In my letter to you a year ago I was able to give you only a vague outlook for the 2008/2009 fiscal year: The global economy was in the grip of a deep financial and economic crisis, the impact and duration of which could not be reliably estimated. We updated you with more details in the course of the year in our interim reports. Today I would like to answer a few key questions which are of importance to everyone with an interest in ThyssenKrupp:

• How did ThyssenKrupp cope in the exceptional year 2008/2009?
• What did we do to counteract the crisis?
• Where does your Company stand today?
• How do we assess the Group's outlook?

Review of fiscal 2008/2009

The global financial and economic crisis hit ThyssenKrupp hard. In 2008/2009 order intake fell by 35% to €36.0 billion, and sales by 24% to €40.6 billion. For the first time since the merger of Thyssen and Krupp in 1999 we ended the fiscal year with a loss: The Group's earnings before taxes amounted to €(2.4) billion; alongside the economic downturn, key factors included nonrecurring items in the form of restructuring expenditures, impairment charges and project costs for our new plants in Brazil and the USA. Only the Elevator segment remained profitable in 2008/2009. Steel, Stainless, Technologies and Services were sucked into the crisis and were unable to prevent losses.

Extensive action program to counteract the crisis

I do not wish to examine in detail how the crisis came about; the facts are well known. What began at the start of 2007 as a normal economic slowdown turned into the most severe global recession in recent history due to the effects of the financial crisis.

A crisis like this compels all companies to take decisive action. ThyssenKrupp responded quickly and introduced both operating and structural measures, which began to show initial success even during the past fiscal year:

• The Groupwide program ThyssenKrupp PLuS is aimed at improving earnings and liquidity and reducing costs and borrowing requirements. With a range of measures we succeeded in cutting our costs by considerably more than €1 billion before the end of fiscal 2008/2009. It is particularly important to us that around half the measures will have a sustainable impact – i.e. they will continue to yield savings in the future.
• By reducing inventories and optimizing our receivables management, we cut our net working capital by well over €3 billion as of September 30, 2009, and thus significantly improved our liquidity position.
• In addition, we analyzed all investment projects for possible reductions and postponements. No exceptions were made even for our major projects in the steel area. We succeeded in scaling back our capital expenditures in 2008/2009 by well over €1 billion from the level originally planned.
• We also made progress with the necessary restructuring of individual areas such as the shipyards and automotive activities. The portfolio optimization process was likewise continued, e.g. with the sale of ThyssenKrupp Industrieservice to WISAG.
• The Group's administrative expenses of around €2.5 billion per year are to be reduced by 20% on a sustainable basis. The reorganization of the Group, implemented October 01, 2009, will play a major role in this.

ThyssenKrupp today

ThyssenKrupp began the new fiscal year with considerable problems – clearly reflected in last year's loss – and a long list of things to do, but also with optimism and self-confidence.

Our measures are taking effect and will make the Group tougher and more competitive in the future; we will continue to do everything possible to efficiently implement our cost-reduction and restructuring programs. Together with the cost reductions already achieved, we will achieve a sustainable improvement in our cost base of €1.5 to €2 billion from 2010/2011. And despite all the continuing risks the economy is starting to pick up slowly in many areas. Our customers are placing more orders, even if a return to the level of the good years is still some time away. Short-time working has been significantly reduced.

The reorganization enables us to act with greater speed and flexibility on the global markets; it also makes internal decision-making processes faster and more transparent. Operational management of the Group is more decentralized and strategic management more centralized. Since the beginning of the new fiscal year, our operations have been combined in eight business areas which are tied directly to corporate headquarters; the former segment management tier has been eliminated. Initial experience in various parts of the Group has been positive and speaks clearly in favor of the new organizational structure.

Overall in the past fiscal year we created a solid platform to emerge from the crisis stronger and – as soon as the economy rebounds – return to the success of previous years. Especially important to me was the fact that we decided all the key measures in agreement with the employee representatives, after in some cases heated discussion. Competitive strength, viability for the future and social responsibility must not be mutually exclusive. At ThyssenKrupp we have shown that they can be reconciled even in difficult times.

Against this background we are maintaining our policy of dividend continuity in 2008/2009. In January 2010, the Executive Board and Supervisory Board will propose to the Annual General Meeting the payment of a dividend of €0.30 per share for the past fiscal year. We feel it is important to safeguard the long-term loyalty of our stockholders and the long-term attractiveness of our stock. This also means that in good years we pay out less than we could – and less than some would wish – but in bad years – within reason – we do not cancel the dividend altogether.

OUTLOOK WITH SUBDUED OPTIMISM

The worst of the global economic recession seems to have passed and a slow economic recovery is expected for the coming year. Global GDP is forecast to grow again in 2010 – albeit only slightly, by 2.7%. Unfortunately, there is not yet sufficient impetus for a self-sustaining upturn and full recovery of our main sales markets. Against this background we expect sales to stabilize and earnings to improve significantly in the 2009/2010 fiscal year. We expect to return a profit before taxes – excluding nonrecurring items such as disposal gains and restructuring expenses – in the low three-digit million euro range.

This Annual Report contains more information on the impact of the financial and economic crisis on our customer sectors as well as on the business situation and main events in the reporting period and our expectations for the future. As required by the relevant rules, we report on the 2008/2009 fiscal year on the basis of the segment structure in place in that year. But we also describe the Group's new organizational structure and examine its main features and strategic advantages. Our outlook for 2009/2010 is based on the new business areas. I hope you find the report informative.

As you can see, your Company has come through an extremely difficult year; a no less demanding year lies ahead. But we are confident that we can successfully master the current challenges. We are making good progress, and our efforts are recognized by our business partners and the capital market. I hope that with this Annual Report I can convince you that ThyssenKrupp's stock is and will remain a worthwhile long-term investment.

Yours sincerely,

Dr.-Ing. Ekkehard D. Schulz
Chairman of the Executive Board
Düsseldorf, November 2009