THE FIAT GROUP IN

The gross operating result of Insurance Activities reached
6.1% of premiums written during the year, compared with
3.2% in the previous year, thanks to improvement in the
claims/premium ratio.
Overhead and Research and Development Outlays
Overhead came to 6,149 million euros in 2001 (0.7% more
than in 2000), but substantially in line with the previous year
as a percentage of revenues (10.6%).
Improved efficiency in the Sectors offset the negative effects
of inflationary pressures and increased outlays for advertising.
As a result of stiffer competition in Europe, especially Fiat Auto
had additional advertising expenses amounting to 64 million
euros.
If these costs were excluded, overhead outlays at the Group
level would total approximately 4,870 million euros, in line
with previous year results in spite of inflation increases.
Research and development outlays, which were charged
to income, totaled 1,817 million euros, or 92 million euros
more than in 2000. This increase was mainly due to higher
spending by Fiat Auto to update the product range and
thereby enhance the value of its brands.
Significantly higher spending on technological innovation
was also reported in other Group Sectors, such as Ferrari
and Aviation.
Operating Income
Operating income, before extraordinary, financial, and tax
components, totaled 318 million euros, down sharply from the
Operating Income
(in millions of euros)
788
1999
855 million euros posted in the previous year. The return on
sales (R.O.S.) was 0.5%, compared with the 1.5% recorded
for 2000.
The weakening economy heavily penalized the profitability of
the automotive Sectors, which sustained a decline in volumes
and contraction of margins and, mainly at Fiat Auto, higher
research and development and advertising outlays to support
product innovation and brand promotion. The major
commitment to realizing cost efficiencies only partially
attenuated these negative trends.
The operating performance of the individual Sectors is
reviewed below:
❚ Fiat Auto closed the fiscal year with an operating loss of
549 million euros (-2.2% of sales), against operating income
of 44 million euros in fiscal 2000 (0.2% of sales). A series of
unfavorable factors negatively affected Sector profitability:
the decline in volumes; a worsened product mix/content
Report on Operations – Analysis of the financial position and operating results of the Fiat Group and Fiat S.p.A. 31
855
2000
318
2001
Operating Income R.O.S. %
(in millions of euros) 2001 2000 Change 2001 2000
Automobiles (Fiat Auto Holdings) (549) 44 (593) (2.2) 0.2
Agricultural and Construction Equipment (CNH Global) 209 45 164 1.9 0.4
Commercial Vehicles (Iveco) 271 489 (218) 3.1 5.7
Metallurgical Products (Teksid) 15 101 (86) 0.9 5.4
Components (Magneti Marelli) (74) 55 (129) (1.8) 1.2
Production Systems (Comau) 60 87 (27) 2.7 3.6
Aviation (FiatAvio) 186 143 43 11.4 9.6
Publishing and Communications (Itedi) (2) 10 (12) (0.6) 2.8
Insurance (Toro Assicurazioni) 68 (56) 124 1.2 (1.3)
Services (Business Solutions) 73 n.a. n.a. 4.0 n.a.
Miscellanea and eliminations (*) 61 (63) 124 n.m. n.m.
Total 318 855 (537) 0.5 1.5
of which: Industrial Activities 222 919 (697) 0.4 1.7
(*) The item “Miscellanea and eliminations” includes for 2000 the operating results for the Rolling Stock and Railway Systems Sector that was deconsolidated as of August 1, 2000.
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