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complement their automotive customers’ developments of bodies and chassis as well as production processes. This new way of cooperation enables the business unit to take an early influence on the selection of materials and to forward the use of new materials and innovative processing techniques. With the usa potentially restricting imports, risks may arise which could lead to exports being redirected at low prices to Western Europe.

In the Stainless business unit, increasing capacity overshoots in connection with the sealing off of emerging markets lead to higher price and volume risks, which may be impacted by cyclical fluctuations. The subsidiaries of this business unit meet such risks through corporate capacity, distribution and production control. Major income risks resulting from fluctuations in the raw materials and foreign exchange markets are met by congruent commodity and currency contracts.

In the Automotive segment, the risk of negative developments in automobile demand in partial markets is lowered by an increasing global presence, in particular in growth areas such as Asia and Latin America. Regardless thereof, the Automotive Segment, due to the current sales structure, is particularly reliant on further developments in North America. As a result of the terrorist attacks on September 11, 2001, the chances of a swift recovery in the automotive sector are rather slight. Furthermore, indicators point to a market downturn in Europe and Brazil. Negative income effects are softened by tight cost management.

The concentration attempts of automobile manufacturers and competitors are met by dynamic internal and external, quantitative and qualitative growth.

Automotive will expand its market position as a system vendor. Through research and development, cooperation with partners or acquisitions of participants, Automotive is

countering possible risks arising from the discontinuation of automotive products manufactured to date. Major consideration is given to the increased use of alternative materials and the use of electronics instead of mechanics. At the same time, however, the increasing complexity of products as well as underlying production processes in some cases carries the risks of higher start-up costs and a strained income situation.

After strategic investments in its market position, the Elevator segment has been further strengthened. No serious risks are anticipated in this area. The sluggish domestic building and construction activities and the increased competitive pressure in the services area are met through cost adjustments, increased intensity of customer commitment, and the opening of new customer segments. Risks from a decline in the growth of passenger potential due to the attacks in the usa will be of minor significance owing to the well-secured activities in Services.

The Technologies Segment comprises units of different risk structures.

After a slump in demand in the usa, particularly at Giddings & Lewis, Production Systems expects a stimulation of the demand for cutting machine tools, which may, however, be delayed due to the events of September 11, 2001 in New York. Further restructuring measures as well as a sales offensive have been initiated for a long-lasting improvement of the income situation.

Calculation risks in connection with major contracts will be countered by more intensive project management and controlling at the respective facilities. The danger of relying too strongly on a small number of major customers by concentrating on technologically demanding, know-how intensive core activities is curbed by means of a broader-spread customer basis as well as further internationalization of business activities.

Plant Technology contains risks arising from the processing of long-term contracts due to a concentration on mastered technologies by means of intensive tender analyses, more efficient contract management as well as stricter project controlling. Any risks affecting relations with major customers in the Near East resulting from recent developments are to be compensated for by stepped-up sales activities in other regions.

Marine curbs any risks arising from order processing through continuous technical and economic performance checks via an expanded project management and controlling system. For the building of naval vessels, capacities are reserved on a long-term basis. To compensate for fluctuations in capacity utilization, the unit is engaged in civil shipbuilding, in which non- payment risks are lowered by contractual provisions and respective terms of payment. Civil shipbuilding defies the harmful price cutting of Asian suppliers by concentrating on fast vessels (ferries, cruise liners), mega-yachts and container ships up to 2,500 teu.

Mechanical Engineering braves risks arising from the persistently sluggish European building industry through internal adjustment measures, program extensions and exploration of further markets.

In the Materials segment, the dependency on cyclical price developments is lowered through further extension of the service business, which does not depend on the price development of materials. Increasingly centralized warehousing as well as improved logistics control systems – and thus lower inventories – buffer the effects of short-term price

fluctuations. According to experience, decreases in income due to falling prices are compensated for by the positive effects of price recovery phases.

Furthermore, risks from possible losses of receivables are covered primarily through a broadly diversified customer portfolio and the worldwide business activities of Materials.

In the Serv segment, the direct dependency on cyclical fluctuations has been lessened through the expansion of the services business as well as the conclusion of long-term customer contracts.

The Industrial Services business unit is virtually independent of economic developments owing to high customer retention and depth of services. The rising internationalization of customers is met by the expansion of the unit’s own commitment abroad.

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