In fiscal year 2003, we addressed in detail the Company's situation in a difficult economic environment.

We advised the Executive Board and supervised the management of the Company in accordance with the duties assigned to us by law, the Articles of Association, and the bylaws. The Executive Board informed us in a timely and comprehensive manner in our meetings and via written reports. The Chairman of the Supervisory Board was kept informed about all important matters. He also held regular discussions with the Chairman of the Executive Board regarding the Group’s strategy and risk management.

Four regular and two extraordinary Supervisory Board meetings were held in the year under review. At these meetings, we discussed current business developments, important business transactions, and Executive Board measures requiring Supervisory Board approval. In particular, we approved a new schedule of responsibilities for the Executive Board. We also focused in detail on the share buyback program that began on December 23, 2003. In November, we held in-depth discussions of the Company’s medium-term planning, including its financial, investment, and human resources planning.

We addressed the implementation of the German Corporate Governance Code in several meetings. We amended our first declaration of compliance, issued in December 2002, on June 30, 2003. We issued the declaration of compliance for fiscal year 2003 in December 2003 and made it accessible to the shareholders on the Company’s website. Additional information on corporate governance at Beiersdorf can be found in the joint report by the Executive and Supervisory Boards on the following pages.

The Executive Committee of the Supervisory Board met three times, as well as passing a resolution in writing. Among other things, the Executive Committee addressed the issues of succession planning for the Executive Board and the latter’s compensation, which consists of a fixed and a variable component. The Committee also authorized the share buyback program. It was not necessary for the Mediation Committee, set up in accordance with § 27 (3) Mitbestimmungsgesetz (German Co-Determination Act), to meet. The Audit Committee that was formed in November 2002 met twice, in March and in September 2003.

BDO Deutsche Warentreuhand Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, which was appointed as the Company’s auditors by the Annual General Meeting on June 11, 2003 and engaged by the Supervisory Board, audited the annual financial statements of Beiersdorf AG and the Group financial statements as of December 31, 2003, as well as the joint management report for Beiersdorf AG and the Group, and issued an unqualified audit opinion on them. In addition, they audited the report by Beiersdorf AG regarding dealings among Group companies according to § 312 Aktiengesetz (German Stock Corporation Act), which states that there are no reportable dealings at this time, and issued the following unqualified audit opinion: "As a result of our audit, we confirm the correctness of the information contained in this report." The annual financial statements, the joint management report, the report on dealings among Group companies, and the auditors’ report were distributed to all members of the Supervisory Board immediately after their preparation. The Audit Committee of the Supervisory Board performed a preliminary review of the financial statements, the reports, and the proposal on the utilization of the net retained profits.

In the meeting convened to adopt the annual financial statements on March 10, 2004, all documentation relating to the above-mentioned financial statements and reports were discussed at length in the presence of the auditors, who reported on the key results of their audit. Our review of the financial statements, the joint management report, the report on dealings among Group companies including the statement made by the Executive Board that there were no reportable dealings, and the auditors’ report did not raise any objections. Therefore, we concur with the auditors’ findings and approve the annual financial statements of Beiersdorf AG and the Group as prepared by the Executive Board for the year ending December 31, 2003; the annual financial statements of Beiersdorf AG are thus adopted. We endorse the Executive Board’s proposal on the utilization of the net retained profits.

Mr. Norbert Ranft, a member of the Supervisory Board since 1999, died on March 29, 2003. During his four years on the Supervisory Board, Mr. Ranft exhibited both dedication and expertise in his work for the Company. We will keep him in our remembrance. Mr. Detlef Stutter, the replacement member elected in accordance with § 11 (4) of the Articles of Association and §17 of the Mitbestimmungsgesetz (German Co-Determination Act) succeeded Mr. Ranft on the Supervisory Board. Mr. Stutter resigned from his Supervisory Board position on May 15, 2003. Mr. Tomas Nieber, Trade Union Secretary of IG Bergbau, Chemie, Energie was appointed to the Supervisory Board of Beiersdorf AG following a ruling by the Hamburg Local Court on May 23, 2003.

Mr. Günter Herz, a member of the Supervisory Board since 1974, resigned from his position effective September 22, 2003. We thank Mr. Herz for his many years of service in this capacity. Mr. Dieter Ammer, Chairman of the Executive Board of Tchibo Holding AG, was appointed to the Supervisory Board of Beiersdorf AG effective September 23, 2003 following a ruling of the Hamburg Local Court on August 29, 2003.

On June 30, 2003, Dr. Werner Opgenoorth retired from the Executive Board at his own request after 12 years’ service as the Executive Board member of Beiersdorf AG responsible for Human Resources. We would like to express our sincere thanks for his extremely successful work. Mr. Peter Kleinschmidt was appointed as a full member of the Executive Board responsible for Human Resources effective May 1, 2003.

At the end of fiscal year 2003, Dieter Steinmeyer resigned from the Executive Board of Beiersdorf AG to concentrate on his position as CEO of tesa AG. Mr. Steinmeyer has been a member of the Executive Board of Beiersdorf AG since 1990. We would like to thank him for his extremely successful work.

We would like to thank the Executive Board and all employees for their hard work and achievements over the past fiscal year in what was a particularly difficult environment for Beiersdorf.

Hamburg, March 10, 2004

On behalf of the Supervisory Board

Dr. Hans Meinhardt
Chairman