The Fiat Group in 1999 - Report on Operations - Fiat SpA

42
AGRICULTURAL AND CONSTRUCTION
EQUIPMENT — CNH GLOBAL
Highlights
(<strong>in</strong> millions of euros) <strong>1999</strong> 1998 1997
Net revenues 5,246 5,127 5,284
Operat<strong>in</strong>g <strong>in</strong>come 371 452 602
As a % of revenues 7.1 8.8 11.4
Income before m<strong>in</strong>ority <strong>in</strong>terest 216 507 422
Cash flow 333 624 528
Capital expenditures 178 151 135
Research and development 158 136 113
Net <strong>in</strong>vested capital 5,777 1,123 592
Number of employees 19,049 21,344 19,077
SALES PERFORMANCE
In <strong>1999</strong>, the tractor market grew slightly <strong>in</strong> Western Europe.
In North America, although overall tractor sales evidenced a
small <strong>in</strong>crease, this was entirely attributable to the growth <strong>in</strong>
sales of low horsepower tractors. <strong>The</strong> North American market
for more powerful tractors, such as those produces by CNH,
cont<strong>in</strong>ued to reflect ongo<strong>in</strong>g market weakness.
In Lat<strong>in</strong> America, the market was slightly above 1998 levels.
However, drought-related problems had a negative impact
on the <strong>in</strong>dustry as a whole.
<strong>The</strong> market for comb<strong>in</strong>e harvesters was particularly weak <strong>in</strong>
most regions throughout <strong>1999</strong>. North America recorded the
weakest performance, primarily as a result of low commodity
prices throughout the year. In Western Europe, the market
decl<strong>in</strong>ed by approximately 15% due to a difficult year for
crops. <strong>The</strong> Brazilian market grew by 15%, cont<strong>in</strong>u<strong>in</strong>g the
positive trend of the previous year.
<strong>The</strong> market for construction equipment experienced different
trends <strong>in</strong> the various product l<strong>in</strong>es. <strong>The</strong> worldwide market for
loader/backhoes was disappo<strong>in</strong>t<strong>in</strong>g, end<strong>in</strong>g significantly below
1998 levels. North America, which accounts for approximately
60% of the worldwide <strong>in</strong>dustry, f<strong>in</strong>ished the year well below
1998 performance, <strong>in</strong>fluenced by ris<strong>in</strong>g <strong>in</strong>terest rates. This
trend, however, was partially offset by encourag<strong>in</strong>g growth <strong>in</strong>
the European market, primarily driven by an improved hous<strong>in</strong>g
sector.
In North America, demand for skid-steer loaders rema<strong>in</strong>ed
strong (+6%), fueled by a favorable economy and suburban
growth. In Western Europe, the market improved significantly,
up 8% over the prior year.
<strong>The</strong> heavy construction equipment market experienced an
overall decl<strong>in</strong>e <strong>in</strong> all products, except excavators. In North
America, sales of heavy equipment dropped 16% over 1998.
Strong growth <strong>in</strong> Western European and Lat<strong>in</strong> American
markets could not offset the sharp decl<strong>in</strong>e <strong>in</strong> North America.
GROWTH STRATEGIES
Dur<strong>in</strong>g <strong>1999</strong>, CNH cont<strong>in</strong>ued to support its growth through
both strategic corporate <strong>in</strong>itiatives that strengthened its
position <strong>in</strong> <strong>in</strong>ternational markets and the launch of new
products <strong>in</strong> markets around the world.
❚ In November <strong>1999</strong>, follow<strong>in</strong>g the acquisition of Case <strong>in</strong>
the United States, New Holland changed its name to CNH
Global N.V. (CNH). This new group is the world’s largest
manufacturer of agricultural equipment and one of the
lead<strong>in</strong>g <strong>in</strong>ternational producers of construction equipment.
<strong>The</strong> acquisition of Case Corporation, which was reflected
on a cost basis <strong>in</strong> <strong>1999</strong>, will be consolidated <strong>in</strong>to the
<strong>Group</strong>’s accounts <strong>in</strong> year 2000.
<strong>The</strong> product l<strong>in</strong>e breadth, geographic sales distribution,
and technological capabilities of New Holland and Case
are highly complementary and will provide significant
opportunities for CNH to grow and <strong>in</strong>crease profitability <strong>in</strong> the
future. <strong>The</strong> comb<strong>in</strong>ed resources of the merged companies
also provide CNH with opportunities to significantly enhance
both services to our customers and expand the Company’s
worldwide equipment product offer<strong>in</strong>gs.
❚ In <strong>1999</strong> the accounts of O&K Orenste<strong>in</strong> & Koppel AG
(German producer of construction equipment) were
consolidated for the first time.