Chrysler 2003 Annual Report Download - page 51

Sales performance
In the agricultural equipment segment, the market as a whole
expanded by approximately 7% in 2003 as compared to 2002,
thanks to growth in North America (approximately +19%), with
increased demand for tractors in all ranges. These increases
were offset by lower demand for combine harvesters in North
America and in Western Europe.
Compared with 2002, the Sector posted a significant increase
in sales of combine harvesters in its principal markets, while
also improving its market share in North America and Western
Europe, despite tractor sales remaining below the levels
posted in the previous year, mainly due to the limited
availability of certain new models.
The market for construction equipment (up 9%) expanded
in North America (approximately +9%) and Asia, while it
contracted in Latin America (approximately -19%) and
Western Europe (approximately -2%). In Western Europe,
the contraction can be attributed to lower demand in the
light equipment segment, while the demand for heavy
equipment remained essentially unchanged.
Construction equipment sales were impacted both by lower
demand and efforts to reduce company and dealer inventory
levels. In North America the decrease was smaller, thanks to
the positive performance of heavy equipment, while sales
volumes increased in the rest of the world (+7%).
In Western Europe, the initial problems connected with
integration of the Fiat-Hitachi and Fiat-Kobelco sales networks
also contributed to the contraction, following formation of
Fiat Kobelco Construction Machinery S.p.A. in the second
halfof2002.
Growth strategies
In 2003 profit improvement initiatives continued with higher
than expected results, thanks in particular to the contribution
of newly introduced products, and lower sales, administrative,
and research and development costs. Streamlining of the
production structure continued: the number of plants was
reduced to 45, thanks in part to reallocation of certain
production units. Further economies of scale were obtained
through streamlining the pool of suppliers, a new logistics
organization, and a reduction in the number of spare parts
warehouses.
Product innovation
Implementation of common platforms for agricultural and
construction equipment continued in 2003 with the introduction
of the new line of Case IH MXU and New Holland TS-A high-
powered multifunction tractors. The percentage of agricultural
equipment updated between 2001 and 2003 rose to 80%.
In 2003, 64% of the revenues from agricultural equipment sales
(30% in 2002), and 66% of the revenues in the construction
equipment segment (53% in 2002) were derived from products
developed on common platforms after integration with Case.
During the first half of the year, CNH won nine prizes at the
most important European specialized trade fairs. More awards
were received in the second half of the year, with a total of 25
prizes accumulated, 9 for tractors, 7 for combine harvesters,
and 4 for grape harvesters.
Another 15 prizes were awarded to CNH in North America for
New Holland and Case IH products, including 6 for combine
harvesters and 3 for tractors.
50 Report on Operations
Agricultural and Construction Equipment — CNH
(in millions of euros) 2003 2002 2001
Net revenues 9,418 10,513 10,777
Operating result 229 163 209
EBIT (*) 99 165 122
Net result before minority interest (192)(211) (291)
Cash flow (net result +
depreciation and amortization) 258 330 262
Capital expenditures 217 431 615
Research and development 229 300 341
Net invested capital 4,148 5,140 6,597
Number of employees 26,825 28,528 28,127
(*) It includes non-operating income and expenses
Highlights
Italy Rest of Europe Rest of the world
Revenues by geographical
region of destination
Employees by geographical
region
0 50% 100%