenKrupp AG

{

ThyssenKrupp Steel Karl-Ulrich Köhler CEO ThyssenKrupp Steel AG and Executive Board Member of ThyssenKrupp AG

{

ThyssenKrupp Stainless Jürgen H. Fechter CEO ThyssenKrupp Stainless AG and Executive Board Member of ThyssenKrupp AG

ThyssenKrupp

1


2

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

ThyssenKrupp Stainless Business Fields of ThyssenKrupp Stainless Group ThyssenKrupp Stainless Sales € 6.4 billion y EBT € 423 million y Free cash flow € 243 million y Employees 12,197

Stainless Steel Stainless Steel

Stainless Steel

ThyssenKrupp Nirosta

ThyssenKrupp Acciai Speciali Terni

ThyssenKrupp Stainless USA

ThyssenKrupp Mexinox

(Germany)

(Italy)

(USA)

Sales

€ 2,682 m

€ 2,505 m

Employees

4,647

3,447

Business Field

Stainless Steel

Stainless Steel

Stainless Steel

Nickel Alloys

Titanium Processing

Company

not consolidated

* FY 2005/06

ThyssenKrupp

ThyssenKrupp VDM

Shanghai Krupp Stainless

ThyssenKrupp Stainless International

(Mexico)

(VR China)

(Germany)

Precision Rolled Products (USA)

project phase

€ 559 m

€ 364 m

€ 1,186 m

€ 998 m

-

1,321

570

409

1,746

(Germany)


3

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

ThyssenKrupp Stainless Top Positions in all Fields of Activities

ThyssenKrupp Stainless Stainless Steel

High Performance Alloys

Sales: €4.6 bn Employees: 9,716 ThyssenKrupp Nirosta ThyssenKrupp Acciai Speciali Terni ThyssenKrupp Mexinox Shanghai Krupp Stainless

Sales: €1.1 bn Employees: 1,987

Processing

Sales: €0,7 bn Employees: 364

ThyssenKrupp VDM

No. 2

Societá delle Fucine Europe

No. 1

ThyssenKrupp Titanium

No. 6

Tubificio di Terni Europe

No. 1

No. 1

(>100 t Unit Weight)

Figures based on fiscal year 2005/06

ThyssenKrupp


4

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

ThyssenKrupp Stainless Sustainable Results in spite of Market Fluctuations Q1 - Q3 (Oct – Jun) *)

Sales Total Shipments thereof Stainless CR

EBT ROCE TKVA Employees *) US-GAAP

ThyssenKrupp

*)

*)

2001/2002

2002/2003

2003/2004

2004/2005

2005/2006

2006/2007

€m

4,020

3,957

4,990

5,572

6,437

6,986

1,000 t

2,482

2,365

2,519

2,237

2,468

1,748

1,000 t

1,543

1,577

1,742

1,578

1,764

1,359

€m

141

192

385

286

423

912

%

7,9

9,9

16,9

11,8

16,0

34,2

4

182

68

199

703

12,116

11,811

12,201

12,197

12,187

€m #

54 12,074

-


5

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

ThyssenKrupp Stainless Leading Positions in Stainless Steel Cold-Rolled Flat Products and Nickel Alloys Stainless Steel

Nickel Alloys

34

23 19 13

The 10 largest producers Stand for 65% of all worldwide shipments Source: ThyssenKrupp Stainless

ThyssenKrupp

14 6

5

5

4

Kobe Steel

TKL

Sumitomo

RTI

VSMPO

5

The 6 largest producers stand for 67% of all worldwide shipments Source: ThyssenKrupp VDM

16

10

VDN

Haynes

IUP (Arcelor)

Hitachi

Allegheny

TKL

7

Sp. Metals

INI Steel

0.4 0.4

AK Steel

0.5

NSSC

YUSCO

TISCO

POSCO

Outokumpu

Arcelor

Acerinox

TKL

0.6 0.6

19

Nippon Steel

0.9 0.9

Allegheny

25

TKL is the only Titanium Producer in Western Europe

Timet

36

1.5

Carpenter

1.6

Deliveries in 2006 1,000 tons

Deliveries in 2006 1,000 tons

Deliveries in 2006 million tons

1.8

Titanium

The 5 largest producers stand for 67% of all worldwide shipments Source: ThyssenKrupp Titanium


6

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

ThyssenKrupp Stainless ThyssenKrupp Stainless covers the Top of the High-Demanding Material Pyramid

Requirements regarding Material Properties

Demand 1,000 t

Titanium

Deliveries

Market Share

1,000 t

Market Price EURO / ton

80

5

6%

~50,000

226

34

15%

~30,000

15,197

1,786

12%

~4,000

Nickel Alloys

Stainless Steel

Figures based on year 2006

ThyssenKrupp


7

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

ThyssenKrupp Stainless Differentiation in Regards to the Competition

Unique Selling Propositions ƒ

Stainless steel patent holder since 1922, almost 90 years of experience

ƒ

Strong Brand “ThyssenKrupp” and in addition globally established product brands (Nirosta, AST, Mexinox, SKS and VDM)

ƒ

Powerful worldwide Service Center Network

ƒ

Benchmark for Product Quality

ƒ

Highly innovative Products and Services

ƒ

Covering the top of the high-performance Material Pyramid

ƒ

Wide Product Portfolio in Cold-Rolled Flat Products

ƒ

Significant End Customer Portfolio

ThyssenKrupp


8

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Stainless Steel and High Performance Alloys Typical Stainless Steel and High-Performance Alloy Applications

Architecture

Sinks

Cooking Equipment

CERAN Hot Plate

Aviation

Astronautics

Plant Construction

Automotive

Freshwater Extraction

Medicine

Cutlery

Offshore

Kitchen Furniture

White Goods

Transportation

Wall Cladding

Wires

Engines

ThyssenKrupp


9

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Stainless Steel General Product Properties

Stainless Steel

ThyssenKrupp

ƒ

Corrosion Resistance

ƒ

Heat Resistance

ƒ

Aesthetic Surface

ƒ

Easy-Care Properties

ƒ

Good Deformation Properties

ƒ

Good Strength to Weight Ratio

ƒ

High Weldability

ƒ

Long Service Life

ƒ

100% Recyclability


10

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Stainless Steel General Comparison of Major Stainless Material Groups (2006) Austenitics Production

ƒ non-magnetic ƒ nickel content

Ferritics

World TKL

77%* 66%

Production

ƒ magnetic ƒ no nickel

Martensitics

World TKL

20% 32%

Production

ƒ magnetic ƒ no nickel

Duplex

World TKL

2% 1%

Production

ƒ magnetic ƒ lower nickel

World TKL

1% 1%

Corrosion Resistance Strength / Hardness Deformability Abrasion Surface Aesthetics Cost Attractiveness

Corrosion Resistance Strength / Hardness Deformability Abrasion Surface Aesthetics Cost Attractiveness

Corrosion Resistance Strength / Hardness Deformability Abrasion Surface Aesthetics Cost Attractiveness

Applications which require a

Applications which have lower

Applications which require high

Applications which require a

high hygienic cleanability and

requirements reg. corrosion

strength and hardness

high resistance to stress

wet corrosion resistance

resistance and deformability Æ

ƒ knifes and cutlery

corrosion cracking, tensile

ƒ food processing / kitchen

cost advantage

ƒ tanks / pressure vessels

ƒ dish washers / dryers

Corrosion Resistance Strength / Hardness Deformability Abrasion Surface Aesthetics Cost Attractiveness

ƒ architecture

ƒ automotive exhausts ƒ interior design

*incl. 9% of 200 Series

ThyssenKrupp

ƒ surgical instruments ƒ fasteners and nozzles ƒ shafts, impellers, etc.

strength and heat resistance ƒ heat exchangers ƒ sea water cooling


11

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

High Performance Alloys General Product Properties of Nickel Alloys and Titanium

Nickel Alloys ƒ

High wet-corrosion resistance

ƒ

High temperature strength

ƒ

Good oxidation resistance

ƒ

Low degree of material extension Titanium

ThyssenKrupp

ƒ

High corrosion resistance

ƒ

Low specific weight

ƒ

Highest strength to weight ratio

ƒ

High biological compatibility


12

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

General Industry and Market Development Stainless Steel Growth Rates much higher than Industrial Production Stainless Steel Cold-Rolled

Stainless Steel Cold-Rolled

1200

1000

Industrial Production Stainless Production Index (1968=100)

Total

11,546

5,011 3,243

Rest of World Europe

1,768 1990

800

7%

per year 3,618 2006

Source: CRU Aug 2007

* World consumption (in 1,000 t)

600

15,577

Nickel Alloys

400

Total

162

226

163

200

0 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 Source: OECD/Global Insight/CRU Nov 2006

ThyssenKrupp

119

Rest of World

43

Europe

1990 * World consumption (in 1,000 t)

2%

per year 63 2006 Source: ThyssenKrupp VDM


13

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Market Environment Development of Stainless Steel Cold-Rolled Flat Apparent Consumption [000t]

22,000 20,000

18,955 19,211 17,267

18,000 15,577

16,000 14,000

12,460

12,000

10,358 10,395

13,275

Other Asia

16,278 16,085

Japan

13,430

11,215

China

10,000 7,515

8,000 6,000

Others

5,517

NAFTA

4,000

Western Europe

2,000 0 1990

1995

Source: CRU Aug 2007

ThyssenKrupp

2000

2001

2002

2003

2004

2005

2006

2007 (f) 2008 (f) 2009 (f) 2010 (f) 2011 (f)


14

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Global Market Presence Market Volumes and Shares (Stainless Steel Cold Rolled Flat, Nickel Alloys) in 2006

NAFTA Market Size 2,008 Tt

Market Size 74 Tt

16%

13%

CHINA Market Size 4,140 Tt

Market Size 17 Tt

4%

8%

EUROPE (EU 29*) Market Size 4,037 Tt

Market Size 66 Tt

35%

31%

ROW Market Size 5,194 Tt

Market Size 69 Tt

1%

3%

Market Share Stainless CR Flat Steel Market Share Nickel Alloys

26 Mar 2007- Source: CRU Feb 07, SPAS Mar 07, Eurofer Mar 07, TKL ZA/UE, *including Norway, Switzerland

ThyssenKrupp

* number for Nickel Alloys are preliminary


15

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Market Presence in Europe Market Volumes and Shares (Stainless Steel Cold Rolled Flat, Nickel Alloys) in 2006

UK OTHERS

Market Size 187 Tt

Market Size 923 Tt

GERMANY

22%

Market Size 1,195 Tt

FRANCE

17%

53%

Market Size 317 Tt

13%

ITALY SPAIN

Market Size 1,136 Tt

Market Size 278 Tt

42% 16% Market Share Stainless CR Flat 26 Mar 2007- Source: CRU Feb 07, SPAS Mar 07, Eurofer Mar 07, TKL ZA/UE

ThyssenKrupp


16

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Increasing non-volatile Customer Bases Sales Structure within ThyssenKrupp Stainless Group Stainless Steel Sales by Customer Group

Stainless Steel Contract Structure

Others 8% Household Applications 5% Automotive 9% Metal Processing 5% based on net sales, FY 2005/06

Tubes 13%

Short Term Contracts

40%

(<0.5 year)

SSC/Trading* 50% White Goods 10% * thereof 50% TK group

Medium Term Contracts

32%

(0.5 â&#x20AC;&#x201C; 1 year)

Nickel Alloy Sales by Customer Group Electronics 15% Others 2% Automotive 5% Offshore 12% Aerospace 14% based on net sales, FY 2005/06

ThyssenKrupp

Industrial Applications 19%

Long Term Contracts

Chemical Plants 27% Electronic-Technology 6%

28%

(> 1 year)

0%

10%

20%

30%

based on ThyssenKrupp Nirosta Shipments 2005/06

40%

50%


17

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Continuous Focus on Increase of Processing Depth Strongest Growth in High-Value Products Sales Structure by Products € 6.4 bn +54 % +79 % +70% Quarto Plate

€ 3.4 bn

Forging / Tubes Titanium Nickel Alloys +66% Cold-Rolled Strip/ Precision Strip

Hot-Rolled Strip

+43%

2001/02

ThyssenKrupp

2005/06


18

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Performance Improvement Programs over-compensate rising Costs Performance improvements over-compensate rising costs and generate additional EBIT Representative Cost Development

Annual EBIT-Effect of 70 million EUR during last 5 years [million EUR accumulated]

[index = 100]

200

175

Electricity

[number of projects]

400

400

350

350

300

300

EBIT Effect Projects

250

150

Gas 125

250

200

200

150

150

100

100

50

50

0

0

Labor Costs 100

Manufacturing Costs 75 2001/02

Productivity (hrs/ton)

Manufacturing costs incl. energy, personnel

ThyssenKrupp

2005/06

2001/02

2002/03 2003/04 2004/05

2005/06


19

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

EBT Development EBT mill EUR 350

Base Price EUR/t

269

141

16

192

385

286

1,900

423

1,800 1,700

325

250

296 290

1,600 1,500 1,400

150 1,300 1,200

1,200

1,100

50

1,000

1,035

900 -50

800 Q1

Q2

Q3

Q4

1999/00

ThyssenKrupp

Q1

Q2

Q3

Q4

2000/01

Q1

Q2

Q3

2001/02

Q4

Q1

Q2

Q3

2002/03

Q4

Q1

Q2

Q3

2003/04

Q4

Q1

Q2

Q3

2004/05

Q4

Q1

Q2

Q3

2005/06

Q4

Q1

Q2

Q3

2006/07


20

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Comparison of leading Stainless Producers’ EBIT-Margins [%]

25,0 20,8 19,3

20,0 16,4

15,0 10,0

13,3

10,7

9,8 8,0 6,1

5,0

12,4

11,8

6,1

3,9 2,3

5,3

7,1

5,8 6,0

4,4

3,8 2,2

1,2

6,8

15,5

15,2 11,6

12,7

16,0 13,1

17,5

17,2

18,4

15,5 13,6

13,2

12,7

7,7 6,1 4,4

4,2 2,3 1,2

0,4

0,0 2000

2001

2002

2003

2004

2005

2006

Q1/2007

Q2/2007

-5,0 -7,0

-10,0

TKL*

Acerinox Group

Outokumpu Total Outokumpu Total **

* TKL in Q2/2007: elimination one-time effects ** Outokumpu Q2/07 EBIT margin without nickel related inventory gains of 100 m€ *** ArcelorMittal without ArcelorMittal Timóteo (former Acesita)

ThyssenKrupp

ArcelorMittal Stainless***

NAS


21

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Challenge: High Raw Material Costs Ă&#x2020; Fluctuations of nickel price have strong influences on stainless steel industry [EUR/t]

Base Price Germany, Trade/SSC, 204, 2mm Sheet

5,000

[US$/t]

55,000 Alloy Surcharge EU

4,500

Base Price EU

4,000

Nickel

3,500 3,000

50,000 45,000 40,000 35,000 30,000

2,500 25,000 2,000 1,500 1,000 500 0 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 04 Sep 2007 - Source: CRU Aug 2007, Metalprices (NICKEL) 04 Sep 2007

ThyssenKrupp

20,000 15,000 10,000 5,000 0


22

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Stainless Steel Cold Rolled Flat Imports into Europe European Union (EU25) [000t/month]

EU 27

100

Italy

90 80

75.5

77.0

74.2

69.3

64.6

70

61.2 62.1

60

53.3

50

41.9

40 30

36.7 40.5 36.6 33.4

27.2

27.7 21.6

41.2

23.9

21.5

22.0

33.8 32.8

29.4

18.9

16.7

20

38.8

11.9

10

China

Japan

29 Aug 2007 - Source: Eurofer Aug 2007, TKL ZA-UE

ThyssenKrupp

South Korea

Taiwan

South Africa

USA

Brazil

Others

Jul

Jun

Mai

Apr

Mar

Feb

Jan 07

Q4 2006

Q3 2006

Q2 2006

Q1 2006

2006

Jul

Jun

Mai

Apr

Mar

Feb

Jan 07

Q4 2006

Q3 2006

Q2 2006

Q1 2006

2006

2005

2004

2003

0

. Imports excl. SKS Deliveries


23

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Challenge: Change of the global Trade Flows Million tons / year NAFTA

Europe

China Net Import

Net Export 1.7 1,8 1,7 1.8 M

D

2005

Net Import 2.3 2,0 2,3 2.0 M

C

2010

Net Export 3.2

M

4.5 .

D

2005

Net Import 4.5 . 4.3

M

C

2010

Significant Capacity Deficits will emerge in Europe and NAFTA China will increasingly be self sufficient respectively will develop into a Net Exporter Market volume Deliveries Capacities estimated (realistic)

ThyssenKrupp

Net Export 6,2 5.7 6.2 5,7

3.7 3,7 M

3,0 3.0 D

M

2005

C

2010

Other Asia Net Export 3,8 3.8

M

4.5 4,5

D

2005

Net Import 5.2 5,2 5.1 5,1

M

C

2010


24

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Concentration on the high-value Segment instead of Commodities Æ Systematic Focus on Value Added Services within the Production Chain Shaping (Tubes)

ƒ Using Advantages in Procurement ƒ Optimization of Raw Material Qualities

Product-Related Services

ƒ Optimization of Raw Material Mix

Coating

Æ USP in regards to Competition Æ Higher Profit Margins

Stamping e.g. Discs

ƒ Economies of Scale ƒ Performance Increase Cutting (SSC) Surface Finishing

Raw Material Procurement

Finishing Shop

Production to Coil

Procurement

Steel Melt Shop

Hot Rolling Mill

Cold Rolling Mill

ƒ Expansion of Existing Business ƒ Utilization of all Growth Options ƒ Differentiation regarding Price and Performance

ThyssenKrupp


25

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Innovations at ThyssenKrupp Stainless Silver Ice® UV – Superior Anti-Fingerprint Properties Fingerprints on stainless steel (Documentation at angle of maximum visual perception)

Customer benefit Aesthetics / market chances: Silver Ice® UV improves the visual appearance during every day use due to its fingerprint / stain resistance and superior cleaning properties. Due to its extra ordinary high scratch resistance the surface aesthetics are not impaired.

Customer loyalty Sustained customer loyalty due to the improvement of end product properties.

Cost savings Improvement of market chances. Higher operating margins than standard business operations by coil coating.

Market potential without Silver

Ice®

ThyssenKrupp

UV

with Silver

Ice®

UV

Long-term market sustainability, increase of market share, new application fields.


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Challenge: Rising Raw Material Costs Development of proprietary Substitutes / new Stainless Grades

Substitution / New Stainless Grades ƒ

ThyssenKrupp Stainless is already very strong in producing ferritic grades (no nickel content)

ƒ

The establishment of new VOD converter allows development of “super ferritics”, i.e. ELC Ferrites (Extra Low Carbon)

ƒ

Development of new stainless steel grades as substitution of common grades, such as austenitic grades 304 and 316

ThyssenKrupp

26


27

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Major Investments at ThyssenKrupp Stainless (I) Overview of current Investment Projects Stainless Steel

ThyssenKrupp Acciai Speciali Terni (AST) – World-Class Terni project ƒ

Restructuring: Closure of Plant Torino and moving to Terni

ƒ

Strengthening of operations: volume, quality and finishing/processing capabilities

ƒ

Installation of VOD converter to produce new ferritic stainless steel grades (Q1 2008)

VOD Converter

ThyssenKrupp Mexinox ƒ

Installation of bright annealing capacity completed in 2006

ƒ

Increase of finishing capacities by installation of completed in 2007

ThyssenKrupp Stainless USA – Alabama Greenfield Project BA Tower

ThyssenKrupp


28

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Major Investments at ThyssenKrupp Stainless (II) Overview of current Investment Projects High Performance Alloys

Societa delle Fucine ƒ

Vertical Furnace

Expansion of forging business by installing new manipulator and furnace

ThyssenKrupp VDM ƒ

Expansion of in-house manufacturing capabilities by installation of a forging plant until 2008

ƒ

Increase of re-melting capacity

ƒ

Relocation of wire production / closure of one plant

ThyssenKrupp Titanium Manipulator

ƒ

VAR Furnace

EB Furnace

Expansion of ingot production capacity from 5,000 t to 10,000 Tt per year by installation of a VAR (2007) and an EB furnace (2008) Forging

ThyssenKrupp


29

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Greenfield Project USA Remarkable market growth in the NAFTA region / ThyssenKrupp Stainless activities already very successful Expected Market Growth

Current ThyssenKrupp Stainless Deliveries [000t]

1,900 1,800 1,700 1,600 1,500 1,400 1,300 220 200

250

USA

1,890

140 120 250

+4.9% p.a.

1,352

Market Share

150

197

11% 7%

143

111 100

Mexico

215

50 0 250

135

+6.9% p.a. Canada

245

230

177

+4.8% p.a.

170

Mexico

200

Market Share

72%

72%

73%

106

61

71

2000

2003

150 100

210 190

12%

USA

200

180 160

[000t]

50 0

2005

06

07

08

13 Sep 2007 - Source: CRU Aug 2007, TKL/UE

ThyssenKrupp

09

10

11

2012

13 Sep 2007 - Source: TKL, McKinsey 2006

2006


30

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

ThyssenKrupp Stainless Deliveries NAFTA and Latin America 2006

2013

[000 t]

[000 t]

237

194 10%

23%

19

41 197 31 125

NAFTA Market Share 106

85%

Market Share

ThyssenKrupp

7%

28% 195

5 190

Legend

372

Market Volume

NAFTA Market Share

230

16%

Legend

SKS NR+AST MXX

270 383 10 103

21%

148 72%

45 10

1.793

1.666 12%

55

530

Market Volume 25

21 4

Market Share

USA NR+AST MXX

10%

52

25 20 7


31

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

NAFTA Market Strategy: Participation in Market Growth, stronger Market penetration of Canada and Suppression of Imports/Local Competitors Wide Product Portfolio incl. 72â&#x20AC;? width

[000t/year]

900 85 340 * 125

Slab Scrap/ Production Yield

Export Hot Band Mexinox

* thereof 120 Tt Hot Band White

ThyssenKrupp

Hot Band White

350

Cold Rolled Production 2012/13

Positioning as alternative Supplier in the Volume Segment next to NAS

USA 77%

Others Latin 1% America 8%

Mexico 1% Canada 13%

Securing and Extension of Position in 430 grades

Processing and Extension of Position in the Quality Segment


32

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

ThyssenKrupp Stainless USA Greenfield Plant with attractive Cost Position Production costs for Cold Rolled AISI 304 2B (w/o Capital Cost) USD/ton

0 ThyssenKrupp Stainless USA

Source: McKinsey cost model

ThyssenKrupp

500 Competitor 1

1,000

1,500

2,000

2,500

Mexinox Competitor Competitor (incl. Anti-Dumping) 2 3

Cumulative capacity Mt thousand


33

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

ThyssenKrupp Stainless USA Greenfield Project Progress Current Status / Next Steps •

Permitting Process almost completed !

Site Preparation currently ongoing

Tendering Process for Plants and Equipment started

Intensive Preparation of Market Entry

Laying of Foundation Stone on 02 NOV, 2007

ThyssenKrupp


34

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

ThyssenKrupp Stainless Global Investment Strategy Current

Target 2009

260 kt cold rolled to market

Mexinox 50 kt cold rolled to market

SKS

300 kt

25 kt cold rolled to market

255 kt hot rolled supply

Nirosta

Acciai Speciali Terni

40 kt external supply

ƒ NAFTA activities very successful to date > 72% market share in Mexico > 12% market share in the US ƒ Re-Roller Mexinox supplied by > AST (~85%) and > third parties (~15%)

ThyssenKrupp

Target 2012/13

90 kt

+Δ120 kt

cold rolled cold rolled cold rolled to market to market Nirosta to market

cold rolled to market

Mexinox Acciai Speciali cold rolled hot rolled supply Terni to market 60 kt external supply SKS 110 kt

280 kt

ƒ World Class Terni Project > strengthens European position > production relocation from Turin to Terni > market-oriented growth and portfolio optimization (semi cold-rolled, super ferrites) > backs Mexinox capacity optimization and > market penetration in NAFTA

+Δ300 kt

650 kt

Nirosta Greenfield 340 kt

Mexinox

cold rolled to market

hot rolled supply

Acciai Speciali Terni

ƒ Further penetration of NAFTA market based on integrated, 72” state-of-the-art Greenfield plant ƒ Leverage of synergies with Mexinox > hot rolled supply ex Greenfield > Mexinox to focus on ferrites ƒ AST and NR to capture additional growth in Europe


35

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Forward Strategy generates Potential for significant Value Growth ThyssenKrupp Stainless stands for …

ƒ

Commitment to increasingly ƒ Reliable and significant profit contribution ƒ Drive value for the Group

ƒ ƒ ƒ

Global Market Leadership

#1

Attractive Growth Markets

≥ 3% p.a.

ƒ

Capex

ƒ

Forward Strategy Europe > Comprehensive optimization of European stainless operations > Value added products > Increase processing capabilities > Restructuring of AST forging plant € 1.5 bn > Strengthening High Performance Alloys

ƒ

Forward Strategy NAFTA > Greenfield USA > Optimization of Mexinox

Return Hurdle for Growth Investments

ThyssenKrupp

≥ 15% p.a.


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Appendix

ThyssenKrupp

1


2

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

ThyssenKrupp Group Overview Key figures 9 months ended June 30, 2007 ThyssenKrupp AG Sales €38.9 bn • EBITDA €4,266 m • EBT €2,853 m • TKVA €1,930 m • Employees 189,260 Steel

Stainless

Technologies

Elevator

Services

Sales €9.9 bn EBITDA€1,939 m EBT €1,298 m TKVA €907m Employees 38,950

Sales €7.0 bn EBITDA €1100 m EBT €912 m TKVA €703 m Employees 12,187

Sales EBITDA EBT TKVA

€8.4 bn €658 m €411 m €268 m Employees 54,128

Sales €3.4 bn EBITDA €(118) m EBT €(187) m TKVA €(274) m Employees 38,556

Sales €12.6 bn EBITDA €713 m EBT €550 m TKVA €385 m Employees 43,098

• Steelmaking • Industry • Auto • Processing

• Nirosta • Acciai Speciali Terni • Mexinox • Shanghai Krupp Stainless • Stainless Int. • VDM

•Plant Technology •Marine Systems •Mechanical Components •Automotive Solutions •Transrapid

• 4 regional business units • Escalators/ Passenger Boarding Bridges • Accessibility

Inter-segment sales not consolidated

ThyssenKrupp

• Materials Services International • Materials Services North America • Industrial Services • Special Products


3

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Steel: Segment Overview Steel 3rd quarter 2005/06 €m €m

3,144 3,151

3,262 3,413

118 262

3.8 8.3

EBITDA EBIT EBT

€m €m €m

563 403 386

670 440 428

107 37 42

19.0 9.2 10.9

TK Value Added* €m ROCE * %

679 23.5

907 27.9

228 4.4%-p.

33.6 18.7

OCF CF from divestm. CF for investm. FCF

551

34 ---156

6.2 ---36.4

566

1.5

€m €m €m €m

(122) 429

585 (2) (310) 273

Employees (Jun 30)

38,384

38,950

ThyssenKrupp

Positive economic environment further benefiting global steel markets; abovetrend production growth at European steel users continued

{

Crude steel output and shipments stable yoy; hot-rolled capacities: maximum utilization ensured by external slab sourcing

{

Higher average revenues per ton feeding through top and bottom line

{

Further preparation of European activities with regard to announced forward strategy (“Herkules” project)

{

Site preparation has kicked off for Alabama steel plant; construction of Brazilian slab plant proceeding to schedule and budget

2006/07 Change Change %

Order intake Sales

* accumulated

{


4

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Stainless: Segment Overview Stainless 3rd quarter 2005/06

2006/07 Change Change %

{

Underlying end consumer demand strong

{

Continuing high imports as well as still high distributor inventories and nickel-triggered slump in demand especially from service centers resulting in lower order volumes and declining base prices

Order intake Sales

€m €m

1,921 1,650

1,943 2,608

22 958

1.1 58.1

EBITDA EBIT EBT

€m €m €m

215 143 126

369 318 296

154 175 170

71.6 + +

{

TK Value Added* €m ROCE* %

17 10.2

703 34.2

686

+ +

Value of orders and sales further impacted by high alloy surcharge (esp. nickel)

{

OCF CF from divestm. CF for investm. FCF

€m €m €m €m

173 1 (35) 139

264 4 (103) 165

91 3 -68 26

52.6 + -18.7

Crude steel output lower yoy (-12%) and qoq (-8%); declining shipments mainly for hot-rolled strip

{

Employees (Jun 30)

12,138

12,187

49

0.4

Competitive position further strengthened by more ferritics and new finishing operations/ higher value-added products in Terni

* accumulated

ThyssenKrupp

24.0%-p.


5

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Technologies: Segment Overview Technologies 3rd quarter 2005/06

2006/07

€m €m

2,688 2,835

5,700 2,815

3,012 -20

+ -0.7

EBITDA EBIT EBT

€m €m €m

228 151 151

230 147 155

2 -4 4

0.9 -2.6 2.6

TK Value Added* €m ROCE* %

267 25.2

268 25.9

OCF CF from divestm. CF for investm. FCF

148

92

117 34 (137) 14

-31 ---78

-20.9 ---84.8

55,201

54,128

-1,073

-1.9

Employees (Jun 30) * accumulated

ThyssenKrupp

(56)

Global economic growth positively impacting demand for infrastructure, energy and raw materials

{

Order intake doubled with strongest contribution by Plant Technology (e.g. major order for fertilizer plant in Egypt) and Marine Systems (F125 frigate program)

{

Excellent visibility: Order book: €16 bn at the end of June; 50% of next year’s sales already booked

{

Complementary acquisitions to expand service activities for the cement industry (kiln service/repair company) and strengthen position of Berco (construction equipment components) in Italy

Change Change %

Order intake Sales

€m €m €m €m

{

1 0.7%-p.

0.4 2.8


6

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Elevator: Segment Overview Elevator 3rd quarter 2005/06

2006/07

€m €m

1,173 1,070

1,309 1,179

136 109

11.6 10.2

EBITDA EBIT EBT

€m €m €m

119 105 98

131 114 106

12 9 8

10.1 8.6 8.2

TK Value Added* €m ROCE* %

182 21.4

(274) (12.6)

-456 -34.0%-p.

---

OCF CF from divestm. CF for investm. FCF

€m €m €m €m

12 22 (40) (6)

(448) 7 (34) (475)

-460 -15 6 -469

--68.2 -15.0 --

Employees (Jun 30)

35,579

38,556

2,977

8.4

ThyssenKrupp

Growth in global construction industry continuously driven by Asia and CEE; German construction sector clearly recovering, mainly for commercial projects

{

Higher order intake and sales driven by new installations, especially in North America (non-residential construction) and China, as well as expansion of service activities in all regions

{

By region, strong demand even in Spain (new installations, service) and France (modernization) as well as for passenger boarding bridges (growth in air traffic)

{

Acquisition of Croatian elevator company to expand market position in Eastern Europe

Change Change %

Order intake Sales

* accumulated, incl. Elevator fine

{


7

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Services: Segment Overview Services 3rd quarter 2005/06

2006/07

Change Change %

Order intake Sales

€m €m

3,841 3,821

4,122 4,308

281 487

7.3 12.7

EBITDA EBIT EBT

€m €m €m

218 185 168

271 237 218

53 52 50

24.3 28.1 29.8

TK Value Added €m ROCE %

201 18.3

385 24.5

184 6.2%-p.

91.5 33.9

OCF CF from divestm. CF for investm. FCF

€m €m €m €m

254 12 (67) 199

83 9 (61) 31

-171 -3 6 -168

-67.3 -25.0 + -84.4

Employees (Jun 30)

38,830

43,098

4,268

11.0

ThyssenKrupp

{

Favorable situation on raw and industrial materials markets reflected top and bottom line; moreover, expansion of distribution activities as well as acquired/established businesses contributing

{

Business with nonferrous metals remains at high level in the US

{

Industrial Services with further growth in almost all sectors and regions

{

“Invest-Roadmap 890+” further pursued: Acquisition of one of Slovakia’s biggest steel distributors as part of the Eastern Europe growth strategy


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

8

Financial Calendar 2007 and 2008

{

October 24, 2007 to December 3, 2007

Quiet Period

{

December 4, 2007

Annual Press Conference, Essen/Germany Analystsâ&#x20AC;&#x2122; and Investorsâ&#x20AC;&#x2122; Conference, Essen/Germany

{

January 18, 2008

Annual General Meeting, Bochum/Germany

{

January 24, 2008 to February 12, 2008

Quiet Period

{

February 13, 2008

Interim Report 1st quarter 2007/08 (Oct to Dec) Conference call with analysts and investors

ThyssenKrupp


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

Financial Calendar 2008

{

April 23, 2008 to May 13, 2008

Quiet Period

{

May 14, 2008 May 16, 2008

Interim Report 2nd quarter 2007/08 (Jan to Mar) Analystsâ&#x20AC;&#x2122; and Investorsâ&#x20AC;&#x2122; Conference, London/UK

{

July 24, 2008 to August 13, 2008

Quiet Period

{

August 14, 2008

Interim Report 3rd quarter 2007/08 (Apr to Jun) Conference call with analysts and investors

ThyssenKrupp

9


10

Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

How to Contact ThyssenKrupp Investor Relations

Institutional Investors and Analysts: {

Phone: +49 211 824-36464

{

Fax: +49 211 824-36467

{

E-mail: ir@thyssenkrupp.com

{

Internet: www.thyssenkrupp.com

ThyssenKrupp

To be added to the IR mailing list, send us a brief e-mail with your details!


Presentation ThyssenKrupp, Morgan Stanley Field Trip, October 5, 2007

11

Disclaimer “The information set forth and included in this presentation is not provided in connection with an offer or solicitation for the purchase or sale of a security and is intended for informational purposes only. This presentation contains forward-looking statements that are subject to risks and uncertainties. Statements contained herein that are not statements of historical fact may be deemed to be forward-looking information. When we use words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “may” or similar expressions, we are making forward-looking statements. You should not rely on forward-looking statements because they are subject to a number of assumptions concerning future events, and are subject to a number of uncertainties and other factors, many of which are outside of our control, that could cause actual results to differ materially from those indicated. These factors include, but are not limited to, the following: (i) market risks: principally economic price and volume developments, (ii) dependence on performance of major customers and industries, (iii) our level of debt, management of interest rate risk and hedging against commodity price risks; (iv) costs associated with, and regulation relating to, our pension liabilities and healthcare measures, (v) environmental protection and remediation of real estate and associated with rising standards for real estate environmental protection, (vi) volatility of steel prices and dependence on the automotive industry, (vii) availability of raw materials; (viii) inflation, interest rate levels and fluctuations in exchange rates; (ix) general economic, political and business conditions and existing and future governmental regulation; and (x) the effects of competition. Please note that we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.”

ThyssenKrupp

ThyssenKrupp Company Profile, October 2007  

Very detailed company profile from October 2007

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