2006 Annual Report - Fiat SpA
2006 Annual Report - Fiat SpA
2006 Annual Report - Fiat SpA
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Agricultural and Construction Equipment<br />
CNH-Case New Holland<br />
Operating Performance<br />
In <strong>2006</strong>, the worldwide market for agricultural equipment<br />
reported contrasting trends for the main products and across<br />
the various regions. Demand for tractors increased 9% overall<br />
as a result of extremely positive performances (+25%) in Rest<br />
of the World markets, more modest growth in Western Europe<br />
(+3%), Latin America (+1%), and a 3% contraction on the North<br />
American market. The combine market continued its negative<br />
trend and contracted 7% overall from 2005.<br />
CNH overall deliveries of tractors decreased from 2005, also a<br />
result of actions to reduce dealer inventories. In particular, the<br />
most significant decline was reported in North America, where<br />
volumes were also influenced by market softness. Conversely,<br />
deliveries improved sharply in Latin America and were stable<br />
in Western Europe. CNH overall market share decreased<br />
slightly while, at the single area level, an improvement was<br />
reported in Latin America. CNH deliveries of combines to the<br />
network declined overall: against the backdrop of an<br />
unfavourable market environment, decreases were reported<br />
in the Americas and in Western Europe; only Rest of the World<br />
countries bucked the trend reporting higher volumes with<br />
respect to 2005. CNH overall market share was up thanks to<br />
an increased penetration of the North and Latin American<br />
markets.<br />
In <strong>2006</strong>, the global market for construction equipment grew<br />
11% overall from 2005. Demand for loader backhoes increased<br />
by 7% thanks to significant increases in Latin America (+37%)<br />
and Rest of the World countries (+33%), in part offset by a<br />
decline in North America (-13%) and Western Europe (-2%).<br />
Worldwide market demand for skid steer loaders was down<br />
6% due to a decline in North America (-13%), against positive<br />
performances in other areas: Latin America (+30%), Rest of the<br />
World countries (+19%) and Western Europe (+3%). Demand<br />
for heavy equipment was up 14%, with increases of 24% in<br />
Latin America, 3% in North America, 13% in Western Europe<br />
and 23% in Rest of the World countries.<br />
In <strong>2006</strong>, CNH benefited from rising demand, increasing<br />
deliveries of construction equipment at a rate consistent<br />
with or higher than that of the market in the various regions,<br />
with the exception of North America, where decreases were<br />
reported for all the main product lines. The Sector’s global<br />
market share was unchanged from 2005, with increases in<br />
Latin America for all the main product lines.<br />
68 <strong>Report</strong> on Operations CNH<br />
Highlights<br />
(in millions of euros) <strong>2006</strong> 2005<br />
Net revenues 10,527 10,212<br />
Trading profit 737 698<br />
Operating result (*) 592 611<br />
Investments in tangible and intangible assets 394 255<br />
- of which capitalised R&D costs 79 40<br />
Total R&D expenses (**) 289 234<br />
Employees at year-end (number) 25,335 25,420<br />
(*) Including restructuring costs and unusual income (expenses).<br />
(**) Including R&D capitalised and charged to operations.<br />
Innovation and Products<br />
In <strong>2006</strong> CNH made significant progress to renew and upgrade<br />
its product line by introducing new models, within the<br />
framework of the reorganisation of its operations into four<br />
distinct global brand structures, which started at the end of<br />
2005 and became fully operational in <strong>2006</strong>.<br />
In the agricultural equipment segment, Case IH launched<br />
a number of new four wheel drive products equipped with<br />
Tier 3 engines: six new models up to 530 engine HP and four<br />
new models of the Magnum series up to 305 engine HP for<br />
which The Chicago Athenaeum Museum of Architecture and<br />
Design, awarded the company’s industrial design firm and<br />
two of its engineers the <strong>2006</strong> Good Design Award for the<br />
new styling.<br />
The Case IH Axial-Flow 2388 combine and its edible bean kit<br />
were the runaway gold medal winners of the Outstanding<br />
Category in Brazil’s <strong>2006</strong> Gerdau Melhores da Terra contest.<br />
Bolstered by launches of the CR and CSX combines in Europe,<br />
New Holland again confirmed its leading position in the<br />
combine market.<br />
In the construction equipment segment, Case Construction<br />
Equipment launched new Tier 3 wheel loaders and dozers<br />
featuring more spacious cabs and improved operating systems<br />
boosting productivity and fuel efficiency. The Case<br />
Construction Equipment’s E Series wheel loaders and<br />
420CT / 440CT compact track loaders were named in<br />
Construction Equipment Magazine’s “Top Products for <strong>2006</strong>”.<br />
Aggregates Manager, a North American publication,<br />
recognised Case Construction with its “Top Rollout” award<br />
for the new E Series wheel loaders and the CX700 excavator.<br />
New Holland Construction launched pilot controls on skid steer<br />
loaders and compact track loaders in North America to<br />
enhance ease of operation and manoeuvrability. New Holland<br />
Construction’s new Tier 3 wheel loaders, launched in North<br />
America and Europe, offer new cabs with greater top visibility<br />
during loading operations. Construction Equipment Magazine<br />
also included New Holland’s E215-ME excavator and its entire<br />
backhoe product line in its “Top 100 Products for <strong>2006</strong>”.<br />
Meanwhile, Case New Holland won strong acclaim from<br />
industry observers with its spring announcement to the<br />
National Biodiesel Board that it fully approves use of up to<br />
B20 blends (20% biodiesel/ 80% petroleum-based diesel) on all<br />
agricultural equipment currently produced with CNH engines.<br />
Services<br />
By refocusing efforts on their dealers and customers, CNH has<br />
set the stage for continued future improvements. In particular:<br />
■ Case IH laid the groundwork to better serve and improve<br />
its dealer network, by launching the “Master Mechanic”<br />
program to create technically competent field service team.<br />
The program’s goal is to train and certify 11,000 dealer<br />
technical service technicians;<br />
■ New Holland took steps to raise service and support levels<br />
during the harvesting season, introducing 24/7 parts and service<br />
coverage during the season, thereby reducing unit down time;<br />
■ In December, New Holland Construction Equipment<br />
launched the Dealer Mechanics Council for Service & Quality<br />
Optimization. The group’s purpose is to establish direct<br />
two-way communication with manufacturing to validate<br />
and promote quality and reliability.<br />
<strong>Report</strong> on Operations CNH 69