Chrysler 2003 Annual Report Download - page 62

Operating performance
In 2003 the business services market experienced a significant
slowdown, in line with market, economic and financial difficulties
that had a widespread impact on all the main fields of activity.
Uncertainty over the future prospects for the economy
prompted companies to reduce investment in IT, in which
overall spending fell for the first time in years. Outsourcing of
company activities also decelerated markedly, while projects
to outsource a number of government functions failed to reach
the operational stage. Even more traditional services, such as
training and temporary employment services, recorded only
modest growth rates, considerably lower than in previous years.
In this market context, and consistently with the Fiat Group’s
policy of focusing on its core businesses, the Sector engaged
in a strategic repositioning that favored service-sharing activity
within the Group and was supported by effectiveness and
efficiency gains achieved through the Relaunch Plan.
The Sector’s operating performance, by business unit, is set
out below.
❚Human Resources: this unit provides payroll and human
resource management (H.R. Services S.p.A.), training
(Isvor Knowledge System S.p.A.) and temporary employment
(WorkNet S.p.A.) services. Aggregate revenues totaled 231
million euros, of which 73% were from “non-captive”
customers, especially for training and temporary employment
services. With regard to temporary employment services,
the restructuring process continued at WorkNet.
❚Engineering and Facility Management: this unit experienced
the greatest degree of business portfolio restructuring,
with the disposal of IPI S.p.A. and Fiat Engineering S.p.A.,
the latter in February 2004. Facility Management activity
in civil and industrial sites is also worthy of note, as is the
extraordinary maintenance activity carried out by Ingest
Facility S.p.A. Turnover amounted to 624 million euros
(73% non-captive) and still includes the revenues of Fiat
Engineering.
❚Administration and Procurement: with Fiat Gesco S.p.A.,
this unit provides management and back office services
within the Group, creating important synergies. The services
provided include the activities of SADI S.p.A. (customs), Fast
Buyer S.p.A. (traditional and online purchasing) and Risk
Management S.p.A. (management of insurable Group risks).
Revenues for 2003 totaled 333 million euros, 73% of which
from “captive” customers.
❚I.C.T. – Information and Communication Technology: the
main activity in this unit is Global Value, a joint venture with
IBM that provides technology infrastructure management
and software application development services for the Group
and the external market. During the year some Sectors of
the Group made significant investments, especially in SAP,
in which Global Value’s operational structures were involved.
eSPIN S.p.A., a competence center active in a number of
specific areas of innovation, most notably in the online
application and management of business processes, is also
part of this unit.
The unit posted revenues of about 600 million euros in 2003,
with Fiat Group companies accounting for 62% of them.
❚The operation of ski lift and cable car facilities at Sestrieres
generated revenues of 21 million euros.
Results for the year
Revenues for the Sector totaled 1,816 million euros in 2003,
a decline of 7.6% compared with the previous year, mainly as
a result of changes in the scope of consolidation in 2003 (sale
of IPI and real estate operations). Other factors influencing
the fall in revenues were the overall contraction in the services
market and the refocusing of Sector companies on activities
within the Group.
Operating income amounted to 45 million euros, compared
with 67 million euros the previous year. On a comparable basis,
however, the result represents an improvement of 6 million
euros. Results from equity investments and, most notably, net
non-operating expenses of 29 million euros resulting in part
from restructuring, generated a net loss of 20 million euros.
This was a marked improvement on the loss of 119 million
euros reported in 2002, which reflected extraordinary provisions
for the writedown of the UMTS licence.
61 Report on Operations
Services — Business Solutions
(in millions of euros) 2003 2002 2001
Net revenues 1,816 1,965 1,805
Operating result 45 67 73
EBIT (*) 11 (140) 608
Net result before minority interest (20)(119) 497
Cash flow (net result +
depreciation and amortization) 10 (77) 567
Capital expenditures 714 32
Net invested capital (31)478 648
Number of employees 7,113 7,900 7,171
(*) It includes non-operating income and expenses
Highlights
Engineering &
Facility Management
34%
4%
17%
12%
33%
Revenues by business unit
Administration
and Procurement
I.C.T. - Information and
Communication Technology
Diversified Services
Human Resources