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Toyota Australia posts $437 million loss

Predictable result: Toyota has joined rivals Ford and Holden in red ink, following decisions to withdraw from local manufacturing.

End of local manufacturing causes Toyota Australia to bleed a record $437 million

26 Jun 2014

TOYOTA Australia's decision to close its local manufacturing operation in 2017 has had a massive impact on the company's financial results, with the car-maker posting a $437 million loss for the past Japanese fiscal year.

The Japanese car-maker's local arm said in a statement released today that its restructuring costs totalled $889 million, which included $505 million in asset write-downs and $384 million for employee redundancies.

Without including the costs associated with the wind-down of production at its Altona, Victoria plant, the company turned a before-tax profit of $266 million, which Toyota attributes to exceeding its cost reduction targets for a second straight year and strong new-vehicle sales.

Total revenue for the period April 1, 2013, to March 31, 2014, was down $500 million to $8.4 billion.

Toyota announced in February this year that it would cease building cars in Australia in 2017, leaving 2500 plant workers out of a job and effectively ending the local automotive manufacturing industry following similar announcements from Ford and Holden last year.

Toyota Australia president Dave Buttner said that despite positive gains in some areas of the business, the decision to withdraw from Australia dealt a heavy blow to the company's results.

“Our employees worked incredibly hard to secure the investment for the new look Camry, which will be built in our Altona plant from early next year,” he said.

“We also exceeded our cost reduction targets for the second year in a row, which was the result of acompany-wide transformation activity to strengthen our business.

“However, despite these positive results, there were too many external factors beyond our control that made it unsustainable to continue building cars and engines in Australia in the mid to long term future.

“This has obviously had a significant impact on our results as our focus is now on supporting our employees and ensuring that we have the correct provisions in place as we transition to a national sales and distribution company.”

In that time-frame, Toyota sold 221,771 vehicles in Australia and produced 102,590 examples of the Camry, Camry Hybrid and Aurion sedans at its Altona plant.

Mr Buttner said the popularity of the top-selling Corolla as well as its export program had a positive impact on its profit.

“Toyota retained its overall market leadership for 2013 calendar year for the eleventh consecutive year,” he said.

“This was led by Corolla being named the highest-selling vehicle last year and strong sales from a number of our vehicles including HiLux and the locally built Camry.

“Our export program also continued to play a significant role in our overall business plan, with more than 67,000 vehicles exported to the Middle East, New Zealand and South Pacific Islands.”

Last year Toyota recorded a $144 million profit thanks largely to its export program in which one out every 10 cars built at Altona was shipped to overseas markets.

The results released today show Toyota built 3149 more vehicles in the past financial year, compared with the 2012/2012 reporting period (99,441). The car-maker also exceeded its pre-tax profit from 2012/2013 by $45.1 million.

In May this year, Toyota Motor Corporation reported global profits of ¥1.8 trillion ($A19 billion), which was a 89.5 per cent jump over its profits in the previous financial year, thanks to stronger sales in Japan, the US and Europe as well as earnings made from hedging the weakening yen against other currencies.

Fellow local car-makers Ford and Holden reported significant losses earlier this year on the back of their decisions to pull out of Australian automotive manufacturing in 2016 and 2017 respectively.

GM Holden recorded its biggest-ever annual loss of $553.8 million for the 2013 US financial year, with a one-off asset write-down of $500.4 million for property, plant and equipment and a further $122.3 million charge for redundancies.

Ford Australia took a hit of $267 million after taxes in the last financial year, following a prediction earlier in the year by its US parent company that the local operation would suffer massive losses as it restructured its business from a manufacturer to a full-line importer.

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