Holden posts $112 million profit for 2010

Mark Reuss predicted it two years ago: Holden would return to profitability in the short term. The improved financial outlook may have taken a year longer than the former Holden MD had hoped, but better late than never...

The result justifies GM's decision to persist with its Australian operation, rather than close it down -- a very real possibility during the dark days of the corporation's Chapter 11 proceedings. Key among the factors contributing to Holden's profit for 2010 were cost-cutting and restructuring.

"The economic climate experienced during 2008 and 2009 required us to improve our structural cost base and business model to ensure the long-term profitability of our domestic business," Holden's Chief Financial Officer, Mark Bernhard was quoted as saying in the press release.

"The measures we took to restructure our organisation and reduce costs during this period saw us emerge as a leaner, more flexible automotive manufacturer."

But if Bernhard appears to have credited restructuring and cost efficiencies primarily for Holden's return to profit, it should be noted also that the company's total domestic sales last year rose 11 per cent -- against 2009 --  and Holden's exports surged higher still, with vehicle exports up 13 per cent and engine exports up 25 per cent.

The added throughput from manufacturing was also complemented by the cost-cutting measures -- between them improving Holden's consolidated revenue to $4.4 billion in 2010, from $3.8 billion for the year before.

According to the press release, local manufacture of the Cruze small car (pictured) will be a focal point for the continuing profitability of Holden in 2011 and beyond.

Senator Kim Carr, federal Minister for Industry and Innovation, also issued a press release, positing his view that the $112 million profit represents a "$320 million turnaround that shows that the New Car Plan is working." The figure of $320 million is based on the gulf between last year's profit of $112.4 million and the 2009 loss of $205.1 million.

Senator Carr also praised Holden for finding additional export market growth (including the E85 SIDI-engined Commodore to Brazil) at a time when the Australian dollar is hitting record highs against the US greenback.

"The fact that there are excellent prospects for further export growth at a time of a strong Australian dollar further underscores our faith in the company and the industry."

And the fact that Holden posted a profit while committing a still larger figure to on-going R&D was cause for further plaudits from the Senator.

"This is a company that has also made an exemplary commitment to local design and engineering, supported by the Australian and State Governments.  For example, it spent $179 million of research and development in 2010, compared with $146 million in 2009."

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