HOLDEN AND FORD POST LOSSES
Holden recorded its biggest ever loss in 2013, confirming a $552.8 million loss that it says is largely due to a one-off impairment charge of just over $500 million.
Likewise, Ford has announced a $267 million loss for 2013, marking its second-worst year on record. (The company’s worst result was $274 million in 2008.)
The huge losses are no surprise for either company, and Holden confirmed last year that its decision to end local manufacturing was expected to result in pre-tax charges “of $400 million to $600 million”.
Both companies have attributed the loss to a write-down of manufacturing assets as each prepares to end Australian production by 2016 (Ford) and 2017 (Holden).
The devaluing of Holden’s assets, a result of its decision to terminate its Australian manufacturing operations, includes the company’s Port Melbourne engine plant and its Elizabeth car assembly line.
Holden also paid more than $122 million in employment separation costs - redundancy payments - to around 800 manufacturing workers and staff.
“Clearly there are significant costs associated with our decision to cease domestic manufacturing of vehicles in Australia by the end of 2017. These costs drove the financial loss for Holden in 2013,” Holden Chief Financial Officer, Jeff Rolfs, said.
“We are mindful of the impact on our employees and our financial results, but it was the right decision. Manufacturing vehicles in Australia is, unfortunately, unsustainable.”
The company is likely to post more losses as it moves towards the 2017 end of local manufacturing, with some 2900 direct Holden jobs to go in Victoria and South Australia.
Similar costs have been borne by Ford, confirming that the write-down of its assets represents $242 million of its $267 million 2013 loss.
Holden says its revenue “increased slightly” to $4.05 billion from $4.02 billion in 2012, thanks largely to interest in the hugely overhauled VF Commodore range.
Across the Holden brand, sales increased by 17.4 percent in the second half of 2013.
Ford’s revenue was a different tale however, with its worst sales results in 22 years leading to a drop in revenue from $3.1 billion in 2012 to $2.8 billion in 2013.
Holden says it spent $145.2 million on research and development, and $190.9 million in tax, for 2013.
Ford, which plans to maintain a much larger design and engineering force in Australia than Holden after local production ends, spent $340 million in local development work for domestic and overseas models.
The company expects to become Australia’s largest automotive employer by 2017, with around 1100 workers in design and engineering.
Holden, however, will retain only a small team that will focus on local tuning programs for imported models.