Chrysler 2003 Annual Report Download - page 13

12 Report on Operations
In June, the Company presented its Industrial and Financial
Relaunch Plan. This four-year plan, which lays the basis for full
recovery of the Group by focusing the scope of its activity and
industrial mission on the automotive business, enabled the
Company to adopt decisive measures to resolve problems
and accelerate the return to growth.
The Plan, which includes detailed operational plans for each
of the individual Sectors, set forth the following fundamental
Group guidelines:
❚Improving cash-flow generation and profitability is the top
priority;
❚A major effort must be made in the areas of product
development, innovation and marketing by launching new
models, investing heavily in technology and strengthening
the distribution networks;
❚The cost structure must be made highly competitive by
rationalizing the Group’s product design and engineering
operations, streamlining its manufacturing organization,
increasing efficiency and strongly supporting the
development of professional competencies among
the engineering, marketing and distribution staff.
Results for the full year enabled the Company to confirm its
commitment to meeting the objectives of the Relaunch Plan,
which are:
❚Achieve operating breakeven in 2004 at the Group level.
❚Achieve a 4% return on sales by 2006 (5.5 percentage points
higher than in 2002).
❚Generate positive operating cash-flow (operating result
plus depreciation and amortization) in 2005.
The Group has already reached many of its stated objectives
while work in other areas is progressing in line with
expectations:
❚Cash generation: Over 9 billion euros were generated
from disposals and a capital increase.
❚Operating breakeven: The positive performance of the
fourth quarter points in the right direction.
❚Corporate structure: A major effort made to streamline the
Group structure, including the disposals completed during
the year, will reduce the number of Group companies from
over 900 in 2002 to about 600 by the end of 2004.
❚Structural cost reduction: Eight of the 12 plants slated for
closure have already been shut down or are in the process of
being shut down, and staff levels have decreased as expected.
❚Margin improvement: New product launches have been
accelerated, and the average age of the product line has
been lowered.
In addition, newly established cross-sector teams have been
active for several months with the aim of increasing Group
synergies and accelerating the achievement of results. These
teams work in the purchasing, productivity, quality, overhead,
and commercial areas. Their purpose is to assist the Company
in focusing on the principal variables of the statement of
operations and ensure the exchange of best practices.
Consequently, the strength of the Group is greater than the
sum of strengths of the individual Sectors.
Thanks to these teams, a vast number of new projects were
launched at the Operating Sectors and Business Units. Over 800
projects were being implemented at the end of 2003 and are
expected to produce concrete improvements in the 2004 results.
The projects promote the dissemination of an entrepreneurial
spirit in the Group, enhance the transparency of expectations,
and, ultimately, maximize the possibilities for success.
The number of projects and people involved in the turnaround
effort has been growing steadily.
Fiat Group Relaunch Plan