Chrysler 2000 Annual Report Download - page 38

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Operating Income % R.O.S. Industrial Activities
(in millions of euros) 2000 1999 Change 2000 1999
Automobiles (Fiat Auto) 44 (121) 165 0.2 (0.5)
Agricultural and Construction Equipment (CNH Global) 45 371 (326) 0.4 7.1
Commercial Vehicles (Iveco) 489 311 178 5.7 4.2
Metallurgical Products (Teksid) 101 76 25 5.4 4.5
Components (Magneti Marelli) 55 108 (53) 1.2 2.7
Production Systems (Comau) 87 43 44 3.6 2.5
Aviation (FiatAvio) 143 109 34 9.6 8.0
Publishing and Communications (Itedi) 10 17 (7) 2.8 4.1
Insurance (Toro Assicurazioni) (56) (103) 47 ––
Miscellaneous and eliminations (*) (63) (23) (40) ––
Total 855 788 67 1.5 1.6
Industrial Activities only 919 850 69 1.7 1.9
(*)The item “Miscellaneous and eliminations” includes the operating results for the Rolling Stock and Railway Systems Sector that was deconsolidated as of August 1, 2000.
Report on Operations – Analysis of the Financial Position and Operating Results of the Fiat Group and Fiat S.p.A.
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Itedi had revenues of 354 million euros in 2000, a
decrease of 14% that was due to the deconsolidation of
Satiz technical publishing operations at the end of 1999.
On a comparable basis, 2000 revenues were up 10%,
thanks entirely to strong advertising revenues.
Gross operating result
The gross operating result was 8,594 million euros, compared
with 7,318 million euros in 1999. As a percentage of revenues,
it declined from 15.2% in 1999 to 14.9% in 2000. For
Industrial Activities alone, this ratio declined from 16.4% in
1999 to 15.9% in 2000 due to the impact of competitive
pressures on sales prices in Europe, which did not allow
certain Group Sectors to completely offset the inflationary
trends of industrial costs.
Overhead and research and development outlays
Overhead came to 6,108 million euros in 2000 (+20.1% over
1999). The increase in overhead was due mainly to changes
in the scope of consolidation (principally the addition of Case
and Fraikin) and the effect of exchange rate differences. On a
comparable consolidation and exchange rate basis, overhead
was substantially in line with 1999.
The successful reengineering of the business support activities
and the streamlining of its organization resulted in significant
savings that amounted to 480 million euros in 2000
(approximately 1,100 million euros in combined savings for
1999 and 2000). The portion of the 2000 savings that applies
to overhead (approximately 290 million euros) offset increased
outlays for advertising and support of the commercial network,
especially at Fiat Auto, in response to stiffer competition in
the European market. The remaining part of these savings
(approximately 190 million euros) contributed to the reduction
of fixed production costs.
Research and development outlays, which were charged
in full to income, totaled 1,725 million euros, or 22.7% more
than in 1999. This increase was due mainly to changes in
the scope of consolidation, but also to higher spending –
especially by Fiat Auto – to update the product range and
thereby strengthen its competitive position. The increased
investment in research and development is a testament to
the Group’s commitment to innovation and its quest for
technological excellence.
Operating income
Operating income before extraordinary, financial, and tax
components, totaled 855 million euros in 2000, up by 67
Operating Income
(in millions of euros)
2000
855
19991998
788
746