in the First Half of 2003 98th Fiscal Year - FIAT SpA

The general economic slowdown continued in early 2003, with
the Sector’s reference market still uncertain and continuing to
contract, often owing to the postponement rather than
cancellation of the large carmakers’ capital investment plans.
A number of emerging markets, such as Russia and China, were
exceptions, offering investment opportunities starting from this
year.
Market developments continued to display a highly cyclical
pattern. Moreover, new investment is no longer directed at
expanding production capacity but rather at rationalizing
existing resources with a view to increasing the use of modular
and flexible production plants and raising capacity utilization.
Carmakers also continued the process of shifting non-core
services and manufacturing operations to leading outside
suppliers.
New orders for contract work totaled 607 million euros in
the first half of 2003, a decrease of 37% on the corresponding
period of the previous year. The geographic breakdown of
orders is as follows: 70% in Europe (Italy 30%, Germany 16%,
France 14% and others 10%), 25% in the NAFTA countries and
the remaining 5% in Brazil and new markets (India).
At 30 June 2003 the backlog of orders for contract work, net
of the portion already produced, came to 1,009 million euros,
a decline of 42% on a year earlier and 17% on end-2002. The
fall reflects the sharp decline in the NAFTA area’s share of the
order portfolio (as progress on contracts outpaced new orders
and the dollar depreciated against the euro).
Highlights in the first half of the year include:
❚ the acquisition of the remaining 49% of the French company
Renault Automation Comau (which later changed its name
to Comau Systèmes France). This company operates primarily
in the Engineering and Mechanical Systems segments. The
purchase, which was envisaged in the original agreements
with Renault, will enable Comau to increase rapidly the
productive, commercial and organizational integration of
its operations in France;
❚ the establishment of Comau Russia to acquire orders for
contract business with the local affiliates of a number of
leading European carmakers.
26
Production Systems — Comau
Operating performance
Revenues came to 1,082 million euros in the first half of 2003,
an increase of about 9% on the year-earlier period. The result
reflects the increase in contract work at Comau Pico in the
NAFTA area (up 40% despite the decline of the dollar against
the euro), which was partially offset by the slight fall (3%) in
contract work at Comau Systems in certain European countries.
Revenues at Comau Service were virtually unchanged on those
for the previous year.
Overall, the growth in contract work in the NAFTA countries
in the first half of this year with respect to the first six months
of last year was due to the strong order portfolio at the end
of 2002 and the base effect of the comparison with the first
half of 2002, which was still sharply affected by the crisis in 2001.
The consolidated results for the first half of 2003 show an
operating loss of 7 million euros, which is slightly higher than
the loss of 5 million euros reported in the same period of 2002,
as a consequence of the weaker performance of contract work
at Comau Systems (lower sales and narrower margins), which
offset the improved results at Comau Pico (which increased
sales, although the beneficial impact was attenuated by the
depreciation of the dollar).