Chrysler 2003 Annual Report Download - page 52

Financial activities
During 2003 CNH Capital continued to focus on supporting
the CNH dealer network and its customers. In Europe, CNH
Capital Europe, the company operated in partnership with
BNP Paribas Lease Group (BPLG), continued to grow as
envisaged without causing an increase in the indebtedness
of CNH.
In 2003 CNH financial activities posted revenues of 549 million
euros, compared with 680 million euros in 2002. If expressed
in dollars, the accounting currency of the Sector, the decrease
would have been approximately 3%. The decrease in revenues
was primarily caused by lower average receivables balances
related to the successful completion of asset-backed
securitization transactions, lower yields on some on-book
portfolios due to reduced market interest rates and lower
operating lease revenues.
Income before taxes totaled 116 million euros, compared
with 89 million euros in 2002. The improvement, which
amounted to USD 48 million when expressed in that currency,
is attributable to improved margins on interest and the
improved quality of the portfolio under management,
achieved in part thanks to the continued reduction of the
“non-core,” high-risk portfolio.
Results for the year
In 2003, CNH had revenues of 9,418 million euros (USD 10,654
million), compared with 10,513 million euros (USD 9,928 million)
in 2002. On a comparable exchange rate basis and when
expressed in dollars, the accounting currency of the Sector,
2003 revenues were substantially in line with those recorded
in the previous fiscal year: higher revenues generated by the
sale of agricultural equipment were offset by lower revenues
reported by the construction equipment segment.
Operating income totaled 229 million euros in 2003 against
163 million euros in 2002 (respectively USD 259 million in 2003
and USD 154 million in 2002). These results benefited from the
effects of measures taken to improve profitability under the
Relaunch Plan and profit contributions from new products,
which were partially offset by higher costs for the introduction
of new products in the agricultural equipment segment
(especially in Europe) and an unfavorable mix on certain
markets for construction equipment.
The Sector formulated a plan to integrate the operations
of the Case and New Holland businesses at the time of the
merger. In 2002 and again in 2003, plans were expanded.
Through year-end 2002, our cumulative merger-related profit
improvements totaled approximately USD 600 million as
compared to the base levels of revenues and costs incurred
in the combined equipment operations for the full year 1999.
We believe that the continuation of these actions through 2006
will result in additional savings of approximately USD 650
million, bringing the total for the period from 2000 to 2006 to
USD 1,250 million. These actions represent improvements as
compared with the base levels of revenues and costs incurred
by CNH for the full year 2002. This estimate is not based on
any assumption of an appreciable increase in industry volumes
from 2002 levels.
In the year ended December 31, 2003, we achieved USD 225
million of the USD 650 million of additional profit improvements
expected by 2006.
51 Report on Operations CNH