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Toyota Australia posts $437m loss as closure looms

By Barry Park, 26 Jun 2014 News

Toyota Australia posts $437m loss as closure looms

Shut-down costs add to financial black cloud over Australian car making sector

TOYOTA’s decision to quit Australian manufacturing has cost the company dearly, with the local car maker today posting a $437 million loss for its 2013-14 financial year.

The huge hole in Toyota Australia’s accounts comes from a half a billion-dollar writedown of the value of the company’s plant and equipment, and a $384 million payout to mainly blue-collar workers, who will all lose their jobs by late 2017.

Toyota said it would have made a pre-tax profit of $266 million without the added costs of shuttering its Altona-based engine casting and assembly lines in Altona in Melbourne’s west.

Added to Ford’s $267 million loss posted for last calendar year and Holden’s $553.8 million loss over the same period, the Australian car industry is responsible for an almost $1.3 billion blow to the manufacturing sector.

Despite its loss, Toyota said it still recorded strong vehicle sales, with 221,771 Toyota and Lexus vehicles sold in the year ending 31 March, with the hit to its bottom line softened further

Due to second-year cost-reduction targets exceeding expectations.

Production of the four-cylinder Camry and Camry Hybrid mid-size sedans and the V6-engined Aurion large car increased slightly last financial year, with 102,590 vehicles built.

Of those, 67,000 vehicles were exported, primarily the Middle East, down on the 69,676 shipped out the previous year.

Toyota blamed the high Australian dollar as one of the key factors hurting its export business, and last year flagged that it needed to strip $3800 from the cost of each car running down the Altona line to maintain viability.

Based on the production numbers, the extra cost left Toyota with a $390 million burden last financial year.

However, revenue fell from $8.9 billion to $8.4 billion, a five percent decline.

Toyota Australia sacked 450 workers last year before announcing in February this year it would end more than 40 years of manufacturing in Australia.

“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,” Toyota Australia president Dave Buttner said.

“We also exceeded our cost-reduction targets for the second year in a row, which was the result of a company-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,” he said.

“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.”

The new-look Camry is expected to roll off Toyota’s Australian production line late next year, despite launching in the US in September this year.

It will also miss out on almost all the interior modifications featured in overseas markets.

Overseas factories are vying for Australia’s production allocation of the Camry beyond Toyota’s local closure, with Thailand firming up as the favourite to absorb the extra capacity.