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Sustainable profits are the key to a successful future for any company. Profits secure the company's existence and its ability to carry on meeting its customers' needs. Profits secure dividend payments and enhance the value of the company in the interests of its stockholders. Profits secure jobs and ensure the company can pay taxes as well as make voluntary contributions to the community.

That's why we strive to expand our potential and make all our actions as efficient and sustainable as possible. Investments, innovations, a commitment to training, jobs and the community as well as constant improvements to the business portfolio make ThyssenKrupp a committed and responsible corporate citizen wherever it operates.

Continuous portfolio optimization

Through the growth of markets, our segments and subsidiaries have developed into global players, serving customers around the world with high-quality products and services. In addition to our firm customer focus and our pursuit of cost reductions through higher production volumes, we concentrate the Group's activities on regional growth markets – a good current example being China. This calls for a high level of flexibility: only by constantly reviewing and developing our business portfolio can we strengthen our capabilities and invest selectively in growth areas – through organic growth or acquisitions. On the other hand, even successful companies sometimes have to leave the Group if they do not fit in with our core business areas – the focus of our investment spending – and would have better chances for long-term development under different ownership. Since the merger in 1999, we have sold companies with total sales of €4.8 billion and acquired others with sales of €5.6 billion.

Even when withdrawing from specific areas of activity, the Group does not neglect its responsibilities. We always strive to find best-owner solutions, i.e. the new owner must see our "marginal" activity as part of its "core" business and thus as a strategic step toward improving its own market and production base. The divested companies are then able to exploit their potential appropriately in the new alliance. Transparent communications are an important part of our best-owner approach: the supervisory bodies of the subsidiaries concerned, with their local employee representatives, and the works councils are involved in any forthcoming changes as early as possible. The workforces are also informed openly about the industrial strategy and prospects for future development at the first possible opportunity.

Investing in the future

In the last five fiscal years, financial investments, i.e. the acquisition of companies or equity interests, accounted for 14% of the Group's total investment spending of €9.9 billion. The greater part – 86% – was made up by spending on property, plant and equipment in the amount of €8.6 billion. In the reporting year we spent €1.4 billion alone on property, plant and equipment to rationalize or expand production, set up new production lines or improve pollution control at our plants.

There are high costs involved in creating new jobs – a single job can cost well over a million euros depending on the machinery involved. The expansion of tinplate production capacities in Andernach is a good example. Rasselstein, a company in the Steel segment, is investing some €160 million to increase its production capacities by 20% by the year 2005. Rasselstein is Germany's only manufacturer of tinplate and a global leader in both product and production technology. The investment will create around 100 new jobs, equating to expenditure of €1.6 million for each new job.

Initiative for innovations

As a technology-oriented company, ThyssenKrupp pursues the strategic goal of maintaining the technology leadership of its products and services. This requires the ability to innovate – the basic prerequisite for growth and competitiveness.

Carried out in the segments, our customer- and market-centric research and development activities are dominated by product and process technology projects, aimed for example at developing new materials or innovative production and processing methods. We work closely with external cooperation partners, such as the Fraunhofer Society and the Max Planck Society, and with numerous universities.

In 2000, the Group launched an annual internal innovation contest as a way of systematically recording and promoting innovation. To date more than 200 entries have been received, of which around 30% were submitted by subsidiaries outside Germany.

The ongoing monitoring and assessment of technology trends is an important strategic task. It allows us to adapt our products and services to new opportunities and risks and to get involved in our customers' development processes at an early stage. Successful examples include nanotechnology, hybrid and fuel cell technologies, and the use of magnesium in automotive construction.

Focus on employees

Innovative and challenging jobs call for qualified and motivated employees. That's why ThyssenKrupp attaches great importance to training and development. We have been training beyond our needs for many years – mainly in the form of industrial apprenticeships – so as to give as many young people as possible a sound start to their working lives. And when we are unable to retain newly qualified apprentices, ThyssenKrupp's trainers provide assistance in looking for jobs or gaining further qualifications.

Anyone intending to embark on a course of university or college studies can apply for a place on the ThyssenKrupp student support program. If they meet the requirements and are accepted onto the program, they will receive both financial support and mentoring by a ThyssenKrupp executive, who provides technical/professional and personal assistance throughout the degree course and helps with internships, assignments and dissertations. For details and conditions, please visit our website at www.thyssenkrupp.com.

Innovative performance incentives

Our working time and compensation initiatives are just as innovative and flexible as our products and services. Wherever it makes good sense, our plants use the options for flexible working hours provided in the collective agreements. This helps us meet our customers' needs quickly and cost-effectively and adjust our production in line with the market.

Enabling employees to share in the company's success is a major component of our performance-oriented corporate policy. To this end we once again issued employee shares in the reporting year. The participation rate of over 50% means that one in two employees in Germany decided they wanted to become co-owners of the Group.

Special profit sharing programs at subsidiaries provide further performance incentives. Works agreements set out goals in the form of measurable indicators that can be influenced by employee performance. The employees then receive an annual bonus based on the extent to which the respective targets have been met.

Commitment to the community

Anyone wishing to identify and utilize future potential must be prepared to take on responsibility beyond their own direct area of activity. That's why ThyssenKrupp lends its support to nonprofit institutions, projects and activities. Donations are based on award criteria which reflect the Group's philosophy and values.

Pushing the boundaries of conventional thinking and action, assuming social responsibility, and at the same time pursuing the primary goal of any company to increase the profitability and the value of the business: all these things together are what constitute strategic sustainability for ThyssenKrupp, a guiding principle for the Group.