Chrysler 2002 Annual Report Download - page 49

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Steel Ltd. for the development, production and sale of crawler
excavators and mini-excavators.
In the first quarter of 2002, CNH acquired a 65% interest in
Kobelco America and a 10% interest in Kobelco Japan. In July
2002, it increased its interest in Kobelco Japan from 10% to
20%.
Also in July 2002, CNH acquired Hitachi Construction
Machinery’s interest in Fiat Hitachi Excavators. Concurrently,
CNH, Kobelco Japan and Somitomo Corporation formed
Fiat Kobelco Machinery S.p.A., to which CNH contributed
the assets of the former Fiat Hitachi Excavators and Kobelco
Japan contributed its European operations. The partners in
the venture own Fiat Kobelco as follows: CNH 75%, Kobelco
Japan 20% and Somitomo Corporation 5%. The CNH and
Kobelco alliance allows Kobelco Japan to increase its interest
in Fiat-Kobelco from 20% to 35% by the third quarter of 2004.
Financial activities
During 2002, CNH and the BNP Paribas Lease Group (BPLG)
formed CNH Capital Europe S.A.S., a retail financing
partnership that operates across Europe. CNH Capital Europe,
which holds the retail financing portfolio, covers all brands and
commercial activities of CNH in Europe. Under the partnership,
BPLG owns 50.1% of CNH Capital Europe, and CNH owns the
remaining 49.9%.
BPLG provides funding and administrative services for CNH
Capital Europe. This partnership will permit continued growth
without incremental funding or debt on the part of CNH.
In turn, CNH will be responsible for the marketing and
development of financial products.
CNH Capital has now completed its transformation into
afinancial services company dedicated solely to the support
of CNH dealers and customers across all its brands.
In 2002, revenues totaled 680 million euros, or 20% less than
in 2001 (decrease of about 16% when stated in U.S. dollars).
Adecline in financial income caused by the reduction of the
investment portfolio that resulted from the sale to CNH Capital
Europe of the operations in Western Europe and the divestiture
of noncore assets during the year is the main reason for the
shortfall.
The profitability of the financing operations benefited from
the lower amounts allocated to the allowance for doubtful
accounts, which was made possible by the Sector’s strategy
of focusing on its core businesses. Income before taxes grew
to 89 million euros, up from 10 million euros in 2001.
Results for the year
CNH had revenues of 10,513 million euros in 2002. The
decrease of 2.4% compared with the previous year is due to
the negative impact that the appreciation of the euro versus
the U.S. dollar had on currency translations. When stated in
U.S. dollars and on a comparable consolidation basis, revenues
show little change from 2001.
CNH ended the year with operating income of 163 million
euros (1.6% of sales), against income of 209 million euros in
2001.
The drop in operating profitability is due entirely to higher
employee medical and pension costs. Without these charges,
operating income would have shown a substantial
improvement when compared with the previous year.
Higher margins earned on new products, some positive
47 Report on Operations CNH Global