FINANCIAL POSITION

The amounts taken into consideration in the cash flow statement correspond to the balance sheet item "Cash and cash equivalents".

There was a cash outflow of €0.1 billion from operating activities compared with an inflow of €0.9 billion in the prior-year quarter. The €1.0 billion decrease in operating cash flows was mainly due to the rise in working capital as a result of business expansion.

Cash outflow from investing activities increased by €0.3 billion in the reporting period to €1.1 billion due to an increase of €0.6 billion to €1.2 billion in capital expenditure on property, plant and equipment, mainly for the construction of the steel mill in Brazil. Expenditure on financial assets was down €0.1 billion from the prior-year quarter. Proceeds from disposals of financial assets and property, plant and equipment increased by €0.1 billion in each case compared with the 2nd quarter 2005/2006.

Free cash flow, i.e. the sum of operating cash flows and cash flows from investing activities, decreased by €1.3 billion in the reporting period to €(1.1) billion. This was mainly due to the rise in working capital and higher capital expenditure on property, plant and equipment.

The following balance sheet analysis includes assets and liabilities held for sale which are reported separately in the Group's consolidated balance sheets.

Compared with September 30, 2006 the balance sheet total increased slightly to €36,551 million.

The increase in property, plant and equipment is mainly due to progress in the construction of the steel mill in Brazil.

The €1,403 million increase in inventories to €8,813 million, mainly in the Stainless and Services segments, was primarily due to higher raw material prices, especially for nickel, and increased inventory levels caused by sales expansion.

The business expansion resulted in a significant increase in trade accounts receivable and payable in almost all areas. This effect was cushioned by the disposal of the North American body and chassis business. This disposal also led to a reduction in accrued pension and similar obligations.

The current other liabilities at March 31, 2007 include the roughly €480 million antitrust fine imposed by the EU Commission on ThyssenKrupp Elevator.

The increase in inventories and in trade accounts receivable in particular resulted in a cash outflow from operating activities; investment in property, plant and equipment also led to a cash outflow for capital expenditure. The net result of this was a decrease of €1,831 million in cash and cash equivalents to €2,616 million.

Total equity increased by €182 million to €9,109 million, mainly due to the net income in the 1st half 2006/2007 and, running counter to this, the payment of the ThyssenKrupp AG dividend in the amount of €489 million.