In order to achieve our strategic objective of profitable growth, we have fixed our focus on three fast-growing areas of competence:

• Laundry & Home Care
• Cosmetics/Toiletries
• Adhesives Technologies

We already boast leading market positions in each of these three core competences, and we intend to further expand these not only through organic sales growth but also through selected acquisitions – as in the case of the intended purchase of the Adhesives and Electronic Materials businesses from National Starch.

A further important element of our long-term strategy is that of concentrated regional expansion. Without neglecting Western Europe, we intend to grow our presence in the North American market while also fixing a strong focus on the growth markets of Eastern Europe, Africa/Middle East, Asia (excl. Japan) and Latin America. Thanks to the continuing highly dynamic development of these growth markets in the year under review, their share of sales now amounts to 34 percent. This means that we have already far exceeded our 2008 target of increasing the proportion of sales accounted for by these markets to at least 30 percent. And we will remain focused on the dynamics of these markets going forward.

Our strong brands and successful technologies are expected to play a decisive role in the attainment of further growth. We are represented by our brands in both the premium and value-for-money segments. Our portfolio comprises a balanced mix of international, regional and local brands. We support these through the development of high-quality, innovative products as well as through advertising and other promotional activities. These investments serve to enhance the value of our brands and ensure that they remain attractive in the marketplace.

We are aligning our product development activities even more closely to the requirements and needs of customers and consumers and are therefore also developing increasing numbers of products in collaboration with them. As well as participating in venture capital companies, we have cooperation and partnership arrangements with universities and industrial associations. Further, we have made it a priority to constantly improve our innovation processes, with the application of increasingly efficient procedures enabling us to reduce the period from product idea to market launch. Through this approach, we ensure that less promising concepts are filtered out at an early stage so that we can concentrate even more effectively on the further development of the best product ideas and on optimizing the deployment of our financial resources. Our aim is to increase the share of sales attributable to new products launched over the previous three to five years from 25 percent to 30 percent.

Our financial targets for 2008 envision not only organic growth in sales but also disproportionate increases in both operating profit and earnings per share (EPS). We likewise intend to further improve our return on capital employed (ROCE). To achieve these objectives, we will be concentrating even more on products offering high contributions while also targeting further improvements in operating margins, particularly in our growth markets. We also aim to become more efficient along our entire value chain.

Again in 2007, we came a step closer to achieving our 2008 financial targets: