Chrysler 2003 Annual Report Download - page 24

23 Report on Operations Analysis of the Financial Position and Operating Results
of the Fiat Group and Fiat S.p.A
❚Iveco closed fiscal 2003 with operating income of 81 million
euros, against income of 102 million euros in the previous
year, which included the positive result of sold activities. On
a comparable basis, it would have posted a slight decrease:
the Sector was negatively impacted by a contraction in
volumes connected to the difficult market situation, and
an unfavorable foreign exchange effect. Iveco responded
to these negative factors by significantly reducing
manufacturing costs and overhead.
❚Ferrari and Maserati reported operating income of 32 million
euros. The Sector did not achieve the level of the previous
year (operating income of 70 million euros) due to high
research and development costs for new products and the
negative foreign exchange effect, which offset the
improvement in mix realized with the Ferrari models.
❚Magneti Marelli reported a significant improvement in its
operating result, moving from an operating loss of 16 million
euros in 2002 to operating income of 32 million euros in 2003,
benefiting in particular from materials costs and overhead
containment measures.
❚Comau posted operating income of 2 million euros, realizing
a significant improvement from the operating loss of 101
million euros reported for 2002, which had been caused
mainly by the high costs incurred on several important
contracts in Europe.
❚Teksid closed fiscal 2003 with operating income of 12 million
euros, compared with operating income of 27 million euros in
2002, which included the operating income of the Aluminum
Business Unit. If this factor were excluded, the Sector would
have realized an improvement of 2 million euros mainly thanks
to cost cutting measures and increases in volumes, which
were partially reduced by the negative impact of product
mix and foreign exchange effects.
❚Business Solutions reported operating income of 45 million
euros for 2003. The decrease from the 67 million euros in
operating income reported for 2002 is mainly attributable
to changes in the scope of consolidation. On a comparable
basis, operating income would have shown an improvement
of 6 million euros thanks to cost savings.
❚Itedi had operating income of 10 million euros in 2003, up
sharply from the 3 million euros reported for 2002, thanks
to higher revenues, efficiency measures in all business areas,
and lower paper costs.
EBIT (Earnings Before Interest and Taxes)
Group EBIT was -319 million euros, compared with -3,955 million
euros for 2002. The major reduction in losses, which totaled
3,636 million euros, stemmed from the sharp improvement in
non-operating items, due to lower expenses and higher gains
realized on disposals, and the result of equity investments, in
addition to the reduced operating loss.
The change in EBIT was influenced by the following items:
The result of equity investments was -156 million euros,
compared with a negative balance of 690 million euros for the
previous year, which included the losses incurred by marking
to market equity securities portfolios held by the insurance
companies, which were sold at the beginning of May 2003.
The improvement in continuing operations alone totaled 182
million euros and was realized thanks to better results of certain
companies valued according to the equity method, in particular
Italenergia Bis.
Net non-operating income totaled 347 million euros, reflecting
a significant improvement from the negative balance of 2,503
million euros for 2002, which had been caused by particularly
high restructuring expenses and writedowns, as well as a
Operating Result
(in millions of euros) 2003 2002 Change
Automobiles (Fiat Auto) (979) (1,343) 364
Agricultural and Construction Equipment (CNH) 229 163 66
Commercial Vehicles (Iveco) 81 102 (21)
Ferrari and Maserati 32 70 (38)
Components (Magneti Marelli) 32 (16) 48
Production Systems (Comau) 2(101) 103
Metallurgical Products (Teksid) 12 27 (15)
Aviation (FiatAvio) (*) 53 210 (157)
Insurance (Toro Assicurazioni) (**) 44 147 (103)
Services (Business Solutions) 45 67 (22)
Publishing and Communications (Itedi) 10 37
Miscellaneous and Eliminations (71) (91) 20
Total (510) (762) 252
(*) Operating Result for the Aviation Sector is shown until the date of its sale (July 1, 2003).
(**) Operating Result for the Insurance Sector is shown until the date of its sale (May 2, 2003).