Investments

Investments in property, plant and equipment, including intangible assets totaling € 143 million as per June 30, 2007, were around € 40 million higher than depreciation and amortization within the Group during the period under review. This is primarily attributable to capital expenditures in the Steel Division which amounted to € 103 million.

The main focus of the investment undertakings in the Steel Division was on securing the orderly completion of the “Continuous Pickling Plant 2” and the “Power Plant 2010” major projects. The “Continuous Pickling Plant 2” project went as scheduled and work on the assembly of plant machinery was continued. The plant is expected to go into operation in March 2008. The planning work for the modernization of the power plant has made consistent progress and a number of major parts have been awarded. Some of the construction work is already under way. All other projects in the implementation phase are also on schedule and within budget.

In the Tubes Division, extending the product range of Mannesmann Fuchs Rohr GmbH (24” plant) is currently in implementation. The main facilities will begin with the production of simple products from the third quarter of 2007 onwards, and full manufacturing will follow at the turn of the year. Tubos Soldados Atlântico, the Brazilian large-diameter tubes joint venture, has meanwhile begun to manufacture construction tubes. As scheduled, the coating facilities will be ready to go live in the fourth quarter so that, after the API certification anticipated in the same period, the mill can start to manufacture oil and gas pipeline tubes at the start of 2008. For the large-diameter mill of Europipe subsidiary Berg Steel Pipe Corp. work forged ahead on the development of the site in Mobile, Alabama (USA) and on the preparations for the industrial buildings. The main parts of construction have already been assigned.