Holden slumps to $210m loss

[Ghiadude]

So- who said the two month shut down was rumour? Maybe they've been flooding the dealers with demos and now that they're full and the economy still hasn't picked up they're stuck. Also do they have the moola for the cruze refit or is that coming from big rev kev?(us)

[Wally]

You guys are aware that the reporting period is 9 months old? It is the 2008/09 financial year as far as I can ascertain. How does that impact on your thoughts about Ford's expected P&L? No backpeddling now LOL.

[Ghiadude]

Originally Posted by Wally

You guys are aware that the reporting period is 9 months old? It is the 2008/09 financial year as far as I can ascertain. How does that impact on your thoughts about Ford's expected P&L? No backpeddling now LOL.

Funny you should say actually. The article says that most of the loss was because of the Pontiac deal going bung. But according to this article http://www.leftlanenews.com/pontiac-...yond-2010.html
that only occured in april of 09(27 april 11 months into the reporting period) this means they were in deep do do long before exports dried up.

[jpd80]

Originally Posted by Wally

You guys are aware that the reporting period is 9 months old? It is the 2008/09 financial year as far as I can ascertain. How does that impact on your thoughts about Ford's expected P&L? No backpeddling now LOL.

It is for Holden's 2009 calendar year but Ford has no reason to crow either.
But for both manufacturers tying their Australian operations to China/Asia,
both would be seen as bad losers.

While Holden can charge that they lost $2 billion in revenue due to cancellation
of US G8 and the almost evaporation of Middle east exports, that's the dual edged
sword of chasing exports as a basis for justifying new vehicles. Ford has also
suffered extremely low revenue but seems to be managing better - seems to be...

I wonder how long either parent will persist with Aussie operations that keep losing money...

[phillyc]

Originally Posted by Wally

You guys are aware that the reporting period is 9 months old? It is the 2008/09 financial year as far as I can ascertain. How does that impact on your thoughts about Ford's expected P&L? No backpeddling now LOL.

Wally, I'm pretty certain GMH & Ford Aus use a calender year. ie December 31 2009. Toyota uses March 31 for it's reporting.

[Ghiadude]

That would make more sense

[4Vman]

Originally Posted by phillyc

Wally, I'm pretty certain GMH & Ford Aus use a calender year. ie December 31 2009. Toyota uses March 31 for it's reporting.

Nice pick up, from how i read the article its based on 2009 calander year.. no "backpeddling" now Wally...

[XRtowcar]

* 2009 - $210.6 million loss
* 2008 - $70.2 million loss
* 2007 - $6 million loss
* 2006 – $146 million loss
* 2005 – $144 million loss
* 2004 – $300.8 million profit
* 2003 – $285.6 million profit
* 2002 – $56.5 million profit
Whats the point of having the top selling car if you cant make a dollar selling it.
They must like losing money.
Cant see a change next financial year either if they're putting the Cruze line in.

[jpd80]

As a reference from Ford's 2009 Q4 Result:

Asia Pacific Africa: For the fourth quarter, Ford Asia Pacific Africa reported a pre-tax operating profit of
$19 million, compared with a loss of $208 million a year ago.

The improvement reflects primarily favorable net pricing, China joint venture profits and structural cost
reductions. Fourth quarter revenue was $1.6 billion, up from $1.4 billion a year ago.

Edit,
I have a feeling that the bulk of that $1.6 Billion revenue comes from Australia,
the complete opposite of Holden/GM China.....

* Profits from China and structural cost reductions from Australia?

[bobthebilda]

The cruze line (if it goes ahead), will be a killer for Holden. 20000 cars @$1000 profit per car (if they acheive a good years industry average) = $20 million profit. $390 million dollar cost of cruze line, written off over 5 years = $78 million write off costs per year. Also I understand its actually cheaper to ship cars from asia to the likes of Perth, Darwin, all of queensland and sydney, than it is to truck cars there from adelaide.

[fte50]

Holden WILL continue to lose money if they do not change their ways, and that will not happen for a long time unless there is a major shakeup of the management team at Holden.
During my time it seems that poor managerial performance was rewarded with a sweep under the carpet or a section transfer, but never a demotion. They never seemed accountable. Im not talking about the senior level managers, but more so area manager down. Problem is its these people that allowed and pushed out of spec pieces through etc. It WAS this attitude that saw the demise of Holdens major business component, not forgetting it was also its most profitable.
The hype of new small cars being locally assembled etc at Elizabeth is no suprise, but nor is it a saviour. Remember, Peter Hannenburger invested heavily in the J-Car (Vectra) line early in the decade only for it to be closed down and stripped a short time later. Now we hear of 'reinvestment' to achieve the same outcome that he envisioned a decade ago - by paying for it twice.
That is just 1 example of why Holden wont survive. If it werent for their Sales & Marketing Dept., they would have crumbled long ago.

[Ghiadude]

Where's wally? Boom tish

[Wally]

Originally Posted by Ghiadude

Where's wally? Boom tish

You are aware that I chose that nic for a reason aren't you. Something just stirs deep down inside doesn't it LOL

[jpd80]

Sorry my last post about Ford financials was a bit misleading,
For the full Financial year Ford Asia pacific South Africa posted these figures:

2008
LOSS of $153 Million (FoA LOSS of $274 Million with $164 Million one time restructuring)
Revenue:$6.5 Billion (FoA Revenue $3 Billion)

2009
LOSS of $75 Million (Predict FoA LOSS of approx $200 Million)
Revenue:$5.5 Billion (Predict FoA Revenue: approx $2.2 Billion)

So FoA is about 50% of region's revenue....

[vztrt]

Originally Posted by 4Vman

Ofcoarse the problem with doing that is you p!ss your suppliers off and the problem rolls into the next financial year so its a short term fix to "minimise" collateral damage..

Or send them bankrupt...especially if they're an aussie based company.

Originally Posted by jpd80

It is for Holden's 2009 calendar year but Ford has no reason to crow either.
But for both manufacturers tying their Australian operations to China/Asia,
both would be seen as bad losers.

While Holden can charge that they lost $2 billion in revenue due to cancellation
of US G8 and the almost evaporation of Middle east exports, that's the dual edged
sword of chasing exports as a basis for justifying new vehicles. Ford has also
suffered extremely low revenue but seems to be managing better - seems to be...

I wonder how long either parent will persist with Aussie operations that keep losing money...

Polites worked on getting the local sales profitable before even considering export.

[bobthebilda]

Its all quite simple really. With a $400 million loss between them (200 for Ford Oz and 200 for Holden), and they employ roughly 12000 people in manufacturing and sales, then if each employee took a $35000 pay cut, then they could both return to profit. Oh wait, they get $300 million in subsidies each year, so each employee only needs to take a pay cut of $60,000 per year, and all is good.

[vztrt]

http://www.goauto.com.au/mellor/mell...2576F7001345C6

Holden plunges to record $210 million loss

Export cuts cost Holden dearly in 2009 as car-maker fights its way back to health

31 March 2010

By RON HAMMERTON

THE demise of Holden’s Pontiac car export deal amid the global financial crisis last year dragged the Australian arm of General Motors down to a net loss of $210.6 million in 2009 – the worst result in its history.

Revenue plunged by more than one third, from $5.8 billion in 2008 to $3.8 billion last calendar year, with the ill-fated Pontiac G8 program the main culprit.

The company has now posted negative results for five consecutive years, compiling cumulative losses of more than $500 million.

However, Holden said the company had been back in the black in recent months, indicating the worst of the troubles were behind it.

Holden's previous record loss was $147 million in both 2006 and 1986 – the latter when GM head office in Detroit was forced to weigh in with a major cash injection.

However, Holden believes there is no such need for such drastic measures this time, with an improving car market and export opportunities helping to lift its bottom line.

Holden’s latest pot of red ink is not as bad as Ford Australia’s most recent result – a net loss of $274 million – posted last year.

Holden says it would have made a small after-tax profit of $12.8 million except for special one-off charges totalling $223.4 million, stemming mainly from “program cancellations” – including the Pontiac G8 project – and the final closure of the company’s four-cylinder engine plant in Port Melbourne.

As Holden is between managing directors, the delivery of the bad news was left to chief financial officer Mark Bernhard, who described the result as disappointing, adding that it was the “by-product of one of the most severe economic downturns in recent memory”.

“Much of our loss was incurred as a result of GM’s decision to discontinue the Pontiac brand in North America,” he said.

“This action resulted in the high-volume export program of the Holden-built Pontiac G8 range ending in April.

“As we know, other key Holden export markets were also affected by global economic conditions which led to a dramatic decline in demand for our product from overseas customers.

“At a local level, despite producing Australia’s top-selling car, the Commodore, our domestic market was also impacted. These factors resulted in revenue declining from $5.8 billion in 2008 to $3.8 billion in 2009.”

Australian sales of the locally made Commodore fell 13.1 per cent last year, but because of the collapse of exports, total production of the car in all its forms plunged 42 per cent, from 119,000 units in 2009 to 67,000 units last year.

As well, engine exports fell from 136,000 units in 2008 to 88,000 in 2009 – a decline of 36 per cent – mainly a result of the four-cylinder engine plant closure.

Asked if Holden would seek recompense from GM North America over the broken export deal, Mr Bernhard said Holden was pursuing other export opportunities with its American parent company, including the proposed Caprice-based Police Pursuit Vehicle (PPV).

The PPV project is not expected to pay dividend this year, however, as Mr Bernhard said tenders for the vehicle were not due until late in the year.

Mr Berhard said he was not at liberty to disclose how much of the decline in revenue resulted from the Pontiac program closure, but he described it as the most significant factor.

He said Holden’s finances began to improve in the second half of last year, in line with the health of the world economy.

“At this time that we started to witness the benefits of some of the more difficult restructuring decisions made during the year to ensure we were operating on a leaner, more efficient base,” he said.

“This contributed to the company’s positive operating cash flow of $289.8 million.

“These decisions included aligning production with consumer demand at our South Australian and Victorian manufacturing facilities.

“To this end, we have been able to ensure the business is in the best possible position leading into the start of small car production at Elizabeth (South Australia) in the first quarter of 2011.

“These streamlining initiatives, as well as improvements in the domestic market in Q4 2009 and January and February 2010 saw our sales and financial performance improve, with the company making a profit in those months.”

Holden is set start production of the Cruze in sedan and five-door hatchback styles next year, by which time it hopes to be able to restore the second shift that was deleted at the Elizabeth assembly plant due to falling customer demand last year.

Mr Bernhard said some of the workers at the plant had taken voluntary redundancy in the interim, but he said he did not have the figures of overall staff cuts in the financial year.

He said the current workforce was 4500.

According to figures posted on the internet, the Holden workforce in March last year was said to be 6300, suggesting a reduction of about 1800 people by natural attrition or redundancy.

Mr Berhard said in a memo to staff that Holden’s senior leadership team – which will soon include incoming chairman and managing director Mike Devereux – was committed to plans that underpinned an efficient and profitable company in the long term.

“We all have an important role to play in lowering operating costs, improving efficiency and positively impacting the company’s bottom line,” he said. “We must now continue our relentless pursuit towards the exciting and profitable position we know and expect Holden to reach.”

[bobthebilda]

Oh, Holden now only employs 4500 workers. Thus lets assume Ford has the same (altho I assume less as they make and sell less cars). Thus for 9000 employees to acheive $700 million in savings, they each only have to take a $78,000 pay cut.

[jpd80]

Originally Posted by vztrt

Or send them bankrupt...especially if they're an aussie based company.



Polites worked on getting the local sales profitable before even considering export.

True, with big losses in 2008 and 2009 the evidence is mounting that Holden
never made a cracker on the 41,000 Pontiac G8s sent to north America.

The article also says Holden is expecting Orders for the Caprice PPV later this year,
gotta wonder whether it's all worth it, a second crew is employed at Elizabeth but at what cost?

[4Vman]

Originally Posted by jpd80

True, with big losses in 2008 and 2009 the evidence is mounting that Holden
never made a cracker on the 41,000 Pontiac G8s sent to north America.

The article also says Holden is expecting Orders for the Caprice PPV later this year,
gotta wonder whether it's all worth it, a second crew is employed at Elizabeth but at what cost?

Which has been said over and over again for years. Any business model developed to need exports to reman viable is playing with fire, especially with the volatility of our dollar. If a car manufacturer can be sustainable within it's own country exports should be cream on top...

[ltd]

Originally Posted by 4Vman

Which has been said over and over again for years. Any business model developed to need exports to reman viable is playing with fire, especially with the volatility of our dollar. If a car manufacturer can be sustainable within it's own country exports should be cream on top...

100% agree. Besides, the PPV is not a done deal yet, Ford USA, Dodge and GMH are all tendering on it, and I'm led to believe that there is some collaboration with Ford Aus on the running gear for the Ford USA bid.

[Joe5619]

Originally Posted by Wally

You guys are aware that the reporting period is 9 months old? It is the 2008/09 financial year as far as I can ascertain. How does that impact on your thoughts about Ford's expected P&L? No backpeddling now LOL.

I would have thought it was Jan to Dec 2009 as Holden (well GM) is a US Stock listed compnay & therefore has a Dec year end..

[XR8putts]

No backpeddling now Wally..

[Brazen]

Ford Australias most recent result was a loss of $274million, geez!.

[4Vman]

Originally Posted by puts99

No backpeddling now Wally..

Too late:

Originally Posted by Wally

You are aware that I chose that nic for a reason aren't you. Something just stirs deep down inside doesn't it LOL

[kezzer]

Originally Posted by Brazen

Ford Australias most recent result was a loss of $274million, geez!.

Shh we don't talk like that round ere.

[Wally]

Originally Posted by Joe5619

I would have thought it was Jan to Dec 2009 as Holden (well GM) is a US Stock listed compnay & therefore has a Dec year end..

Logic suggests you may be right, but Holden is an APC, regardless of it's financials being consolidated in GM's annual return. I guess the pending US lodgement will reveal the devil in the detail.

[irlewy86]

The banjo's will be playing a sad tune in Adelaide tonight.

[Joe5619]

Originally Posted by Wally

Logic suggests you may be right, but Holden is an APC, regardless of it's financials being consolidated in GM's annual return. I guess the pending US lodgement will reveal the devil in the detail.

Correct, but I too work of a APC, US listed stock listed company & we have a year end at Dec in Australia & also have a tax reporting Dec year end. The only "aust" reporting periods we keep the same as other Aust companies are Payroll & FBT, the reset match up with the US. I only assumed any Australian company that as a US parent company would do the same..

[bobthebilda]

I think one would probably have to be a Entamologist to properly detail the web of corporate structures Holden and General Motors use to transfer losses and profits around the world. As part of the following article from the business section of the Sydney Morning Herald said last year.

Despite the prospect of government assistance in Australia, and the company's losses, Holden "upstreamed" dividend payments to its parent company GM Australia, which is in turn owned by the failed GM Corporation in the US. Last year, GM Holden paid $46.8 million to GM Australia (owned by GM Corp), down from $111.8 million the year before.

.

General Motors Holden is a seprate australian registered company, which is owned by GM australia, which is owned by GM Corp in US (and theres probably a few layers of companies in between all those). Thus in theory, GM Holden (which may just include the manufacturing arm) may lose 200 million, but GM australia (who may be the importing arm) may also have lost 200 million. Thus transferring a $400 million loss to GM Corp US. Its all guess work really, but like all Reuss and Batey spin of the last 2 years, and the way Kim Carr hands out secretive unaudited grants to them, you wouldnt know where the money was going or for what it was being used for.