|Holden Ltd announced that sales success across the total
product range and export growth in Middle Eastern markets contributed to an increased
sales revenue of $4.1 billion for the year ended 31 December 1999 and outright market
leadership for the first time since 1981.
Despite the negative impact of intense
competition, new model start-ups including the all new Statesman/Caprice in left and right
hand drive variants, global integration costs and reported abnormal items in the amount of
$24 million, a net income after tax of $135 million was posted for the year. This compares
with earnings of $166 million in the previous year.
Global economic pressures, particularly as they impacted Holden markets within Latin
America and Asia, combined to further reduce earnings potential. Brazilian export earnings
fell significantly year on year and the slow recovery of the Japanese economy led to a
substantial shortfall of Vectra export sales against expectations.
The latter, coupled with the need for increased Commodore and Statesman capacity,
prompted Holden to announce during the year that it would cease local production and
revert to importation of the Vectra model range in calendar year 2000. Consequently, the
full costs associated with exiting Vectra production were absorbed in the reporting
The Vectra decision also provides the opportunity for further capacity expansion and
the resources within the Elizabeth manufacturing facility for the introduction of other
model variants such as the Holden Coupe and all-new Utility.
Announcing the result, Chairman and Managing Director, Peter H Hanenberger said
Holden's 1999 financial performance, although somewhat below expectations demonstrated the
company's resilience in an industry facing many pressures. "During a period of
aggressive discounting and market uncertainty surrounding the transition to the GST, we
were able to increase our overall market share," he said. "Our strong product
line-up and vigorous pursuit of new markets delivered the basis for the current outcome
and improved the quality of our earnings," Mr Hanenberger said.
Domestically, the launch of the all new Holden Statesman/Caprice and the VT Series II
were extremely well received. The Holden Vectra recorded its highest sales ever. Combined
with the popular Astra and Barina models, Holden four cylinder vehicle sales achieved a 19
per cent increase over the previous year. Improved performance across the light commercial
segments - Jackaroo, Frontera and Rodeo achieved their best yearly sales ever - helped the
company become industry leader with 19.7 per cent market share in a total domestic market
that declined by 2.6 per cent.
As in 1998, export sales for Holden's four-cylinder engines were constrained by low
demand from markets within Asia. However, a recovery in the second half led to increased
volume and a second production shift was added at Holden's Fishermans Bend facility. Mr
Hanenberger said although the recovery was slow, Holden was prepared to respond
immediately to the improved customer requirements. This uplift in demand has continued
through the first quarter of 2000, with record engine production and sales achieved in the
month of March.
"The fact that Holden Engine Operations has remained profitable during the Asian
economic downturn positions the company well in its bid to establish a new V6 engine plant
in Australia," he said. Holden is continuing to aggressively pursue approval for
investment in a new all-aluminium V6 engine production facility in Australia, the
realisation of which would mean significant investment, employment and further potential
Holden's total export revenue surged in 1999, contributing around $1 billion to
Australia's balance of trade, almost doubling that of the pervious year. The increase was
driven, in the main, by the full year impact of volume sales to the Middle East. Peter
Hanenberger said the success of the Chevrolet-badged Commodore and Statesman in Holden's
newest market, whilst pleasing, also presented challenges to many areas of the business
including the supplier community.
"Capacity constraints through 1999 necessitated increased reliance on overtime
shifts. This has been alleviated through a staged capacity expansion program that will
continue through 2000. It is our aim to progressively build our vehicle export business by
expanding existing and developing new markets to a level where it alone accounts for one
third of annual vehicle production," he said. "Holden is also determined to be
globally competitive and at the forefront of new technologies. 1999 saw a further $90
million invested in production facilities, product and technological advancements,"
Mr Hanenberger said.
"In stretching the organisation we have built the foundation for a stronger, more
innovative and exciting Holden. Our long-term export strategy is key to Holden's continued
success. Together with the commitment and support of our employees, dealer and supplier
partners and the enthusiasm of our customers we have created a platform from which we will
continue to grow and strengthen the Holden brand," Mr Hanenberger concluded.
(May 4, 2000)