SA:Car maker Holden returns to profit

AAP General News (Australia)
04-12-2011
SA:Car maker Holden returns to profit

By Tim Dornin

ADELAIDE, April 12 AAP - Car maker Holden has bounced back from a slide in domestic
sales and a collapse in exports sparked by the global financial crisis to post a $112
million after-tax profit for 2010.

The surge into the black came after losses totalling $579 million since 2005, including
the $211 million plunge into the red in 2009.

Chief financial officer Mark Bernhard said the return to profit followed several years
of challenging global economic conditions that affected the company's sales and overall
financial performance.

"The economic climate experienced during 2008 and 2009 required us to improve our structural
cost base and business model to ensure the long-term profitability of our domestic business,"

Mr Bernhard said.

"The measures we took to restructure our organisation and reduce costs during this
period saw us emerge as a leaner, more flexible automotive manufacturer."

At the height of its problems Holden axed the second shift at its Adelaide assembly
plant, putting most of its manufacturing staff on reduced hours.

It also closed its four-cylinder engine plant in Melbourne.

But it successfully restructured its operations, developing a strategy to boost production
in South Australia by adding the four-cylinder Cruze to the line-up of vehicles built
at the Elizabeth factory.

The second shift has since resumed and Holden has also signed new export deals, including
some to ship cars to the US.

In 2010, Holden's domestic sales were up 11 per cent to 132,923 vehicles while vehicle
exports rose 13 per cent and engine exports 25 per cent.

Holden's manufacturing operations delivered a consolidated revenue last year of $4.4
billion, up from $3.8 billion the previous year.

The company also invested $179 million in research and development, including work
to engineer the Cruze for local production.

Mr Bernhard said the investment to produce a small car alongside the Commodore range
in Adelaide formed an important part of Holden's long-term strategy.

"We are pleased to announce a return to profitability and to achieve our goal of putting
Holden back in the black in 2010," he said.

"But sustained business performance and our ability to meet the needs of the Australian
market, is critical for Holden's long-term viability."

Federal Industry Minister Kim Carr said Holden's return to profitability was testament
to the resilience and creativity of the Australian automotive industry.

Senator Carr said it was also a resounding vindication of the government's support
for the auto sector.

"The fact that there are excellent prospects for further export growth at a time of
a strong Australian dollar further underscores our faith in the company and the industry,"

he said.

"This result is in no small way due to the efforts of GM Holden chairman and managing
director Mike Devereux and his staff and workers.

"I want to particularly acknowledge the sacrifices that have been made by Holden workers
during the hard times of the global downturn."

AAP tjd/dep

KEYWORD: HOLDEN WRAP

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