Holden manufactures a profit in 2016

GM HOLDEN’S doomed manufacturing operations in Australia turned a $125 million after-tax profit last year, thanks partly to a $51.4 million contribution by Australian taxpayers.

Combined with a $27.3 million profit from its national sales operation, Holden wrapped up 2016 with an overall profit of $152. 8 million to record its second successive year in the black after a string of losses.

The result was a $24.6 million improvement over 2015’s $128.2 million profit and a massive gain over the $553.8 million loss in 2013 when parent company General Motors decided to pull the pin on its Australian manufacturing.

Holden is set to close its remaining Australian factory in Elizabeth, South Australia, in October this year, bringing to end almost 70 years of Holden car production.

A statement released by the company today shows it has continued to receive federal government assistance last year under the Automotive Transformation Scheme (ATS) that was designed to help prop up the local automotive industry by encouraging “competitive investment, innovation and economic sustainability” with an emphasis on “environmental outcomes” and “development of workforce skills”.

Along with the $51.4 million from the ATS, the Holden result also includes a handout of $128.1 million from GM to support an orderly manufacturing wind-down and to support Holden employees facing the axe.

But Holden says that if it was planning to continue local manufacturing beyond 2017, it would have faced an additional $125.6 million in depreciation costs.

“Accounting for financial support payments and projected future depreciation, local manufacturing operations would have recorded an approximate $180 million loss,” it said.

Holden’s sales company profit of $27.3 million (pre-tax $40.3m) was almost triple the $10.1 million result of 2015.

Holden chairman and managing director Mark Bernhard said Holden’s 2016 financial results pointed to a strong long-term future as a full-line importer.

“We’re facing challenges as a business and undergoing fundamental changes, there is no sugar coating that,” he said. “But our consistent financial results highlight the underlying health of the business.

“Now we need to keep our unwavering focus on growing sales, re-building our brand and putting our customers first. If we look after the fundamentals of our business, the rest will take care of itself.” Holden’s 2016 profit was made on consolidated sales revenue of $3.56 billion, down slightly in last year’s $3.59 billion. Sales included 94,308 vehicles – an 8.4 per cent decline on 2015.

So far this year, Holden sales have slipped a further 11.3 per cent, with the company’s market share slipping from 8.0 per cent in 2016 to 7.2 per cent – its lowest share since its first local model was introduced in 1948.

The company paid $188.1 million in taxes – down on the $193.6 million paid last year – and invested $69.1 million in research and development.

Local vehicle production fell from 56,786 units to 38,677. Of those, 4191 were exported, compared with 10,452 in 2015.

Production figures also included 38,677 V6 engines from Holden’s Port Melbourne factory that closed in December.

The Elizabeth plant was also scaled back last year, with production of the Cruze small car finishing there in October, leaving only the Commodore and its derivatives in production over the final year.

From the fourth quarter of 2017, Holden will import all of its vehicles, including a new Commodore based on the next-generation Opel Insignia made in Germany.