Holden's export loss eats into earnings

GM's decision to end Pontiac production in North America hit Holden hard.

A modest after-tax profit of $12.8 million last year was offset by a net loss of $210.6 million due to the curtailment of the Holden-built Pontiac export program. These losses also included a number of special non-recurring expenses totaling $223.4 million, primarily due to the cancellation of the export program. The special fees are mainly related to the closure of the Family II engine plant in Melbourne.

Last year's loss significantly exceeded the $70.2 million loss recorded in 2008. GM-Holden chief financial officer Mark Bernhard said the result was disappointing but a by-product of one of the worst economic downturns in recent memory.

“This has had a significant impact on both our domestic and export sales,” he said. "The majority of our losses were incurred as a result of GM's decision to stop selling the Pontiac brand in North America."

Mass export of the Pontiac G8 ended in April last year, which affected the company's production volumes. Last year, the company built 67,000 vehicles, a significant decrease from 119,000's 2008 88,000 built in 136,000. She exported 2008 engines compared to XNUMX XNUMX in XNUMX.

Bernhard said Holden's other key export markets have also been hit by the global economic downturn, which has led to a sharp decline in demand for locally built vehicles from Holden's overseas customers.

“Locally, despite producing Australia's best-selling car, the Commodore, our domestic market has also been affected,” he said. These factors led to a decrease in revenue from $5.8 billion in 2008 to $3.8 billion in 2009. However, as the global economy began to improve in the second half of the year, Holden's financial position also improved, Bernhard said.

“At this time, we have seen the benefits of some of the most difficult restructuring decisions made during the year to enable a more cost-effective and efficient operation,” he said. "This contributed to the company's positive operating cash flow of $289.8 million."

Bernhard is confident that Holden will return to profit soon, especially as local production of the Cruze subcompact starts in Adelaide early next year. “While we had a good start to the year, I am not yet in a position to declare victory,” he said.