Holden loses $70m in 2008

GM HOLDEN this evening posted a $70.2 million operating loss for its financial year ending on December 31, 2008.

The better-than-expected result came in the same week that Toyota Australia announced a $123.4 million profit for its fiscal year ending on March 31, and following the record $274.4 million loss revealed by Ford Australia a week ago.

Holden stressed that it would have made a small after-tax profit of $6.6 million except for special, one-off charges that amounted to $76.8 million and related mainly to the upcoming closure of its Family II engine plant closure.

In addition, Holden said it made top-up contributions of $50.3 million to its Defined Benefits Scheme as the world financial markets began to deteriorate.

Reduced sales volumes saw total revenue drop from $6.1 billion in 2007 to $5.8 billion last year, which chairman and managing director Mark Reuss described as “disappointing, because the organisation was well placed to make a healthy profit in Australia before world markets fell in the third quarter of 2008”.

Left: GM Holden chairman and managaing director Mark Reuss.

Total sales revenue was $5.4 billion compared to $5.7 billion in 2007, while vehicle and engine exports achieved increased revenue of $1.9 billion – up from $1.6 billion in 2007 on the back of a full year of Pontiac G8 sales in the US.

Mr Reuss said the fact Holden invested some $360 million in research and development in 2008 demonstrated that it remained committed to heavily investing in its longer-term future. He is on record as saying he expects Holden to return to profit in 2010.

“The Holden senior leadership team is doing everything possible to return to a profitable position as quickly as possible,” said Mr Reuss in a letter to employees today. “This includes attacking the revenue and cost sides of the business with equal enthusiasm.

“We have spoken about many of these strategies which include lowering operating costs on our vehicles, developing more alternative fuel and fuel-saving technologies, concentrating on production of our new fuel-efficient small car and pursuing export opportunities.

“At the same time, we must focus on our ongoing restructuring efforts to ensure we have the right business for the future. All of us have a role to play in improving our current position,” said Mr Reuss.

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