Following a phase of exceptionally high acquisition and investment activity, the Freudenberg Group used the 2005 financial year to consolidate and strengthen the balance sheet. Thanks to improved working capital management, prudent housekeeping and strong cash flow from operating activities, net debt declined by 27% to €580 million and the share of partners’ equity rose to 45%.

In what was an overall positive year, high raw material prices, the difficult conditions in the world textile industry and the German construction sector, and further intensified competition among automotive suppliers had a negative impact. The affected business groups have introduced the necessary restructuring measures.
 
In the year under review, the Freudenberg Group generated sales of €4.8 billion, corresponding to a rise of some 10%. With a share of 33%, the region accounting for by far the largest share of sales was the European Union (excluding Germany), while North America and Germany each accounted for 25% of sales. The share of group sales in Asia was some 7%. As a result of various cooperation projects, particularly with the Japanese partners NOK Corporation and Japan Vilene Company Ltd., the largest part of Freudenberg’s activities in Asia is not consolidated. If sales by the Japanese partners are included on a pro rata basis, Asia accounts for some 20% of total group sales.

Consolidated profit rose to €202 million, in line with the rise in sales. Lower income from investments in associated companies and higher income taxes partly offset the positive contribution from higher profit from operations. Profit distribution by world region varied considerably, with Germany in particular showing a weak profit/sales ratio.