Despite the growth in worldwide demand in past years, we do not expect any supply shortages for our key raw materials (oil, natural rubber, and steel), because the increased supply is sufficient to meet demand. Geopolitical uncertainties and financial speculation in raw materials could have a short-term effect on this equilibrium, however. As a result of the recent price growth for crude oil and natural rubber, we expect that raw material prices will trend upwards in 2008.

For the automotive divisions, cost exposure may result in particular from rising steel prices, whereas the other divisions are mainly affected by the development of oil and natural rubber prices. Since these raw materials are usually purchased in U.S. dollars, a stronger U.S. dollar can represent a further price risk for our companies that are outside of the U.S.A. and whose currency is not tied to the U.S. dollar. We expect that raw material prices will continue to rise on the international raw materials markets in 2008.

We mitigate the risks of unavailability of raw materials and production materials by observing the market carefully, and seeking out and developing new suppliers. Nevertheless, single sourcing cannot always be avoided. By carefully selecting our suppliers and reviewing them regularly, we limit the risk of supply delays, insufficient quantities, or inadequate quality.