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Gross cash flow climbed €116 million to €493 million due to higher EBIT and lower income tax payments (the previous year had been impacted by tax payments in arrears totaling €56 million). The sharp reduction in inventories (down €71 million) raised the net cash flow from operating activities to €551 million. Net cash from investing activities amounted to -€104 million. At €447 million, free cash flow was up €146 million on the previous year. €955 million was paid out for the share buyback. The dividend and interest payments, together with an increase in financial liabilities, led to a further cash outflow in the amount of €24 million. On December 31, 2004, cash and cash equivalents amounted to €290 million.

Financing and Liquidity Provisions

The primary goal of financial management at Beiersdorf is to safeguard liquidity. The type and volume of transactions are in line with the Group’s basic operating and financial business. Scenarios and rolling 12-month planning are used to establish liquidity requirements. The share buyback program concluded in January 2004 amounting to €955 million was initially financed by Group funds and a short-term bank loan. In addition, the existing €200 million multicurrency commercial paper program was utilized temporarily as a cost-effective alternative financing method. A substantial portion of the loan was paid down over the course of the year from free cash flow. In December 2004, a syndicated loan was taken out to ensure followup financing and to cover general financing requirements. This took the form of a club deal of €500 million.

The credit line was provided by eight banks in total, and has a term of five years. This financing measure ensures the Group has adequate liquidity, even in the case of a short-term increase in financial requirements. €110 million of the available amount had been utilized as of the balance sheet date.