Report on Expected Developments

Expected Macroeconomic Developments

Assessing economic developments in the coming years is subject to considerable uncertainty. There are no reliable, generally accepted forecasts as to the future course of economic developments. Our planning is based on a significant decline in global economic growth. However, we are not currently able to predict the scale, duration, and regional breakdown of the crisis.

The following scenario appears probable to us: We expect very low levels of growth in 2009 for the USA, Western Europe, and Germany. A decline in economic output is also possible in individual countries. With respect to the growth regions – Eastern Europe, Asia (excluding Japan), and Latin America – we expect an interruption to the relatively long phase of stable, strong growth and a clear drop in the pace of growth over the short term.

We expect that the economic slump will only start impacting consumer spending after a delay. The effects are already being felt in key industrial segments, such as the automotive industry.

Sector Developments

In our opinion, growth on the global cosmetics market will be slightly below the long-term trend as a result of the current economic situation. We are anticipating very low levels of growth, possibly even market contraction, in the major, saturated markets in Western Europe and the USA. In the growth regions of Eastern Europe, Asia (excluding Japan), and Latin America growth will probably be slower.

Global development of the adhesive tape markets will continue to be dominated by the trends already seen in the year under review. We expect negative growth in Western Europe and North America. In Asia and Eastern Europe, we are anticipating a gradual increase in growth – although not at the levels of previous years.

Our Market Opportunities

Despite the economic situation described above, Beiersdorf still has opportunities for business development. These are based on our internationally oriented strategic positioning, and particularly on our increased focus on our brands and our increasing presence in growth markets. This process combines sales growth, long-term earnings power, a solid financing structure, and the stabilization of our innovation lead through our extensive research and development activities. We are continuing to build on our stock of powerful innovations. The careful and sustainable development of our brands plays a crucial role in establishing consumer trust in our products: NIVEA was again voted the “Most Trusted Brand” by Reader’s Digest in 2008 – a competitive advantage that offers particular opportunities given current sector developments. This, together with the dedication and excellence of our employees, forms the basis for our ability to identify and exploit potential opportunities.

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