Chrysler 2002 Annual Report Download - page 58

Operating performance
The slowdown in the growth of the world economy which
had characterized performance in 2001 continued to affect
the markets where the Sector operates in 2002 as well.
The heavy economic repercussions generated by the highly
uncertain climate on the markets following the terrorist attacks
of 2001 have again proven to be critical factors, dampening
recovery expectations.
Against this background, Teksid continued the reorganization
of the Sector, and at the end of September 2002 the Aluminum
Business Unit was sold to Questor Management Company.
As regards the other activities:
❚In 2002 Meridian (Magnesium) was involved in a series of high
technology product launches in the Italian and Canadian
plants for Mercedes, BMW, Opel, Jaguar and Ford and it
completed the acquisition of new orders: among them,
particularly relevant are those with General Motors in the
United States and Land Rover in England. For the latter, the
phases of site identification and planning for the construction
of a local production unit in cooperation and synergy with
existing suppliers have been completed. The contribution
of the Business Unit to the Sector’s total revenues was 19.8%
(17.7% in 2001).
❚The Cast-Iron Business Unit continued its profitability recovery
action on the more critical production sites. It is important to
stress the commercial activities already carried out, which
will allow to improve, within the time frame of the plan,
production saturation with the acquisition of new orders.
On the American market, Brazil performed a primary role,
enhancing its portfolio with 40 new components for local
clients, Pegasus block and cylinder head for CDC Cummins
and a block for Mack Trucks; Mexico contributed with 2
Cummins cylinder blocks.
In the European area, Poland broadened its portfolio inserting
acomponent for Toyota (differentials) and others for Daimler
Chrysler, in France with a new engine block for Renault,
asuspension arm for ACI and parts of turbochargers for
Honeywell Garrett and General Motors. In Italy, orders have
been obtained for the supply of drive shafts for Deutz, F1C
engine blocks and bed plates for Iveco, while in Asia (China)
deliveries were started on 3 engine blocks for BHMC. The
Business Unit’s contribution to Sector revenues amounted
to 37.5% (39.2% in 2001on a comparable consolidation basis).
Results for the year
In 2002, the Sector had revenues of 1,539 million euros, or 12.2%
less than in the previous year (-5.3% on a comparable basis).
At 660 million euros, revenues of the Aluminum Business Unit
were about 6% lower than in 2001, on a comparable basis; the
market contraction accounted for about 10% of the decrease,
on a comparable consolidation basis, in the Cast-Iron Business
Unit’s revenues, which amounted to 575 million euros. By
contrast, the Magnesium Business Unit bucked the trend, with
revenues of 304 million euros (+6% over the previous year),
thanks to the positive performance of the SUV market in North
America, where the Business Unit concentrates its operations.
Non captive customers accounted for 90% of total revenues
(80% in 2001).
The Sector’s operating income was 27 million euros (1.8%
of revenues). On a comparable basis, operating profitability
improved by about 49% with respect to the previous year,
thanks to the cost reduction interventions and to the greater
efficiency achieved by the Cast-Iron Business Unit, which more
than offset the reduction in volumes.
Depreciation and amortization totaled 93 million euros and
research and development outlays amounted to 21 million
euros.
The net loss for the year came to 214 million euros, against a
net loss of 125 million euros in 2001, and was due in part to non-
operating expenses of 156 million euros, mainly connected with
the sale of the Aluminum Business Unit and the depreciation of
other fixed assets.
56 Report on Operations
Metallurgical Products — Teksid
(in millions of euros) 2002 2001 2000
Net revenues 1,539 1,752 1,873
Operating result 27 15 101
EBIT (137)(67) 68
Net result before minority interest (214)(125) 8
Cash flow (121)(16) 113
Capital expenditures 78 151 182
Research and development 21 27 29
Net invested capital 250 788 861
Number of employees 7,368 13,827 14,286
Highlights
Revenues by geographical
region of destination
Italy Rest of Europe Rest of the world
Employees by geographical
region
050% 100%