SUBSEQUENT EVENTS, OPPORTUNITIES AND OUTLOOK

There were no events requiring disclosure.

We anticipate that the world economy will continue to show strong growth this year. At 4.9%, world GDP growth will be slightly higher than expected a few months ago.

In the USA, the economy will slow this year due to the weaker property market and low private investment. By contrast, the economic recovery in the euro zone and Germany will be much stronger than expected. Over the course of the year, the increase in VAT will have a lesser impact on the German economy than was previously feared. Growth is being driven above all by corporate capital spending and rising exports; private consumption is also stronger than initially anticipated. The emerging markets continue to report strong growth momentum, above all China and India. Growth rates should also remain high in most Eastern European countries.

The main risks to global economic growth are from increasing raw material and oil prices as well as a faster-than-expected slowdown in the USA.

We expect the following developments and opportunities for ThyssenKrupp on the major markets:

  • Given the robust state of the world economy, the global steel market will expand further this year. According to the latest IISI forecast, the market is expected to grow by around 6%. Demand in China, India and other emerging countries will once again show higher-than-average growth. Following oversupply last year, a roughly 3% decline in demand is forecast for the NAFTA region. Developments in the EU market will be more settled in 2007. With steel consumption continuing to rise, we anticipate only a moderate 1.5% increase in supply due to an expected rundown of stocks in the 2nd half of the year. There continues to be a risk of global oversupply in commodity grades, which could result in persistently high import levels to the EU market.
  • Stainless output in 2007 is expected to be slightly higher than a year earlier. Demand from end users will remain strong in Europe but decline slightly in the USA. In China, growth in capacities will continue to outstrip demand. Even though the price differential between Asia and Europe/USA is growing smaller, imports to these regions will remain at a high level. This import pressure and the already high inventory levels at distributors and service centers will further impact orders at producers. Lower order intake and high alloy surcharges are depressing base prices for stainless steel in Europe and the North America. At the same time, producers are coming under increasing pressure to supply new grades with lower nickel contents or chromium steels as a substitute for the expensive chromium-nickel steels. The market for high-performance nickel-alloy and titanium materials is again expected to perform positively.
  • In 2007 we expect auto production to increase slightly to 70.8 million vehicles. Growth will continue to focus on the emerging markets of Asia and Eastern Europe. In Japan and the USA, output could fall slightly. By contrast, vehicle production in Western Europe is expected to remain at roughly the prior-year level. Compared with 2006, German vehicle output is expected to increase slightly as a result of production relocations from Belgium to Germany.
  • With capital expenditure remaining high, we expect the global mechanical engineering sector to report solid production growth, albeit at a slightly reduced pace. The German mechanical engineering industry will expand further this year, although again at a slightly slower pace than in 2006. The large-scale plant construction sector is once again expected to perform very positively in 2007.
  • International construction activity will continue to be driven by the countries of Asia and Central and Eastern Europe in 2007. Construction output in the USA is expected to weaken slightly. In Germany, the main impetus in 2007 will come from continuing high investment in the commercial building sector. By contrast, housing construction will slow following the abolition of the home owners' allowance and the absence of pre-buying effects ahead of the increase in VAT. A similar trend is expected in public sector building, which is being impacted by restrictive spending policies at federal and state level. The German construction industry is therefore expected to continue its recovery in 2007 on the back of strong commercial building activity, though growth will be slower than in 2006.

New carbon and stainless steel site in the USA

As part of their forward strategy for profitable growth, the Steel and Stainless segments are planning to jointly build a new production and distribution site in the southern USA. This will significantly strengthen our position in North America. The NAFTA region is one of the biggest volume markets for high-grade flat carbon steel. North America is also an important market for stainless steel flat products. After several years of weaker growth, the us market is forecast to expand by 3.2% p.a. in the next few years. Growth in Mexico (9.5%) and Canada (5%) is expected to be considerably higher. 2nd Quarter 2006 – 2007 Thyssenkrupp Interim management report Subsequent events, opportunities and outlook 23

The centerpiece of the new site will be a hot strip mill which will be used to process slabs from the steel mill we are currently building in Brazil. The plant will also include cold rolling and hot-dip coating capacities for high-grade end products of flat carbon steel. In addition, Stainless intends to build a melt shop on the same site for stainless slabs which will also be rolled on the new hot strip mill. A cold rolling mill will also be built to allow further processing into stainless cold-rolled. Part of the hot-rolled will also be supplied to our existing stainless cold rolling mill in Mexico.

Earnings target raised

We expect the Group's positive performance to continue in the further course of fiscal 2006/2007. Based on the very good results in the first two quarters and improved growth prospects we now expect to increase sales to around €50 billion and generate earnings before taxes and major nonrecurring effects of around €3.5 billion.

As a result of the significantly increased earnings strength of the Group as well as anticipated earnings effects from the investment program, the Executive Board has raised its mid-term target up to 2010. The aim is to achieve sustainable earnings before taxes and major nonrecurring effects of €4 billion on sales of around €60 billion. In the longer term, particularly after the completion of our major investment projects in North America, we expect sales in the region of €65 billion and earnings before taxes and major nonrecurring effects of €4.5 to 5.0 billion.