Holden has today confirmed an after-tax loss of $255.2 million for the 2014 financial year.
But, although significant, the loss was far from unexpected for the Lion brand, having already forecast major financial losses as it works through a costly transition to a sales and import-only operation.
Importantly, Holden’s losses in the 2014 financial year represented a significant improvement on the previous year, which, thanks to a massive one-off $500.4 million “impairment” charge on property, plant and equipment, saw Holden record a $553.8 million loss – its biggest ever.
Holden’s greatest cost in 2014 was a $345.9 million charge in employee separation costs, compared to a $122.3 million charge in the 2013 financial year.
“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,” Holden’s chief financial officer, Jeff Rolfs, said today.
“This is simply the cost of doing what we have to do, which is treating our people and our company with respect and dignity.”
Consolidated revenue fell from $4.05 billion in 2013 to $3.62 billion in 2014, thanks to a drop in financial-year sales of 106,092 – down from 112,059 in the previous year. Rolfs blamed the reduced sales numbers on an extremely competitive market.
He said however that Holden is clearly moving closer to becoming profitable once more, highlighting the company’s $5.6 million 2014 loss in operating performance, which marks a significant improvement on the $70.3m loss recorded in 2013.
The carmaker also benefited from $80.8 million in government assistance through the 2014 financial year.
Rolfs pointed to Holden’s plans for 24 major vehicle launches over the next five years – including the recently arrived Astra, Cascada and Insignia models from Europe, along with the all-new Barina Spark due in early 2016 – as a key factor in returning the brand to the black. A “true sports car” has also been promised.
“We’re counting on the plans we have in place, and the great products, to be a great help in becoming profitable. I won’t give a specific timeline for this though,” he said.
Holden’s last recorded profit, $89.7 million, came in 2011. In 2012, the company announced a $156.8 million after-tax loss.
Reaffirming the company’s intention to continue manufacturing vehicles in Australia until late 2017, Rolfs said Holden has a strong financial base under it.
“We have a really strong, world-class balance sheet: we have zero debt, we have very sufficient cash reserves, and we have a very healthy pension fund. Many companies across the world aspire to this and Holden has it, despite challenging circumstances,” he said.
“And let’s not forget Holden’s broader contribution to industry and the economy. Holden spent $123.7 million in research and development in 2014 alone, and we’ve spent well over a billion in r&d over the past five years”.
Holden has a bright future ahead, Rolfs said, with the company focused on “three key pillars” of brand, product and customer experience.
In 2015, Holden’s year-to-date sales sit at 51,737, compared to 56,773 at the same point in 2014.
Holden is currently the third best-selling automotive brand in Australia, following Mazda (56,591 YTD) and market-leader Toyota (101,714). Hyundai is running a close fourth with 50,099 sales year-to-date.