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Holden posts $255m loss as costly closure takes its toll

By Damion Smy, 17 Jul 2015 News

Holden posts $255m loss as costly closure takes its toll

Holden closes the books on its penultimate full year as a local manufacturer with another big run of red ink, posting a $255.2 million loss for 2014

HOLDEN has posted a $255.2 million loss for the 2013-14 financial year, the second-largest loss in its history following the previous year’s $553.8m. It means that the company hasn’t posted a profit since the $89.7m it recorded in 2011.

Holden sold 106,092 vehicles in 2014 as the second-most popular brand, yet the loss still equates to $2403.57 per vehicle.

Holden chief financial officer, Jeff Rolfs, was interim CEO for most of the year, following the abrupt departure of Gerry Dorizas in October. “It’s obvious that there are major costs associated with our decision to cease domestic manufacturing of vehicles in Australia by the end of 2017, chief among them being employee separations and entitlements,” Rolfs said in an official statement, citing the loss as a direct consequence of its planned 2017 shut-down.

Holden says that despite the loss, it has a healthy balance sheet with zero debt and is committed to supporting its employees as it becomes a full-line importer. It’s a similar statement to that of cross-town rival Ford, which will quit Australian production by October 2016.

 “We are always mindful of the impact on our employees and our financial results, however these are expected and foreshadowed costs that are well within our forecasts,” said Rolfs. “As we announced in 2013 and again last year, there are substantial costs involved in the orderly wind-down of local manufacturing. This is a difficult path to tread but we’re committed to our long-term plan.”

That plan will have to be carried out by new MD Mark Bernhard, who took over the top job from July, the first Australian chief of Holden since John Bagshaw left in 1990.

“Having started my career with Holden, I understand the strength of the brand and its importance to Australia and our customers,” said Bernhard. “My job is to build on that for future generations.

“Our company is going through a challenging transition to a national sales company and I am determined we will treat our people with the respect and dignity they deserve. But we must also look forward and Holden’s future success will be built on three pillars: brand, product and customer experience.”

Holden's loss compares with rival Ford's $191 million loss in 2014, while in a surprise result, Toyota made a $194 million profit in its 2013-14 financial year on the back of strong exports and sales of imported product.

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