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

The weakness of world economic growth in the first half of the
year had an appreciable impact on the markets in which the
Sector operates. Automobile output fell in nearly every region
of the world, with the exception of South America and Asia,
which registered gains, and the NAFTA area for heavy
commercial vehicles, which was broadly unchanged on the
previous year.
Despite difficult economic conditions - with sharp pressure on
prices and exchange rates - Teksid’s major effort to diversify its
customer base and markets, together with its constant search
for efficiency gains in products and processes, enabled the
Sector to improve overall performance on the year-earlier
period.
These initiatives will be developed further in the recentlyintroduced
Fiat Group Relaunch Plan. A greater focus on
customer satisfaction and product and service quality will be
flanked by a significant push to develop a structural response
to the problems that have weighed on the Sector’s results.
The Sector gained a number of major orders from Fiat Group
companies and external firms in the period, including:
❚ The Cast Iron Business Unit received orders from PSA,
Renault, Garrett, D.Chrysler, Visteon, Caterpillar and
Cummins.
❚ The Magnesium Business Unit received orders from GM,
Borg Warner, D.Chrysler, Land Rover, JCI and Intier.
Teksid’s commitment to product and process innovation and
development continued with the aim of offering customers the
most highly competitive conditions possible, in line with market
demands and more stringent technological and environmental
regulations.
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Metallurgical Products — Teksid
Operating performance
Notwithstanding the challenging economic environment,
the Sector’s output remained virtually unchanged for Cast Iron
operations (down 0.3%) and performed well at the Magnesium
Business Unit (up 6.8%, thanks to the significant growth in
volumes in Europe and the strong performance of SUV sales
in the United States). By contrast, the adverse trend of exchange
rates reduced net revenues to 439 million euros (down 8% on
the corresponding period of 2002, excluding from the
comparison the Aluminum Business Unit, which was sold in
September last year; the Cast Iron Business Unit posted a
decrease of 10.1%, while the Magnesium Business Unit showed
a 6.3% fall).
Sales to customers outside the Fiat Group accounted for 87%
of the total, compared with 86% in the first half of 2002.
The Sector posted operating income of 5 million euros in the
first half, compared with income of 12 million euros in the yearearlier
period (a loss of 3 million euros on a comparable
consolidation basis). The improvement is attributable to
efficiency gains, which reduced both overhead and variable
costs and helped offset the unfavorable impact of exchange
rates in the period.