THE FIAT GROUP IN

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Paolo Filomeni,
Teksid’s Chief Executive Officer.
Metallurgical
Products
When it was established in 1978, Teksid could draw
on more than sixty years of expertise accumulated
by Fiat’s metallurgical operations.
OPERATING PERFORMANCE
The slowdown in the growth of the world economy had
deep repercussions on the markets where the Sector operates.
The NAFTA countries were particularly affected, with automotive
production falling off sharply as early as the first quarter of
2001. The further deterioration that occurred after September
11 negated any feeble expectations of an upturn.
Against this background, Teksid reported a decrease in sales
volumes that has contributed to the profound shift in business
mix that the Sector is experiencing. More specifically, the
Aluminum and Magnesium operations are growing rapidly,
while the Cast-Iron Business Unit has cut capacity in Europe
and expanded selectively in the NAFTA markets and in China.
A detailed review follows.
❚ The Aluminum Business Unit was busy with the
development and market launch of eight new products.
These projects required major investments, including the
startup of a new U.S. factory in Alabama that uses lostfoam
technology to produce cylinder heads and blocks
for the new GM L850 engine. A second plant, still under
construction, will manufacture die-cast cylinder blocks for
Nissan. Work continued on a second aluminum facility in
Mexico that will produce cylinder heads for Ford, Chrysler
and Nissan. These new factories will enable the Aluminum
Business Unit to almost double its output over the next five
to six years. In 2001, its contribution to the Sector’s total
revenues had already increased from 45% to 49%.
❚ Meridian (Magnesium) continued to develop new products
for both the American and European markets. An important
Teksid
Highlights
(in millions of euros) 2001 2000 1999
Net revenues 1,752 1,873 1,682
Operating income 15 101 76
as a % of revenues 0.9 5.4 4.5
Net income (loss) before
minority interest (125) 8 26
Cash flow (16) 113 123
Capital expenditures 151 182 182
Research and development 27 29 23
Net invested capital 788 861 793
Number of employees 13,827 14,286 14,522
Revenues by geographical
region of destination
Employees by geographical
region
0 50 100%
Italy
Rest of Europe
Rest of the world
new contract covered the development of the radiator
mounting bracket for Ford’s line of SUVs. In 2001, the
Magnesium Business Unit completed the expansion of its
plant in Strathroy, Ontario. Its contribution to the Sector’s
total revenues was 17% (16% in 2000).
❚ The Cast-Iron Business Unit opened its new Hua Dong
foundry. Located in Zhenjiang, China, this facility produces
cast-iron cylinder blocks for automobiles and light
commercial vehicles. The Business Unit’s contribution
to Sector revenues fell from 39% in 2000 to 34% in 2001.
In order to quickly bring its costs in line with current sales
volumes, Teksid is implementing incisive contingency plans to
reduce production and has launched a reengineering program
that aims primarily at streamlining its Cast-Iron operations and
business support services.
RESULTS FOR THE YEAR
In 2001, the Sector had revenues of 1,752 million euros,
or 6.5% less than in the previous year.
At 866 million euros, the revenues of the Aluminum Business
Unit were 2.2% higher than in 2000, as gains in Europe more
than offset a decline in shipments to NAFTA customers. The
Cast-Iron Business Unit reported lower revenues of 599 million
euros (-18.5%) due to weak market demand, the sale of the
Rovigo factory and, to a lesser extent, the closing of the
Carmagnola plant. Revenues generated by the Magnesium
Business Unit were down 1.2% to 287 million euros. Customers
outside the Fiat Group accounted for 80% of total revenues,
compared with 76% in 2000.