Holden posts second-biggest financial loss on record

[BroadyFord]

Not good...

Holden $152.7 million in the red


http://www.carsguide.com.au/news-and...ion_in_the_red

After two years of modest profits Holden has posted its second-biggest financial loss on record on record.
The car maker was $152.7 million in the red in the 2012 calendar year despite $73.5 million in government funding. Its biggest result in the red was $210.6 million in 2009.
The 2012 figure means Holden has lost $730 million over six of the past eight years, and a $202 million profit over the same period.
The last time Holden finished in the black, in 2011, the profit of $89.7 million was identical to the taxpayer funding it received in that calendar year. In 2010, Holden posted a profit of $112 million after receiving $100 million in taxpayer assistance.
An analysis of Holden’s financial results over the past 13 years shows the car maker returns an annual average profit of $64 million from an annual average turnover of $5.5 billion.
Holden’s biggest profit since the year 2000 was $300 million after a record turnover of $6.8 billion in 2004, immediately before five consecutive years of losses.
Holden’s revenue was down 7 per cent to $4 billion in 2012, its second lowest figure in the past decade as Commodore production fell to record lows and Holden posted its lowest sales in 19 years, despite a record high new-car market.
Holden says the company made money in 2012 but the financial loss was primarily due to the devaluing of its Elizabeth car making factory because of its reduced output ($198 million), and redundancy packages which saw hundreds of factory workers leave the company ($27.8 million).
“Australia is one of the most open and trade-exposed automotive markets anywhere in the world with more than 180 passenger cars to choose from. With the Australian dollar at levels not seen since the early 1980s, this puts particular pressure on our Australian manufacturing operations,” Holden’s chief financial officer George Kapitelli said in a statement.
“While we benefit from the strength of the currency with our imported models, we are the most trade-exposed of the local manufacturers, with 60 per cent of our sales from the locally produced Commodore and Cruze. Despite the loss Holden is well positioned for future profitability, with a strong and healthy balance sheet and zero debt.”
Holden hopes to turn its fortunes around with the new Commodore range going on sale this Friday -- with price cuts of up to $10,000 -- ahead of a showroom debut in June.
A new mid-size sedan and a new compact SUV due later in the year will also enable Holden to compete in lucrative market segments where it has been absent.
Leaner production costs after the latest round of redundancies will also contribute to Holden’s financial health.
“We have restructured our manufacturing operations to improve productivity, reduce structural costs and match production to demand, and at the same time we’re focusing on new products and marketing initiatives to ensure our future competitiveness,” Holden boss Mike Devereux said in a statement, adding that the company invested $197 million in research and development and spent $100 million on factory upgrades in 2012.
Meanwhile Holden says it has extended its latest voluntary redundancy program to allow factory workers more time to assess their options. Last month the company announced it would cut 400 jobs at its Elizabeth car assembly plant near Adelaide and 100 engineering jobs in Melbourne.
“We haven’t closed the voluntary redundancy process yet,” said Holden director of government and corporate affairs Matt Hobbs. “We continue to work with our employees and representatives to ensure everybody understands what is on offer and what would be right for them personally.”
When asked if Holden would resort to forced redundancies if it couldn’t get the numbers, the spokesman said: “We will work with employees if we are unable to reach those numbers. We have had more than 500 expressions of interest, people making enquiries about what their package might be, but we are yet to finalise how many workers have made a formal request.”
Toyota Australia announced 350 forced redundancies at its car factory in the Melbourne suburb of Altona in March last year. At Ford, of the 330 factory jobs cut at Broadmeadows and Geelong in November last year, only 120 were voluntary.
The 500 job losses Holden announced last month follow 180 job cuts at Elizabeth in November 2012, and a further 40 at the Port Melbourne engine plant in March 2012.
It is the biggest single redundancy program since Holden axed 500 positions in July 2009 in the wake of the Global Financial Crisis, after exports of the Commodore to the USA ended when the Pontiac brand was shut down.
The latest cutbacks will take Holden’s factory workforce at Elizabeth down to 1750 -- just 50 more than at Ford. At its peak, Holden employed 7350 factory workers in 2004, its biggest production year in the past decade. Back then Holden built 165,000 cars compared to a forecast of 74,000 this year.
This reporter is on Twitter: @JoshuaDowling

Holden in 2012: a look at the books

New-car deliveries: 114,665 (the lowest in 19 years)
Commodore deliveries: 30,532 (the lowest in 34 years)
Revenue: Down 7 per cent to 4.0 billion (compared to $4.3 billion in 2011, $4.4 billion in 2010 and a peak of $6.8 billion in 2004).
Financial result after tax: $152.7 million loss (compared to $89.7 million profit in 2011 and $112 million profit in 2010).
Taxpayer funding: $73.5 million (compared to $89.7 million in 2011 and $100 million in 2010).
Research and development investment: $197 million (compared to $231 million in 2011 and $179 million in 2010).
Vehicle production (Elizabeth, SA): Down 9 per cent to 82,172 (compared to 90,424 in 2011 and 66,000 in 2010).
Engine production (Port Melbourne, VIC): Down 26 per cent to 74,526 (compared to 101,000 in 2011 and 98,000 in 2010).
Exports: Up 14 per cent to 13,778 (compared to 12,000 in 2011 and 8000 in 2010. At its peak Holden exported 60,518 cars in 2005, mostly to North America, when the Australian dollar bought approximately 75 US cents).

Holden: the bottom line
2000: + $237.4 million
2001: + $285.1 million
2002: + $256.6 million
2003: + $285.6 million
2004: + $300.9 million
2005: - $144.6 million
2006: - $146.6 million
2007: - $6.1 million
2008: - $70.2 million
2009: - $210.6 million
2010: + $112.4 million
2011: + $89.7 million
2012: - $152.7 million

[BroadyFord]

Ford supposedly cleared the decks last year by bringing forward its debt liabilities and what not, so if this year is another shocking figure then it's clear things are not good.

[Cobramad]

Hard to compete with the playing field as it is, AND peoples tastes moving from the large Aussie-built sedan. So much choice nowadays... at such a tempting price.

[mik]

If you were a betting man i reckon you would be thinking that the comments about the viability of our local car makers by retired high ups in the local industry where pretty much on the money.

[R-Design]

Sounds like a lot of money's gone into VF (R&D & factory upgrades) assuming its a sales winner they should be ok.

[BroadyFord]

From an updated version of the article:

...“We are losing [money] on our locally produced cars and that’s obviously a position we need to reverse,” said Holden chief financial officer George Kapitelli. “What the headline numbers today don’t show is the difference between General Motors profitability versus Holden profitability. Holden’s imported portfolio is profitable. The losses we have talked about today are a direct result of Holden building cars in Australia.”...

http://www.carsguide.com.au/news-and...ion_in_the_red

UPDATE:

As predicted, Dowling is going insane on Twitter.

[FalconXV]

Does anyone have the profit and loss figures for Ford over the same period?

[Trump]

Originally Posted by FalconXV

Does anyone have the profit and loss figures for Ford over the same period?

This would be interesting. Russ, you have anything?

[jphanna]

i am no expert in these matters by any means, but over the decades (Chrysler, Mitsubishi, Nissan) were sort of 'accepted' as likely to cease manufacturing local car industry. I even remember mitsubishi claiming that 3500 was the 'break even' point for the 380. 3500 sales today......is a good number for a local aussie 6

i certainly didnt think in my lifetime that holden/Ford could ever be in a position of contemplating ceasing local manufacturing without being pumped up by govts.

in an election year, can you see the federal govt or opposition saying....'enough is enough, we are not supporting holden/ford anymore?

[jpd80]

WTF, Dowling used to be a Holden love Muppet, now he's sticking the knife in at every opportunity.

[Road_Warrior]

Originally Posted by jpd80

WTF, Dowling used to be a Holden love Muppet, now he's sticking the knife in at every opportunity.

I think his true colours are finally starting to show.

[Dr Smith]

Originally Posted by jpd80

WTF, Dowling used to be a Holden love Muppet, now he's sticking the knife in at every opportunity.

He did boast he paid for his own ss ute...maybe the new prices are going to burn his trade-in......he's bagged the Malibu economy, made fun of the SS ute and it might have struggled to catch Sabin in a Transit it seems and now this....

[FlipXW]

Originally Posted by jpd80

WTF, Dowling used to be a Holden love Muppet, now he's sticking the knife in at every opportunity.

Holden don't have enough money to pay him off anymore . Seriously though hope the VF takes off well and the 2014 Falcon cant come quick enough.

[BroadyFord]

I think Dowling (like most media commentators) is hostile towards industry assistance in any way, shape or form.

He's been banging on non-stop about how Holden has received billions in taxpayer subsidies and questions whether it's worth the money. Don't get me wrong, it's a fair question to ask once or twice IMO but if you ramble on about it 24/7, it's inevitable that the average Joe gets the idea planted in his head that providing support to Aussie manufacturers is evil as the cars they produce are "dinosaurs", which inevitably translates to a general animosity towards the industry, and in turn, lower sales.

[Franco Cozzo]

I think Mr Beige is on the money that he got dicked on price for his new SS ute.

[FOMOCO 1]

Dowling may not be so one eyed. I spotted him trying to be incognito earlier this year. Where you may ask???? Small FORD Sunday at Williamstown....

[Road_Warrior]

Originally Posted by Big Damo

I think Mr Beige is on the money that he got dicked on price for his new SS ute.

I don't think that is the only thing he "got dicked on" if you get my drift.

[jpd80]

Now we wait on tender hooks for Ford Australia's financial result, I would predict a loss but
that would be mitigated by Ford's proactive right sizing of production capacity for the past few years.
I think Holden is still to find the bottom of the market, the VF will probably give them a lift like FG did
for Ford in 2008 but I have a hunch that the problem runs much deeper than a "stale" VE Commodore.

LPG didn't work with fleets, Ecoboost isn't working with private buyers, the only thing left is diesel or a hybrid.
When everything else is eliminated, that which is left must be true.......

[The G6ET Spot]

Originally Posted by jpd80

WTF, Dowling used to be a Holden love Muppet, now he's sticking the knife in at every opportunity.

He has admitted on radio that he has had the said SS ute back to Holden on 18 occasions for problems with it.

[Bossxr8]

Originally Posted by FOMOCO 1

Dowling may not be so one eyed. I spotted him trying to be incognito earlier this year. Where you may ask???? Small FORD Sunday at Williamstown....

And you didn't go and punch him in the face

[XRtowcar]

If Holden continually made a profit there would be no reason for the government to subsidise them.
Seems like creative accounting to me.

[DanielXR8]

Originally Posted by BroadyFord

I think Dowling (like most media commentators) is hostile towards industry assistance in any way, shape or form.

He's been banging on non-stop about how Holden has received billions in taxpayer subsidies and questions whether it's worth the money. Don't get me wrong, it's a fair question to ask once or twice IMO but if you ramble on about it 24/7, it's inevitable that the average Joe gets the idea planted in his head that providing support to Aussie manufacturers is evil as the cars they produce are "dinosaurs", which inevitably translates to a general animosity towards the industry, and in turn, lower sales.

Banging on about the co subsidies, gets the attention of the editor and gets his story and name out of the auto section and up towards the front of the paper or at the top of the news web page.

I don't know if that attracts him more pay, but apparently he quite likes being noticed that way. For some time I felt many of here were banging on a bit about him, but I've come to agree. He is a sickening example of an attention seeker.

[uniacidz]

New model VF car on the way.
New model cruze
Other new models as well like the Volt

Onwards and upwards, i hope

Journo seems a a attention seeker. Heard alot about him form this forum.
But hey, they are there to write stories

[Falcman0o7]

Holden can pack up and **** off for all i care.

[eb2fairmont]

Originally Posted by jpd80

Now we wait on tender hooks for Ford Australia's financial result, I would predict a loss but
that would be mitigated by Ford's proactive right sizing of production capacity for the past few years.
I think Holden is still to find the bottom of the market, the VF will probably give them a lift like FG did
for Ford in 2008 but I have a hunch that the problem runs much deeper than a "stale" VE Commodore.

LPG didn't work with fleets, Ecoboost isn't working with private buyers, the only thing left is diesel or a hybrid.
When everything else is eliminated, that which is left must be true.......

I'd be keen on diesel. Holden's issues are most likely cruze related. It may get volume but commodore makes more per unit sold.

Ford's decision to stay with territory and falcon was the correct one.

Thats where the ss deal will hopefully fire. Even though sold at lower cost, productions costs for the ss would be the same for commodore and cruse, and the margin in ss would be greater than selling the same number of cruzes.

[Trump]

Originally Posted by Falcman0o7

Holden can pack up and **** off for all i care.

Yeah, no. If Holden pack up and cease manufacturing here, Ford will be next, then Toyota. There will be 15,000 immediate unemployed if this would happen, plus another eventual 200,000 in the component and other industries dependant on the car manufacturers.

[Nikked]

Too bad the general public don't understand a few basics of the manufacturing sector...

It will just be another point of argument for the anti-handout mob...

[DJM83]

Originally Posted by Falcman0o7

Holden can pack up and **** off for all i care.

What, so Ford will then follow? Then you might have to 'heaven forbid' buy a new Ford to keep em in business.

[stevz]

Originally Posted by Falcman0o7

Holden can pack up and **** off for all i care.

Wow, your post is just brimming with intelligence...




Not.

[Resurrection]

This is not good news for anybody, even us Ford fans. If VF fails to sell in sufficient numbers then who knows where this industry will be in the next 5 to 10 years.