Chrysler 2005 Annual Report Download - page 51

50 Reporton Operations Transactions among Group Companies and with Related Parties
01 Report on Operations
Elasis signed a project agreement providing for an investment plan
to support Fiat’s manufacturing plants at Pratola Serra near
Avellino and Termoli near Campobasso and the research activities
carried out at Pomigliano d’Arco (Naples).
This agreement is part of the general Programme Agreement
reached with the Italian Government in December 2002.
The plan calls for the following measures:
- industrial capital expenditures of approximately180 million euros
in the FMA plant at Pratola Serra for the production of new
diesel engines (1.6 and 1.9 JTD two- and four-valveengines);
- industrial capital expenditures of approximately 434 million euros
in the Powertrain Italia plant at Termoli for a new highly
automated and flexible production line that will make advanced
generation petrol-powered engines able to respond quickly to
changes in demand, and the new M40 transmission for light
commercial vehicles of Sevel Val di Sangro;
- an investment of approximately33 million euros earmarked
for research and development specifically performed by Elasis
in the design of new engines.
The Fiat Group’s commitment of 647 million euros will be
supplemented by a Government contribution of approximately
82 million euros.
On February 24, 2006, CNH announced that its wholly owned
subsidiary, Case New Holland Inc., issued senior notes with a face
value of $500 million maturing in 2014 (fixed annual interest rate
of 7.125%) to professional investors.The company expects to
complete the transaction at the beginning of March 2006.
Furthermore, the obligations imposed by the “Personal Data
Protection Code” (Legislative Decree no. 196/2003) were satisfied
in compliance with the provisions of the “Technical Regulation
of Minimum Security Measures” (Appendix B of the Code).
Consequently, the Fiat S.p.A. Security Planning Document was
updated by the addition of the Plan for additional measures
reinforcing security levels in order to combat the evolution
of emerging risk factors.
Business Outlook
The Western European automobile market is expected to remain
stable in 2006, while demand in Brazil should showmoderate growth.
In this context, the Group’s Automobile Sector plans to take
advantage of the full-year contribution of its new models to boost
volume and improveits mix in European markets. Meanwhile, the
profit contribution from Brazil is expected to remain roughly
unchanged from the 2005 level.
Aggressivecost-cutting will continue in all non-essential areas of
the company. Efforts will also be made to ensure that purchasing
efficiencies offset the impact of expected price hikes in raw materials.
At CNH, the demand for construction equipment should remain
strong, while agricultural equipment volumes in 2006 are expected
to remain stable. The North American market is expected to
outperformEurope, with soft demand forecast in Latin America.
CNH should benefit from its recent brand reorganisation, while
relying on pricing to offset rising rawmaterial costs. CNH will also
remain focused on achieving greater purchasing and manufacturing
efficiencies.