Chrysler 2002 Annual Report Download - page 31

The operating loss reported by companies in the Industrial
Activity segment totaled 1,381 million euros in 2002,
represented a deterioration from the operating loss of 273
million euros incurred in the previous year. This result was due
to the increasingly difficult economic environment, negatively
impacting the volumes and profitability of the automotive
Sectors.
In 2002 the EBIT of Industrial Activities totaled a negative 4,038
million euros, as compared with a positive result of 186 million
euros in 2001.
The severe reduction compared to the previous year is
largely attributable to the rapid and general deterioration
of the economy, whose impact on the operating profitability
of the Automobile Sector was particularly acute. The high
non-operating expenses connected with the major industrial
restructuring initiatives, losses in the book value of numerous
activities, and the divestiture of numerous activities at a loss
and on unfavorable terms further penalized income in this
segment.
Financial Activities
Companies operating in the Financial Activities segment
generated 3,910 million euros in revenues during 2002,
almost the same as in 2001.
Revenues of the Financial Activities of the Automobile Sector,
which totaled 2,236 million euros (-3.3% compared with 2001),
were impacted by lower vehicle sale volumes and increased
selectivity to improve the quality of contract portfolios.
Financial Activities in the Agricultural and Construction
Equipment Sector generated a total of 680 million euros in
revenues (-20% with respect to 2001), due to the streamlining
of portfolio activities unrelated to Sector business, in addition
to divestiture of European activities as part of the joint venture
with BNP Paribas.
Financial Activities in the Commercial Vehicle Sector had
an increase in revenues, which rose from 787 million euros
in 2001 to 1,005 million euros in 2002 (+27.7%) attributable
to the consolidation of a company that also trades with
dealers outside Europe.
The income before taxes of the normal business of the
Financial Activities (not including the impact of income
or losses posted by intersegment investments in industrial
companies held by financial companies) totaled 192
million euros, compared with 346 million euros in 2001.
The income before taxes of Financial Activities in the
Automobile Sector totaled 285 million euros, almost
unchanged from the 290 million euros generated in 2001.
The financial activities of CNH Global generated a total
of 89 million euros in income before taxes, as compared with
10 million euros in 2001. This improvement in profitability is
aresult of strategies to focus the portfolio on its core business.
Conversely, the pre-tax result of the Financial Activities at
Iveco deteriorated, as it closed the fiscal year with a loss
of 183 million euros, as compared with income before taxes
of 46 million euros in 2001. The decrease was due to higher
non-operating expenses, including 210 million euros for
writing down the book value of Fraikin to its presumed
market value, in accordance with the agreement made
for its sale in the first quarter of 2003.
Insurance Activities
The premiums written by companies operating in the Insurance
Activities segment totaled 4,921 million euros in 2002, 10.4%
lower than in the previous year.
Life insurance premiums declined as a whole, particularly in
the bancassurance channel, partially due to restructuring of
the Capitalia distribution network following its merger with the
Fineco banking group. Consequently, Toro Assicurazioni was
unable to exploit the opportunities offered by growth in this
segment on the Italian market.
Volumes in the casualty business increased in both Italy and
France, virtually in line with market trends, notwithstanding
aselective approach to writing policies.
The income before taxes of Insurance Activities totaled 24
million euros, as compared with 232 million euros in 2001.
The decrease was mainly attributable to writedowns taken
to mark to market the portfolio of listed securities, which
was only partially offset by the growth in operating income
generated by improved performance of the casualty insurance
operations and higher proceeds from sale of real estate.
Balance Sheet by Activity Segment
Industrial Activities
Although cash increased by 1,146 million euros with respect
to December 31, 2001, the Financial payables net of
intersegment activities of Industrial Activities decreased by
2,067 million euros. This improvement is largely attributable
to the divestiture of lines of business and investments, capital
increases, and lower requirements for working capital, net of
the effects of operating performance during the period.
Financial Activities
Financial payables net of intersegment activities decreased
by 1,889 million euros, largely as a result of the reduction in
financial receivables and leasing portfolio caused by lower
volumes, the divestiture of certain activities (CNH agreements
with BNP Paribas in Europe and assignment of part of the Sava-
Leasing portfolio), increased securitization of receivables, and
foreign exchange translation effects of the euro, particularly
portfolios denominated in US dollars and the Brazilian real.
29 Report on Operations Analysis of the Financial Position and Operating Results
of the Fiat Group and Fiat S.p.A.