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Manufacturing Exit Accounted for, GM Holden Posts Profit

Executive Summary

The automaker says its 2015 financial result reinforces that the company is in position to be profitable for the long term on its imported-vehicle portfolio.

After two years of significant losses, GM Holden is back in the black with a A$128.2 million ($94.4 million) after-tax profit for 2015.

The GM subsidiary says the previous two years’ losses were driven directly by employee separation and asset impairment charges associated with the wind-down of local manufacturing in 2017.

The majority of write-downs and charges now have been accounted for, and GM Holden says the 2015 result reinforces that the company is in position to be profitable for the long term on its imported-vehicle portfolio. Last week, GM Holden announced it would add the Brazilian-built Trailblazer SUV to its portfolio later this year.

The 2015 financial result includes one-time accounting reversals of A$79.7 million ($58.7 million) in employment entitlements, driven largely by the decision to retain GM Holden’s powertrain calibration-engineering unit.

As the company continues its transition to a full-line importer and national sales company, it sold 102,951 vehicles in 2015, giving it a market share of 8.9% to rank among the top three automotive brands in the Australian market.

It had a pretax profit of A$194.8 million ($143.5 million). Consolidated revenue was A$3.59 billion ($2.64 billion).

GM Holden Chairman and Managing Director Mark Bernhard says the 2015 results show the company is consistently profitable on its imported-vehicle range.

“We’re paving a profitable and sustainable future for Holden for the long term,” Bernhard says in a statement.

“We recorded significant charges, and therefore losses, in 2013 and 2014 due to asset impairments and employee entitlements. This is the cost of looking after our people and ensuring an orderly wind-down, and that remains our unwavering commitment.”

Bernhard says GM Holden is excited by its future and the long-term vision of once again becoming Australia’s best automotive company.

“We’ll make this happen by launching 24 new vehicles by the end of 2020, putting the customer first, remaining a key part of our local communities and rejuvenating our brand to reflect today’s Australia,” he says. “It’s a big job, but we have the plans and the people to do it.”

GM Holden says it remains a significant contributor to the Australian economy. In 2015, the company spent A$70.9 million ($52.2 million) on R&D and paid combined taxes of A$193.6 million ($142.6 million), up from A$170.7 million ($125.7 million) in 2014.

The company will maintain a significant presence in Australia after manufacturing ends. Its corporate headquarters in Port Melbourne will employee about 700 people, combined with an international design studio, a national parts and distribution center, a proving ground and a local engineering department.

GM Holden will have more than 300 designers and engineers working on local and global vehicle programs, along with the more than 10,000 employees in its nationwide dealer network.

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