Holden posts $6 million loss for 2007

Holden MD Mark Reuss has described 2007 as "a good news story" for the local manufacturer, despite the company's board signing off on a $6 million loss.

Relative to the 2006 outcome, it was a good result. The year earlier, Holden had lost $146 million and the year before that, $145 million -- both results a consequence of one-off debts. These debts included the development of the VE Commodore (and its global rear-wheel drive platform), plus the restructuring of the company in line with laying off hundreds of staff.

The staff retrenchments were a natural follow-on from the end of the third shift at the Elizabeth plant and the introduction of leaner manufacturing. Holden incurred a debt of $77.5 million for staff payouts during 2007.

"The restructuring money that was involved with the first year of VE -- like I say, it was about $77.5 million -- so, that's a one-off restructuring piece to get out of the old car and we have that behind us," says Reuss.

"So if we continue on our track to be a great efficiency producer and we keep reinvesting in our manufacturing footprint we have here with the V6 and the total vehicle, we can generate a pretty bright future here in Australia."

As Reuss pointed out, without that $77.5 million burden, Holden would have reported a substantial profit -- although not as substantial as the $242 million profit reported last week by Toyota Australia.

Interestingly, Holden invested $420 million in research and development during 2007 -- a 37 per cent increase on the R&D sum for 2006. At least a portion of the 2007 figure would have been costed against the new Sportwagon. But Holden is not saying how much of that R&D expenditure was budgeted for the VE wagon -- and how much was allocated to the Chevy Camaro. In fact, Holden is less than entirely transparent on the break-down of its revenue for 2007. Reuss would not reveal, for example, the split between earnings from locally-manufactured products and imports in the domestic market.

Holden is anticipating a better year for 2008. While Middle East exports were down last year, they had declined after a year of record sales in 2006. Added to whatever export sales are made this year, Holden can count on a take-up of slack from the export of the Pontiac G8 to the US.

Domestic sales in 2007 were actually ahead of sales in 2006 and, although it's off to a late start this year, the Sportwagon is likely to redress the difference in sales between the Commodore sedan for the year to date (nearly 7000 units down, according to VFACTS).

The restructuring likely to follow the cessation of Family Two engine production at Holden's engine plant in Port Melbourne will not occur until 2009, so there'll be minimal effect on 2008 figures.

"Our '07 results show that Holden recovered in a very difficult market with a lot of headwinds," says Reuss. "We're here to stay."

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