Holden driven $554m into red

Automaker's decision to quit manufacturing in Australia ensured worst year on record.

Holden's decision to quit manufacturing sent the company spiralling into the red last year, with a $554 million loss its worst on record.

A slight increase in revenue, to $4.1 billion, failed to offset $500m in writedowns on plant and equipment as a direct result of the plan to close its Adelaide and Melbourne plants in 2017.

Holden said the writedown was a one-off payment in line with expectations, with its ­December announcement predicting a figure between $400m and $600m.

However, it also incurred $122m in redundancy payments and expects severance costs to continue, with 2900 jobs at stake when production of Commodore and Cruze cars ceases in three years.

Holden said exit costs were the key driver of its 2013 result.

“There are significant costs associated with our decision to cease domestic manufacturing of vehicles in Australia by the end of 2017,” chief financial officer Jeff Rolfs said.

“Last year, we recorded the initial allocations of our employee separation costs with further charges expected in this area.”

The $554m loss eclipses Holden’s previous worst of $211m at the height of the global financial crisis in 2009.

The General Motors subsidiary has now chalked up negative results in seven of the past 10 years, totalling almost $1.3bn.

Mr Rolfs said quitting manufacturing would help return the company to profit and pointed to a strong second half to the year, when sales surged more than 17 per cent, mainly thanks to ­imports.

“We are profitable on our ­imported portfolio and Holden is focused on taking the right decisions to grow sales and revenue in the immediate term,” he said.

However, total sales slid to 112,059, down 2.3 per cent, and the brand’s market share slipped to 9.9 per cent.

This was despite a record year for vehicle sales overall.

Holden remains a distant second to Toyota in the sales race after ceding leadership in 2003 with demand for its locally built models at an all-time low — and half the level of a decade ago.

Output from its Adelaide plant fell 11 per cent to 74,602 cars and exports remain a small part of the picture but increased 23 per cent, to 16,909, as Holden began shipping rebadged Commodores to Chevrolet dealers in the US.

Government assistance in the form of the Automotive Transformation Scheme rose slightly to $86m.

The company found encouragement in a slight increase in revenue, by $29m to $4.05bn, and Holden’s new boss, Gerry Dorizas, recently declared a goal of overtaking Toyota by the end of the decade. “The strategy is to go back to No 1,” he said in his first comments after taking the reins at Holden earlier this year. “And we’re saying 2020.”

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