Chrysler 2005 Annual Report Download - page 5

Letter from the Chairman
and the Chief Executive
Officer
4Letter from the Chairman and the Chief ExecutiveOfficer
2005 marked a turning point for Fiat.
We delivered on our commitments, we met all of our targets
and we even exceeded a number of them.
We had promised that 2004 would be Fiat’s final year of net losses –
and we achieved net income of over 1.4 billion euros in 2005.
We had committed to a drastic cut in net industrial debt – and
it was reduced by two-thirds.
We had decided to focus on the relaunch of our Automobile
activities, and in the last quarter of 2005 Fiat Auto posted a trading
profit of 21 million euros after 17 consecutive quarters of losses.
This has contributed to restoring Fiat’s credibility, not only in Italy, but
internationally, as evidenced by the improvement in our debt ratings
and our ability to attract a large number of institutional investors in
our debt raising activities.
Our reputation has also benefited from the launch of new models
across all brands that have been received extremely well by the
public for their creativity, style, technology, and innovation, qualities
that havedistinguished the best Fiat cars since the firm was founded.
These breakthroughs, as well as all the other operational and financial
improvements highlighted in this annual report, could not have been
achieved without the strenuous efforts of the entire Fiat community,
each and every one of whose members contributed to the relaunch
of the Group with dedication and discipline. Todo so, the Fiat
people had to endorse fundamental changes in attitude, to assume
greater responsibility and accountability, and to show their
determination to deliver.Wewould like to express our sincere thanks
to all of them.
During 2005, we also built a strong base for more effective and
profitable operations in the future.
First of all, we successfully resolved all pending strategic and financial
issues: wesettled our outstanding matterswith General Motorsand
received a 1.56 billion euro cash payment; the Italenergia Bis
transaction led to a 1.8 billion euro reduction in net industrial debt;
and finally, conversion of the Mandatory Convertible Facility resulted
in a 3 billion euro debt reduction and a sharp improvement in Group
equity.
Fiat’s business governance structure, especially in Automobiles, was
right-sized to match realistic demand and market conditions. In Autos
we have put in place a fully market-oriented organization, unbundling
the brands: Fiat, Lancia and Alfa Romeo now face the customer on
their own, while sharing key functions such as manufacturing, quality
and safety. Everything is driven by the brands and for the brands.
Similarly, in Agricultural and Construction Equipment, Case New
Holland was reorganized along four brands rather than regions.
And wehave begun to aggressively streamline processes throughout
the organization.
The Company will reap the benefits of these structural
improvements in 2006 and beyond.
Last year, we made other important decisions that will shape the
Group’s future, in the form of targeted industrial alliances with major
international partners. Seven such agreements were struck in the
Automobile Sector – with Pars Industrial Development Foundation
(PDIF), PSA-Tofas, Zastava, Suzuki, Ford, Severstal Auto and Tata
Motors – while another partnership was established in commercial
vehicles and industrial engines, between Iveco and SAIC.