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

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PRODUCTION SYSTEMS — COMAU/PICO
Highlights
(<strong>in</strong> millions of euros) <strong>1999</strong> 1998 1997
Net revenues 1,693 843 841
Operat<strong>in</strong>g <strong>in</strong>come (loss) 43 (1) 27
As a % of revenues
Income (loss) before
2.5 (0.1) 3.3
m<strong>in</strong>ority <strong>in</strong>terest (8) (6) 12
Cash flow 30 12 29
Capital expenditures 26 14 16
Research and development 20 14 17
Net <strong>in</strong>vested capital 485 165 179
Number of employees 16,943 7,103 4,809
GROWTH STRATEGIES
<strong>The</strong> acquisitions completed <strong>in</strong> <strong>1999</strong> with the goal of
support<strong>in</strong>g the growth strategy pursued by the Production
Systems Sector <strong>in</strong> its core bus<strong>in</strong>ess segments (bodywork
and ma<strong>in</strong>tenance services) <strong>in</strong>clude the follow<strong>in</strong>g:
❚ <strong>The</strong> most important transaction was the acquisition by <strong>Fiat</strong>
S.p.A. of a controll<strong>in</strong>g <strong>in</strong>terest <strong>in</strong> the Pico (Progressive
Tools & Industries Co.) <strong>Group</strong>, a lead<strong>in</strong>g U.S. producer
of bodywork production systems with a significant market
presence <strong>in</strong> Great Brita<strong>in</strong>, Mexico and South Africa.
❚ In France, Comau purchased a majority <strong>in</strong>terest (51%) <strong>in</strong>
Renault Automation and acquired the bodywork systems
of Sciaky S.A.
<strong>The</strong> Pico, Renault Automation and Sciaky acquisitions
re<strong>in</strong>forced at the structural level the Sector’s operations <strong>in</strong>
its pr<strong>in</strong>cipal markets and strengthened its relationship with
all major automotive manufacturers.
Comau Service, a bus<strong>in</strong>ess unit established <strong>in</strong> 1998 to provide
specialized ma<strong>in</strong>tenance services for automotive production
and facilities, became operational <strong>in</strong> Italy <strong>in</strong> <strong>1999</strong>.
Comau Service, which will cont<strong>in</strong>ue to handle the <strong>in</strong>sourc<strong>in</strong>g
of ma<strong>in</strong>tenance services for production facilities of the <strong>Fiat</strong>
<strong>Group</strong> throughout the world, also entered <strong>in</strong>to agreements
with several large carmakers.
RESULTS FOR THE YEAR
Ow<strong>in</strong>g <strong>in</strong> part to the transactions discussed above and
<strong>in</strong>clud<strong>in</strong>g Pico’s contribution, the Sector achieved the follow<strong>in</strong>g
results <strong>in</strong> <strong>1999</strong>:
❚ <strong>The</strong> year-end net order portfolio amounted to 1,762 million
euros, compared with 576 million euros at December 31,
1998.
❚ Revenues rose to 1,693 million euros, double the amount
booked <strong>in</strong> the previous fiscal year.
❚ Operat<strong>in</strong>g <strong>in</strong>come totaled 43 million euros (2.5% of
revenues). In 1998, Comau without Pico reported
an operat<strong>in</strong>g loss of 1 million euros.
<strong>The</strong> year ended with a net loss of 8 million euros, compared
with a net loss of 6 million euros <strong>in</strong> 1998. <strong>The</strong> Sector’s
<strong>in</strong>terest <strong>in</strong> the <strong>1999</strong> result was a loss of 10 million euros (loss
of 6.7 million euros <strong>in</strong> 1998).
Cash flow reached 30 million euros, up from 12 million euros
<strong>in</strong> 1998.
On an aggregate basis, the performance of Comau and Pico
resulted <strong>in</strong> the creation of value <strong>in</strong> <strong>1999</strong>.