Holden posts $361m loss

Holden has reported a $361 million loss before tax, for the financial year. That works out at $255.2 million after tax.

It's not good news, but a better result than the previous year's loss of $553.8 million.

At any rate, good or bad news, the loss came as no surprise to Holden's CFO Jeff Rolfs, who predicted that the company would likely post another loss in 2014 when he announced the 2013 figure. In fact, Rolfs said at that time that Holden would likely remain in the red through to 2017.

The results for 2014 show Holden faced with a $345.9 million charge for 'employee separation costs' and a $9.4 million 'impairment charge', payable once only for property, plant and equipment. Those two costs combined contributed by far the greatest component of the loss. Without them, the loss would have been as little as $5.6 million, a significant improvement on the $70.3 million figure calculated the same way for 2013.

"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. We're committed to supporting our people and treating them with the respect and dignity they deserve during this transition; clearly there are significant costs associated with that," Rolfs said today of the 2014 result.

"We are working with all levels of government and the rest of the industry to deliver support, training and links to future opportunities for Holden employees impacted by our decision. This is evidenced by Holden's $15 million contribution to the Australian Government's Growth Fund for the transition and re-skilling of Holden employees, along with the Holden transition centres we have established at all of our sites.

"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. 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."

The loss is staggering in light of Holden's ranking as Australia's second most popular brand, with sales totalling 106,092 vehicles for the 2014 calendar year. Only Toyota, itself closing down its manufacturing base in Australia, was more popular than Holden last year. In contrast with Holden, Toyota turned a profit in 2014. Ford, the third local manufacturer - also ending production shortly – reported a loss of $191 million last year. Holden's locally-built Commodore sold over 30,000 units last year, and was the fifth most popular model in Australia for 2014.

While the numbers are grim on the face of it, the $345.9 million for employee separation actually accounts for all employee entitlements through to the end of 2017. Holden has now booked the vast majority of its exit costs based on the plan to wind down manufacturing, and that includes both separation costs and assets write-down.

Holden's consolidated revenue for 2014 was $3.62 billion. The company says it has implemented initiatives to reduce operating costs and improve business efficiency during the course of the year.

"Our operations and business model will continue to evolve, what won't change is Holden remaining a significant part of Australia and its communities through both our National Sales Company and our 230-strong dealer network, employing more than 14,000 people combined. Holden also continues to contribute to the Australian economy, spending $123.7 million in research and development in 2014 alone," Rolfs said.

"Holden is focused on executing our long-term plan to grow sales and revenue and manage our other costs very closely. We continue to face stiff challenges and there is no quick fix but we are building a sustainable future step by step.