GM-Holden has announced a $6 million net loss for the financial year ended December 31, 2007. Even though it’s still in the red, today’s announcement represents a massive turnaround from Holden’s $146 million loss for 2006, which came on top of a $145 million loss in 2005.
GM Holden boss, Mark Reuss (pictured) announced the car-maker’s financial results in a national media teleconference from Melbourne this afternoon. It was his first financial report announcement since taking up the GM-Holden reins in February, this year.
Mr Reuss described the result as “a good news story” and “an almost break-even position”. “Put it another way,” he said, “[the result represents] about a $140 million turnaround over the last year.”
He said the results showed that GM-Holden had recovered in a difficult market and “strong headwinds” and was “…aggressively re-investing” in the future. Evidence of that re-investment, he said, was Holden’s announcement of the closure of Family II engine production and “… re-investing here in a range of alternative fuels and technologies to put us in a strong position to tackle the challenges here in the next decade”.
He said that the 2007 result was encouraging in the face of rising fuel prices and the weak Japanese Yen and US dollar. He also said it showed that GM-Holden was in the Australian market for the long haul. Especially in terms of coming technologies, he said, the Australian large car market would remain strong. “A lot of the range of our solutions for alternative fuels and technology are still going to be aimed somewhat at our local production of a large car,” he said. He said Holden would offer “…a range of alternatives for people to stay in large cars”.
Mr Reuss said the results announced today were for the first full year of VE Commodore sales and included a number of one-off costs and what the boffins call “non-cash accounting adjustments” during the year. Before tax, he said, the Holden had spent $77.5 million on restructuring following the end of VZ production at its Elizabeth plant, in South Australia. It also spent $420 million in research and development, up 37 percent on the $307 million it poured into R&D in 2006. That spend continued Holden’s position as the leading private sector investor in R&D in Australia.
Mr Reuss says Holden was last in profit in 2004, when the company was in the black to the tune of $216.4 million.
The car-maker’s retail sales total last year was 146,680 (marginally up on its 146,511 total for 2006). Commodore retained its mantle as Australia’s favourite car for the 12th year running, helped by record sales of V8s.
Although it's not necessarily the bottom when it comes to net profit and loss, the big question, of course, will be how GM-Holden fares in the retail sales race this calendar year. And one of the indicators to watch will be the traditional passenger car battleground, where so far this year the Commodore and Corolla have see-sawed for the title of Australia’s top-selling car, with Commodore kicking back last month mostly because Holden offered strong anniversary edition incentives.
When it comes to the overall number of vehicles sold here – that’s passenger cars, SUVs and commercials – Holden last topped the Top 10 Makes list in 2002, with 178,392 sales for 21.6 percent of the market. That year, Toyota was number 2, with 157,864 sales and 19.2 percent market share.
Since then, Toyota has ruled, culminating in last year’s 236,647 total calendar year sales and 22.5 percent of the market. For the record, Toyota Australia’s after-tax net profit for its financial year – April 1, 2007 to March 31, this year – was $242.2 million, up from the previous year’s $184.4 million.
OFFICIAL PRESS RELEASE
GM Holden - Report for financial year ended 31 December 2007
Review of Operations
The year 2007 was a significant period for GM Holden with the launch of new domestic variants, announcement and start of a major export program to the United States and growing role in global product development and design for parent company General Motors.
Major product launches included the all-new VE Ute range and the introduction of the Pontiac G8 sedan, based on the VE Commodore, for the US market.
2007 saw continued restructuring of Holden’s manufacturing business at Elizabeth, South Australia, following the end of production of previous utility models. GM Holden sold vehicles in Australia and New Zealand through the Holden, Saab and Hummer brands.
This was set in a challenging environment in which GM Holden continued to be impacted by global business conditions and increasing competition from imported brands. Exchange rates continue to be challenging with the Australian dollar reaching record highs against the US dollar and Japanese yen. This strongly favours imports and disadvantages exports. Combined with changes in commodity prices and higher fuel prices, this contributed to earnings pressure.
GM Holden continued its role as the global centre of expertise for rear wheel drive vehicle development for General Motors in the areas of product development, design and engineering. Work continued on a number of significant projects including the new Chevrolet Camaro.
GM Holden’s 2007 revenue was slightly reduced at $6,143 million compared to $6,379 million in 2006. A market shift to smaller vehicles with lower revenue per vehicle, reductions in real terms in vehicle pricing and increased competition from imported brands were all factors in this lower revenue performance.
The net result after tax from principal activities was a loss of $6 million in 2007, representing a significant improvement from net losses of $146 million in 2006 and $145 million in 2005. The result was impacted by one-off costs and non-cash accounting adjustments during the year. On a pre-tax basis, Holden had $77.5 million of restructuring costs following the end of VZ production at Elizabeth.
GM Holden continued to invest heavily in its future in Australia during 2007. This included $420 million in research and development, up 37% on $307 million in 2006, which continues Holden’s position as the leading private sector investor in R&D in Australia.
GM Holden’s total Australian retail sales of 146,680 units was marginally higher than 2006 (146,511 units) with Commodore holding its position as Australia’s favourite car for the 12th consecutive year helped by record sales of V8 models. 57,300 Commodores were sold in 2007, nearly 10,000 ahead of its closest rival.
Against this backdrop, GM Holden’s overall market share was down from 15.2% to 14% in a growing domestic market which topped one million vehicles for the first time in 2007.
In the fiercely competitive passenger segment, Holden sold 104,848 vehicles in 2007 for a 17% market share. The Holden Captiva SUV, launched in late 2006, was the third best selling model in the highly competitive medium SUV segment and provided valuable portfolio coverage.
GM Holden’s Elizabeth plant produced 107,795 vehicles in 2007, down on 2006 due to market demand and end of previous generation models in preparation for all-new models.
GM Holden Engine Operations in Victoria produced 269,421 four and six-cylinder engines in 2007. Production at Holden’s $400 million Global V6 engine plant at Port Melbourne included engines for Holden, Saab, Opel, and GM Daewoo. A reduction in Family II volumes saw engine exports drop 12% in 2007 to 184,795. Within this, exports of the newer V6 engines saw an 11% increase.
Despite the announcement of new export programs to the US and UK, GM Holden vehicle exports of 36,534 showed a drop on 2006 figures, largely due to a readjustment in the Middle East volumes following record levels in 2005. Production of the Pontiac G8 started late in 2007 so did not have a significant impact on 2007 figures.
GM Holden exported vehicles to Brazil, Middle East, New Zealand, UK, South Africa and USA in 2007 which helped generate export revenue of $1,556 million including engines, components and engineering services.
In 2007, GM Holden offered vehicles covering the light, small, medium, large, sports, prestige and luxury passenger segments, light commercial and van markets. Vehicle launches included the VE Ute range, Epica medium sedan, diesel models for the Rodeo utility and Captiva, and a more powerful and economical 1.8-litre engine addition to the Astra small car range. The Hummer brand also joined Saab in GM Holden’s Premium Brands line up.