Prospects for 2004

Freudenberg concluded two major acquisition projects in the first quarter of 2004: these were the purchase of substantial areas of business of Burgmann Dichtungswerke of Wolfratshausen/Germany with sales of some 300 million Euro and a workforce of 3,300, and Chem-Trend of Howell, Michigan/USA, with sales of some 95 million Euro and a workforce of 400. A key task in 2004 will be to integrate these companies in the Freudenberg Group. Burgmann will operate as a stand-alone Business Group in the Seals and Vibration Control Technology Business Area, while Chem-Trend joins Klüber and OKS to form the new Chemical Specialities Business Group in the Specialties and Others Business Area. These acquisitions confirm Freudenberg’s strategy to purchase complementary processes and products in order to achieve growth in high-earnings segments where the Group is familiar with products and markets.

A further focus in 2004 will be to continue the efforts begun in 2003 to intensify innovation in even closer union with customers and to accelerate the pace at which innovation is brought to market maturity.

Several unforeseeable developments such as EU enlargement, the situation in the Middle East, reform policy in Germany and other European states as well as Dollar-Euro parity play a role in a forecast for 2004. However, business in the first quarter of the current fiscal year indicates that the effects of the ostensible upturn in Germany have as yet hardly made an impact on Freudenberg business, and sales developments in the European Union and America give little cause for optimism. Freudenberg therefore assumes that 2004 will again be a very tense year.