Chrysler 2002 Annual Report Download - page 22

❚FiatAvio had revenues of 1,534 million euros in 2002.
The 6.2% decrease with respect to 2001 is attributable to the
lower volumes in the commercial segment which, beginning
from the second half of the year, suffered from the crisis in
the world commercial aircraft market. Furthermore, deliveries
of turbines derived from aircraft engines, used in industrial
applications, suffered the effects of lower demand in the
United States. Revenues from government programs
continued to grow thanks to sales of engines for the new
European fighter aircraft.
❚Toro Assicurazioni generated 4,916 million euros in
premium revenues during 2002, 10% less than in the previous
year due to a decline in life insurance premiums, largely in
the bancassurance channel. The Sector was unable to fully
exploit the opportunities offered by growth in the domestic
market due to ongoing restructuring of the Capitalia (formerly
Banca di Roma) distribution network following its integration
with the Fineco (formerly Bipop-Carire) banking group.
Premiums earned in casualty insurance were up both in Italy
and in France, virtually in line with the growth rates of the
respective markets.
❚Business Solutions posted revenues of 1,965 million euros,
for an 8.9% increase compared with the previous year. This
improvement was realized through development of business
for non-captive customers, whose proportion of total revenues
climbed to 51%. The increases were concentrated in the
areas of information technology, where the Sector provides
services through Global Value, a joint venture with IBM, and
expansion of its temporary employment agency services,
thanks in part to the acquisition of a company already
operating in this sector.
❚Itedi reported revenues of 360 million euros. The 3.7%
gain over fiscal 2001 is due to an increase in the price
charged for newspapers and new publishing ventures
that compensated for lower newspaper sales volumes.
Improvement also derived from higher advertising revenues in
some sectors, notwithstanding contraction in the advertising
market as a whole.
Operating Result
In 2002, the Fiat Group posted an operating loss of 762
million euros, compared with operating income of 318 million
euros in the previous year. The market downturn and intense
competition, with consequent pressure on prices, impacted the
profitability of the automotive Sectors, contributing in particular
to the loss reported by Fiat Auto. Certain Sectors were also
compelled to set aside greater provisions in operating reserves,
due in part to stiffer market conditions, such as extension of
vehicle warranties and lower prices for used cars.
The major commitment to realization of cost savings, including
the contribution of industrial synergies at CNH and Fiat Auto,
continued generating positive results.
During 2002, research and development outlays, which are
charged directly to income and thus included in the operating
result, totaled 1,748 million euros, or 69 million euros less than
in 2001. This decrease is mainly attributable to the change
in the scope of consolidation and the impact of variations
in foreign exchange translation rates. Fiat Auto confirmed
its commitment to renew its product line by maintaining its
spending on research and development at last year’s levels,
while Ferrari increased the resources it dedicates to
innovation.
The operating result broken down by Sector is illustrated as
follows:
❚Fiat Auto reported an operating loss of 1,343 million euros
in 2002, as compared with a loss of 549 million euros in 2001.
The principal reason for deterioration in this result is the
contraction of sales volumes, and more aggressive discount
20 Report on Operations Analysis of the Financial Position and Operating Results
of the Fiat Group and Fiat S.p.A.
Revenues Revenues
(in millions of euros) 2002 2001 Change
Automobiles (Fiat Auto Holdings) 22,147 24,440 (2,293)
Agricultural and Construction Equipment (CNH Global) 10,513 10,777 (264)
Commercial Vehicles (Iveco) 9,136 8,650 486
Ferrari 1,208 1,058 150
Components (Magneti Marelli) 3,288 4,073 (785)
Production Systems (Comau) 2,320 2,218 102
Metallurgical Products (Teksid) 1,539 1,752 (213)
Aviation (FiatAvio) 1,534 1,636 (102)
Insurance (Toro Assicurazioni) 4,916 5,461 (545)
Services (Business Solutions) 1,965 1,805 160
Publishing and Communications (Itedi) 360 347 13
Miscellanea and Eliminations (3,277)(4,211) 934
Total 55,649 58,006 (2,357)