Holden slumps to $210m loss

[Sprint XR8]

Holden Australia slumps to $210m loss

BARRY PARK
March 31, 2010
Car maker Holden today announced it has made a $210.6 million loss last financial year, largely due to the suspension of its lucrative US export program.

"Much of our loss was incurred as a result of GM's decision to discontinue the Pontiac brand in North America," Holden chief financial officer Mark Bernhard said in a statement released today to the car maker's 6000-plus employees.

Mr Bernhard said the record loss included a series of special, one-off charges totalling $223.4 million.

"Before the special charges, which stemmed mainly from program cancellations and the final closure of the Family II engine plant, we posted a small, after-tax profit of $12.8 million," he said.

"The result, while disappointing, was the by-product of one of the most severe economic downturns in recent memory."

Mr Bernhard said much of Holden's loss was incurred "as a result of GM's decision to discontinue the Pontiac brand in North America".

Holden was building Pontiac-badged left-hand drive versions of its Commodore family car for sale in the US, with exports at one stage accounting for one in every two vehicles built at Holden's Adelaide-based car-making plant.

The program was cancelled in April after Holden's US parent, General Motors, restructured to protect itself from bankruptcy.

As a result, Mr Bernhard said revenue had fallen from $5.8 billion in 2008 to $3.8 billion last year.

Holden's Australian operations also felt the pain of the global economic crisis last year.

"At a local level, despite producing Australia's top-selling car, the Commodore, our domestic market was also impacted," he said.

"However, as the health of the world economy began to improve in the second half of the year, so too did our finances. 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. This contributed to the company's positive operating cash flow of $289.8 million."

Holden has already made changes to align production with consumer demand at its South Australian and Victorian manufacturing facilities, he said.

"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 in the first quarter of 2011."

Holden will start building hatch and sedan versions of the Cruze small car in Adelaide from early next year to shore up its vehicle-building operations in Australia.

The Commodore large car continues as Australia's best-selling car, but the Cruze also gives the car maker insurance as sales in the large family car sector continue to decline, hurt by rising interest rates and the on-going fallout from the global financial crisis.

Mr Bernhard said improvements in the Australian new car market, and streamlining its production process, meant that Holden had made a profit in the first two months of this year.

"Throughout the year, we also remained a significant investor in local research and development, spending $146 million and demonstrating that the business remains committed to investing in our long-term future," Mr Bernhard said.

http://theage.drive.com.au/holden-au...0331-rdjo.html

[Fordman1]

Expect more this year....

[4Vman]

How come Wally or Brazen missed posting this news??? Lift your game boys!

Being market leader in sales is clearly working for Holden....

[Fordman1]

Originally Posted by 4Vman

How come Wally or Brazen missed posting this news???

Being market leader in sales is clearly working for Holden....

Perhaps Burnz or Outback will post some more details of the progress Holden is making....

[4Vman]

Originally Posted by Barraxr8

Perhaps Burnz or Outback will post some more details of the progress Holden is making....

Remember... its more important to sell the most cars!! not make a profit!!!

[Fordman1]

Originally Posted by 4Vman

Remember... its more important to sell the most cars!! not make a profit!!!

Yes I must remember that..

the Hatchback is selling sooo well I'm told...

[Ghiadude]

Mr Bernhard said the record loss included a series of special, one-off charges totalling $223.4 million.

What are these one off charges that I keep hearing about in announcements such as this ? whats included in that? protection money for the mob perhaps???

[4Vman]

Originally Posted by Ghiadude

What are these one off charges that I keep hearing about in announcements such as this ? whats included in that? protection money for the mob perhaps???

Brazens commission payment for promoting the sportshatch??

[Fordman1]

Originally Posted by Ghiadude

What are these one off charges that I keep hearing about in announcements such as this ? whats included in that? protection money for the mob perhaps???

Imagine if they had down balanced as they should have by giving their people "packages" instead of "screwing" them over...

Add $100 to $200 mill to that number...

[XR8putts]

What happens if Holden continue to bleed money? - It's not like they can ask GM for more money.

Also, when can we expect Ford to report on the 2009 financial year?

[Wally]

I've been patchy on the net today 4Vman, but I can rely on your keen sense of prepubescent razor wit to fill in the gaps. [starwars] The estrogen is strong in you and your special friend 4V. [/starwars]

Insofar as the Holden result, regardless of special items, a $211m loss is a $211m loss. Don't know why finacial officers feel it is necessary to make excuses for poor performance in non listed companies.

[4Vman]

Originally Posted by Wally

I've been patchy on the net today 4Vman, but I can rely on your keen sense of prepubescent razor wit to fill in the gaps. [starwars] The estrogen is strong in you and your special friend 4V. [/starwars]

Insofar as the Holden result, regardless of special items, a $211m loss is a $211 loss. Don't know why finacial officers feel it is necessary to make excuses for poor performance in non listed companies.

never mind Wally, you found it eventually!

[Fordman1]

Originally Posted by puts99

What happens if Holden continue to bleed money? - It's not like they can ask GM for more money.

Also, when can we expect Ford to report on the 2009 financial year?

I reckon in a month or two.

I suspect Ford will announce a loss of about $40 mil. I'm guessing..

[Wally]

Don't forget I can't see your posts 4V, but I'm sure your loyal shadow will quote them, for you.

[phillyc]

Originally Posted by 4Vman

Remember... its more important to sell the most cars!! not make a profit!!!

Barra & 4V play nice! I'm sure all three of those gents are in pain right now.

I'd like some clarification on those figures though. I can see how the

$210.6 million loss after charges
$223.4 million one-off charges
$12.8 million after-tax profit

But, how do you turn a positive operating cash flow of $289.8 million into just $12.8 million after tax profit? Which suggests about $19 million before-tax profit.

Does their $289.8 positive cashflow include the $200 million the Australian government granted GMHolden? Is it absorbed by interest payments to their US owner? Did they absolutely balls-up their currency hedging on their imported line-up?

Very interesting.

[Wally]

Originally Posted by Barraxr8

I reckon in a month or two.

I suspect Ford will announce a loss of about $40 mil. I'm guessing..

That's a hard one, because by all accounts they haven't been over extending themselves. Of course as anyone in business know, depreciation and writedowns can be a best friend when trying to avoid tax attracting EBIT. Once again it only really matters to the parent (and those who think they at one with the company). I lie, it also matters to the Govt when they feel they need to throw money to keep jobs.

[XR8putts]

Originally Posted by Wally

That's a hard one, because by all accounts they haven't been over extending themselves. Of course as anyone in business know, depreciation and writedowns can be a best friend when trying to avoid tax attracting EBIT. Once again it only really matters to the parent (and those who think they at one with the company). I lie, it also matters to the Govt when they feel they need to throw money to keep jobs.

What are you babbling on about now?

[Falc'man]

(No offense to the thread-starter by any means) I don't see the point to this topic. If they make a loss they get bailed out. And if they make money, they squander it on concept cars that never see the light of day, or on kickbacks to the press.

Originally Posted by puts99

What happens if Holden continue to bleed money? - It's not like they can ask GM for more money.

As above, they'll just get another secret loan from the government.

[phillyc]

Originally Posted by Barraxr8

I reckon in a month or two.

I suspect Ford will announce a loss of about $40 mil. I'm guessing..

Off topic. But, a huge chunk of the 2008 Ford loss was their company funded super. That would've bounced back in fine style. Ford's 2009 will be interesting and almost certainly better than GMHolden's 2009.

[bobthebilda]

Philly C, there are many ways to report a positive cash flow, in years when you make a loss. Holdnens pay its large suppliers 4 months after they receive the goods. A commodore can be sold (and sales and cash flow recorded), 3 months and 3 weeks before even holden pay the suppliers (and the suppliers workers, and suppliers suppliers). And these can costs will be rolled into next reporting session. Holdens largest supplier at the moment is Daewoo, we dont know if Holden has paid Daewoo for all the cruzes and Captiva's they have received and sold. Unless Holden releases a detailed financial report, then one must simply see a $200 million plus lost as a very very very big loss, with no excuses. A $200 million dollar loss, for a company, which their own auditor last september, said may not be a going concern, would seem to be a very very big concern.

[phillyc]

Originally Posted by Falc'man

No offense to the thread-starter but I find these threads useless. If they make a loss they get bailed out. And if they make money, they squander it on concept cars that never see the light of day, or on kickbacks to the press.

As above, they'll just get another secret loan from the government.

Spot on Falc'man. You so often have a way with words. I mean GMHolden were bankrupt in the 1980s and got bailed out by their parent GM. I don't think the same would happen today. It would be the Aus Federal government doing it like the secret $200M they got last year.

GMH must certainly be flying pretty close to the wind. After all not paying redundancies last year was proof of that. But the media lapped it up with them being nice and keeping employees on despite the half pay every 2 weeks & loss of loadings plus additional non-paid shutdown days.

[4Vman]

Originally Posted by bobthebilda

Philly C, there are many ways to report a positive cash flow, in years when you make a loss. Holdnens pay its large suppliers 4 months after they receive the goods. A commodore can be sold (and sales and cash flow recorded), 3 months and 3 weeks before even holden pay the suppliers (and the suppliers workers, and suppliers suppliers). And these can costs will be rolled into next reporting session. Holdens largest supplier at the moment is Daewoo, we dont know if Holden has paid Daewoo for all the cruzes and Captiva's they have received and sold. Unless Holden releases a detailed financial report, then one must simply see a $200 million plus lost as a very very very big loss, with no excuses. A $200 million dollar loss, for a company, which their own auditor last september, said may not be a going concern, would seem to be a very very big concern.

That is very true, cashflow reporting can be very missleading......

[Fordman1]

Originally Posted by phillyc

Off topic. But, a huge chunk of the 2008 Ford loss was their company funded super. That would've bounced back in fine style. Ford's 2009 will be interesting and almost certainly better than GMHolden's 2009.

I agree, but don't forget that Ford had a lot of "downdays" in the first 2 quarters of 2009.

I think they were about breakeven towards the end of the year but had substantial losses in the first half.

The posted results will be interesting..

FoA are still in trouble, however having said that Holden are in deep "stuff".

As mentioned above, they are considered to be a risk as far as a on going concern is considered...

[GavL]

Originally Posted by Ghiadude

What are these one off charges that I keep hearing about in announcements such as this ? whats included in that? protection money for the mob perhaps???

Buying racing teams :P

(probably not really)

[phillyc]

Originally Posted by bobthebilda

Philly C, there are many ways to report a positive cash flow, in years when you make a loss. Holdnens pay its large suppliers 4 months after they receive the goods. A commodore can be sold (and sales and cash flow recorded), 3 months and 3 weeks before even holden pay the suppliers (and the suppliers workers, and suppliers suppliers). And these can costs will be rolled into next reporting session. Holdens largest supplier at the moment is Daewoo, we dont know if Holden has paid Daewoo for all the cruzes and Captiva's they have received and sold. Unless Holden releases a detailed financial report, then one must simply see a $200 million plus lost as a very very very big loss, with no excuses. A $200 million dollar loss, for a company, which their own auditor last september, said may not be a going concern, would seem to be a very very big concern.

4 months is an eternity waiting to be paid. I agree the reports released really do not have adequate financial details like those from the US.

I actually wonder if the operating profit and huge loss kind of tie in with GMH's accounting method. Ie the factory can make cars for say $30,000 but then sell them to GMH via stock transfer for $32,000 (thereby booking an manufacturing operating profit) who then onsells to dealers at $30,000. So, the production side of things made a profit but the entity made a loss of equal size. Those dealers could easily be here in Aus or the US or Middle East.

Bobthebilda, can you locate a link to the GMH auditor stating they probably aren't a going concern? Scary stuff.

PS I think that delay in production to payment is how New GM posted a profit late last year. They basically have a mammoth excess of stock. So they stopped making vehicles and ate into the inventory. Costs were down, revenue neutral / increased. Instant but unsustainable profit.

[4Vman]

Originally Posted by phillyc

4 months is an eternity waiting to be paid. I agree the reports released really do not have adequate financial details like those from the US.

I actually wonder if the operating profit and huge loss kind of tie in with GMH's accounting method. Ie the factory can make cars for say $30,000 but then sell them to GMH via stock transfer for $32,000 (thereby booking an manufacturing operating profit) who then onsells to dealers at $30,000. So, the production side of things made a profit but the entity made a loss of equal size. Those dealers could easily be here in Aus or the US or Middle East.

Bobthebilda, can you locate a link to the GMH auditor stating they probably aren't a going concern? Scary stuff.

PS I think that delay in production to payment is how New GM posted a profit late last year. They basically have a mammoth excess of stock. So they stopped making vehicles and ate into the inventory. Costs were down, revenue neutral / increased. Instant but unsustainable profit.

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..

[phillyc]

Originally Posted by Barraxr8

I agree, but don't forget that Ford had a lot of "downdays" in the first 2 quarters of 2009.

I think they were about breakeven towards the end of the year but had substantial losses in the first half.

The posted results will be interesting..

FoA are still in trouble, however having said that Holden are in deep "stuff".

As mentioned above, they GMH are considered to be a risk as far as a on going concern is considered...

Yes, Ford copped media flack for their downdays and retrenchments in the first part of 2009. Apart from supplier issues Ford haven't had a single down-day. In fact they've had a number of overtime shifts since late last year.

Since the comeback king Burela came on board, it will make for interesting results.

[burnz]

Originally Posted by Barraxr8

Perhaps Burnz or Outback will post some more details of the progress Holden is making....

my ears are burning.

i think toyo will be the only profit provider that year.

[bobthebilda]

Philly, the link below was to an age article, when Holden reported their last loss

http://www.theage.com.au/business/ho...0702-d6ky.html

I have seen other articles referring to the same issue. The poignant part being

Deloitte partner Clive Mottershead said Holden's "interdependence" with the now bankrupt GM, combined with the car maker's $US70 million ($A86.8 million) annual loss and the fact that current liabilities exceeded current assets by about $US250 million, cast uncertainty over the Australian operations..

And there has been other articles about how the Commonwealth bank (traditionally their bank), wont support them anymore, so the fed government has basically agreed to "underwrite" them

Thus if you have $250 million in negative assets, and you make another $200 million dollar loss, Then you avoid paying redundancies at all cost, because you simply cant afford them.

[4Vman]

Originally Posted by bobthebilda

Philly, the link below was to an age article, when Holden reported their last loss

http://www.theage.com.au/business/ho...0702-d6ky.html

I have seen other articles referring to the same issue. The poignant part being

Deloitte partner Clive Mottershead said Holden's "interdependence" with the now bankrupt GM, combined with the car maker's $US70 million ($A86.8 million) annual loss and the fact that current liabilities exceeded current assets by about $US250 million, cast uncertainty over the Australian operations..

And there has been other articles about how the Commonwealth bank (traditionally their bank), wont support them anymore, so the fed government has basically agreed to "underwrite" them

Thus if you have $250 million in negative assets, and you make another $200 million dollar loss, Then you avoid paying redundancies at all cost, because you simply cant afford them.

Its hard to fathom how they're loosing $2K per car sold....

Discounted low spec fleet sales must be killing them.