Chrysler 2008 Annual Report Download - page 42

Report on Operations Financial Review – Fiat Group 41
For 2008, Fiat Group Automobiles reported trading profit of
€691 million (2.6% of revenues), a decline of €112 million from
the €803 million figure (3% of revenues) recorded in 2007. This
decline was entirely attributable to the fourth quarter slump in
demand in Western Europe and the economic slowdown in
Latin America. The impact on income from the consequent
reduction in volumes was only partially compensated by
reductions in overheads and production-related costs,
including recourse to flexible working arrangements provided
under Italian labour legislation. Trading profit for 2007 included
a non-recurring gain of approximately €65 million (net of non-
recurring charges), while for 2008 it included approximately
€40 million in unabsorbed fixed costs resulting from the two
month closure of the Giambattista Vico plant in Pomigliano.
Maserati reported trading profit of €72 million for the year
(8.7% of revenues), representing a significant improvement
(+€48 million) over the €24 million figure (3.5% of revenues) for
the previous year, due to increased volumes and cost efficiencies.
Ferrari closed 2008 with trading profit of €339 million (17.6%
of revenues), up 27.4% over the €266 million figure (15.9% of
revenues) for 2007. This performance was primarily attributable
to cost efficiency gains, which included a decrease in the net
cost of Formula 1 racing, and a more favourable sales mix,
offset in part by the unfavourable U.S. dollar and British pound
exchange rates.
Agricultural and Construction Equipment
CNH – Case New Holland trading profit was €1,122 million in
2008 (8.8% of revenues), an increase of €132 million over the
€990 million level (8.4% of revenues) for 2007 (up 21.6% in US
dollar terms). Agricultural equipment sales growth, mix
improvements and pricing actions more than offset weakness
in the construction equipment industry, higher procurement,
manufacturing and expediting costs which were caused by
increased agricultural volumes, especially in the first 9 months
of the year.
Trading Profit by Business
(€ millions) 2008 2007 Change
Automobiles (Fiat Group Automobiles, Maserati, Ferrari) 1,102 1,093 9
Agricultural and Construction Equipment (CNH – Case New Holland) 1,122 990 132
Trucks and Commercial Vehicles (Iveco) 838 813 25
Components and Production Systems (FPT, Magneti Marelli, Teksid, Comau) 402 509 -107
Other Businesses and Eliminations (102) (172) 70
Total for the Group 3,362 3,233 129
Trading margin (%) 5.7 5.5
(€ millions) 2008 2007 Change
Fiat Group Automobiles 691 803 -112
Maserati 72 24 48
Ferrari 339 266 73
Total 1,102 1,093 9
Trading margin (%) 3.8 3.8
Following is a discussion of trading profit by Business/Sector:
Automobiles
The Automobile businesses reported trading profit of €1,102
million for 2008, slightly higher than the €1,093 million figure
for 2007. Trading margin was flat at 3.8%. Lower trading profit
at Fiat Group Automobiles (-€112 million), reflecting the impact
of the market crisis in the last quarter, was more than offset by
increases at Ferrari (+27.4%) and Maserati, where trading profit
grew from €24 million for 2007 to €72 million for 2008.