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Holden posts $128m profit for 2015

By Barry Park, 06 May 2016 Industry

Holden posts $128m profit for 2015

Holden has pegged its first profit in five years, although says it was weighed down by its loss-making Australian manufacturing operations

HOLDEN has posted a $128.2 million profit for 2015  its first in five years  but added that making cars in Australia was still dragging the company's profitability down.

The result is a turnaround from the $255 million loss reported in 2014 and a record $558.3 million in 2013, all associated with its decision to quit manufacturing in Australia in 2018 and become a full-line importer. Shutting down the Port Melbourne engine plant and the Elizabeth assembly line is costing the carmaker about $600 million. 

The positive result is also in stark contrast to Ford Australia, which earlier this week posed a $162 million loss for 2015, its last full year as a manufacturer here. It also turns around a string of consecutive losses for the carmaker that have totalled almost $1 billion.

Holden managing director Mark Bernhard said the import side of Holden's business was already consistently profitable.

“We’re paving a profitable and sustainable future for Holden for the long term. Put simply, Holden is profitable on our imported vehicle range, while our manufacturing business continued to run at a loss in 2015,” Bernhard said.

“We recorded significant charges, and therefore losses, in 2013 and 2014 due to asset impairments and employee entitlements. This is the cost of looking after our people and ensuring an orderly wind-down, and that remains our unwavering commitment."

He said if Holden had continued building cars beyond 2018, the carmaking side of its business would have lost $85 million in 2015.

Bernhard indicated Holden would be able to improve its bottom line further once local manufacturing ended.

"I think as we move away from local manufacture where we're losing money and we replace those products with imported products where we are making money, it would be safe to assume we will be increasing profitability," he said.

Holden's financial statements released today said it had also included "one-off accounting reversals" of $79.7 million – read cost savings – relating in most part to to a decision to keep its powertrain calibration engineering team on the company books, as well as $57 million in "supplier-related costs".

Holden's result is based on $3.9 billion in revenue earned from 102,951 vehicle sales in 2015, down three percent on 2014's numbers.

On the manufacturing side, Holden said it had built 56,786 Commodore and Cruze cars for the year, down 13.5 percent on 2014's numbers, and 50,397 six-cylinder engines, down almost 27 percent on the previous year.

In terms of exports, Holden sent 10,576 Commodores and Chevrolet-badged Caprices to markets including New Zealand, the Middle East and North America.

Holden said if it had not made the call to quit Australian manufacturing in 2018, it would have taken an extra $125 million hit to its bottom line, dragging its profit down to just 3.2 million for the year.

Government grants added $70.3 million to the carmaker's bottom line.

Holden's last full-year profit was $89.7 million, pegged in 2011 – the exact amount it received in taxpayer support for the year.

Holden said it had invested $70.9 million in research and development in 2015, paling in comparison with Ford Australia's claimed $300 million spend for the year.