Chrysler 2008 Annual Report Download - page 7

Letter from the Chairman
and the Chief Executive Officer
Letter from the Chairman and the Chief Executive Officer
6
Dear Shareholders,
Characterising the Group’s 2008 results is no easy task.
If we were only to consider trading profit, 2008 was clearly a
record year - the best in our history.
But it was also a year of two halves: the outstanding
performance of all our businesses in the first nine months was
followed by widespread declines in the fourth quarter as a
result of the dramatic change in the economic environment.
Yet our focus remains - as it constantly has in recent years -
firmly on the future.
The challenging global economic situation we were faced with,
particularly in the closing months of the year, is destined to
continue to have a profound impact on Fiat’s markets.
In fact, 2008 was a year of trials.
The crisis which was initially believed to be confined to the
financial system and the U.S. spilled over into the real
economy on a global scale, triggering significant and
widespread deterioration of trading conditions in most sectors
and regions where we operate.
There is significant uncertainty linked to the future
performance of the economy which nobody currently is fully
able to evaluate, not even the most authoritative international
institutions.
This uncertainty has been further compounded by a severe
credit crunch, both to consumers and to businesses.
For the Fiat Group, the prospects ahead will require additional
commitment and sacrifice from us, as they will from you, our
Shareholders. It is for this reason that the Board of Directors
has decided not to propose a dividend for 2008, other than the
mandatory dividend payable on savings shares.
We believe that this decision, even though 2008 profit was
sufficient to enable distribution of a dividend, is indispensable
in guaranteeing that, going forward, the Fiat Group maintains a
strong capital structure and a level of liquidity adequate to
meet its future commitments and challenges.
During 2008, we worked intensively on renewing the product
range, improving industrial processes, strengthening the image
of our brands and accelerating the Group’s international
expansion, including through targeted alliances.
Earlier this year, a letter of intent was signed with Chrysler and
Cerberus Capital Management for the creation of a global
strategic alliance. The agreement would not require cash
investment by the Fiat Group or commitment to provide
funding to Chrysler in the future. Rather, it is based on an
underlying rationale of mutual benefit, with Fiat receiving an
equity interest in Chrysler and gaining access to new markets
and the U.S. automaker gaining access to competitive
platforms for fuel-efficient vehicles, engines, transmissions and
components where we are already well established. We are
confident that such an agreement would provide an
opportunity for our Group to create medium and long-term
value.
Looking forward to 2009, we believe that difficult trading
conditions will continue at least through the first half of the
year and that it will only be possible to fully assess the effect
of actions to underpin demand for the automotive sector in
Italy, and other major European markets, as the year unfolds.
However, we expect quarter-by-quarter performance will be
uneven, with the first three months being particularly difficult.
Improvements should be visible in the remaining three
quarters, as the benefits of restructuring initiatives begin to be
felt.
As we look forward, we are convinced that the industrial profile
of our businesses, which has been carefully re-engineered in
recent years, means we are well-placed for the next phase of
development.
Fiat Group Automobiles has a strong presence in the smaller
car segments and has invested significantly in being able to
offer a range of low environmental impact models.
We expect current market trends, likely to be further
accentuated by present circumstances, will continue toward
demand for increasingly smaller, more environmentally-
friendly and economical cars.
At Case and New Holland, we have been working with
determination to ensure an extensive product offering and
stronger global presence.
For Iveco, we have sought to balance an over-dependence on
our domestic Western European market with an increased
presence in Eastern Europe, Latin America and China.
FPT Powertrain Technologies has been committed to research
and technological innovation enabling it to compete with the
world’s best powertrain makers in terms of performance and
respect for the environment.
There was the same level of energy and focus in the
components sector, with its fundamental role as a contributor
to the overall competitiveness of the Group being further
strengthened.