in the First Half of 2004 99th Fiscal Year - FIAT SpA

In the first half of 2004, the worldwide market for agricultural
equipment grew by 17% compared with the same period last
year. Demand increased sharply in North America (+12%) and
Latin America (+19%), expanded at a slower rate in Western
Europe (+4%) and was up a healthy 14% in the rest of the world.
The trend was also up in every segment of the construction
equipment market. Compared with the first six months of 2003,
shipments rose 4% in Western Europe, 30% in North America,
34% in Latin America and 23% in the rest of the world.
In the first half of 2004, unit sales of CNH’s agricultural
equipment increased faster than demand in the all-important
North American market and matched the strong growth rate
of the Latin American market. In Western Europe, however,
sales were down, reflecting weak market demand, especially
for combines. In the rest of the world, the Sector’s unit sales
increased, but did not match the market’s overall rate of
expansion.
During the first half of 2004, sales of CNH’s construction
equipment were up sharply in North America, expanding in
line with the rise in market demand, which was especially strong
for heavy equipment. Shipments were also up in Latin America,
though at a lower rate than the market as a whole, but were
down significantly in Western Europe, where demand decreased
for light equipment but improved for heavy equipment.
CNH’s effort to revamp and upgrade its product line continued
during the first six months of 2004. The Sector added 29 new
products to its agricultural equipment lineup. The most
noteworthy of the 13 new machines launched in Europe are
the new line of Case IH JXN/JXV tractors. These tractors have
been designed to meet the specific needs of fruit growers,
providing them with an improved level of performance and
comfort. This new product line has been positioned at the top
of its market segment. The 10 new models introduced in North
America include a New Holland large square baler and an
automatic bale wagon. These two products and three others
sold under the Case IH brand were honored with prestigious
awards in North America. The Sector was active in the South
American market as well, launching six new agricultural
machines.
In the construction equipment area, CNH brought to market
16 new models during the first half of 2004. These included
a line of four compact excavators in North America and 12
machines in Europe. In Europe, the most significant
development was the introduction of a complete line of mini
excavators that will enable the Sector to compete in the light
equipment segment of the market. In Latin America, major
product launches are planned for the second half of 2004.
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Agricultural and Construction Equipment — CNH
Operating Performance
In the first six months of 2004, CNH reported revenues of 5,059
million euros, up 5.4% from the same period last year. This
improvement was achieved despite the negative foreign
exchange differences caused by the appreciation of the euro.
The revenue increase, which would have reached about 11%
on a comparable foreign exchange translation basis, reflects
primarily a gain in unit sales in the Western Hemisphere and
higher prices.
CNH ended the first half of 2004 with operating income of
229 million euros, or 124 million euros more than in the first
six months of 2003. The result for the period benefited from
a sizable increase in sales volumes, a rise in the prices charged
for agricultural and construction equipment and product cost
savings.