Redlion is back in the black
HOLDEN is back in the black after five years of losses on its carmaking operations in Australia.
The red lion brand banked a $112 million profit on its operations through 2010, reversing the trend that had built cumulative losses of more than $550 million since 2005.
The turnaround came as Holden’s parent, General Motors in the US, also worked to recover its long-term profitability after unsustainable losses that forced it into bankruptcy and a massive government bailout.
The money is staying in Australia as Holden has not declared a dividend and intends to spend the profit on future programs. Almost all areas of Holden’s business showed an upswing through 2010, from new-car sales to exports of engines and complete cars.
It was also helped by the thirdbest year in sales history in Australia, which saw the Commodore continue its 15-year run as the country’s favourite car.
‘‘We’re certainly very pleased to announce a return to profitability. We’re mindful, though, that . . . sustained business performance is the key to Holden’s long-term viability,’’ said Holden’s chief financial officer, Mark Bernhard.
The profit in 2010 meant a $123 million turnaround from a $211 million loss in 2009 that was partly triggered by the global financial crisis, but was also impacted by restructuring costs as Holden cut its workforce from more than 6000 people to just over 4500. ‘‘The economic climate experienced during 2008 and 2009 required us to improve our structural cost base and business model to ensure the longterm profitability of our domestic business,’’ Mr Bernhard said. The profit is also less than the $149 million Holden has received in Green Car Fund grants from the Federal Government over the past three years as part of Canberra’s backing for future investment. But Holden trumpets its spending on everything from Cruze production to research-and-development work that will deliver significant economy improvements to the Commodore, from E85 ethanol fuel use to a new hi-tech LPG model.
Holden’s total revenue in 2010 was $4.4 billion, up from $3.8 billion in 2009.
The good news from local car makers is expected to continue when Ford reports its results in the first week of May, following a borderline $13 million profit last year. Toyota, Australia’s number one brand, will report in July, four months after the end of the Japanese financial year, and should also be in the black after a pre-tax profit of $182.3 million in 2009.