Holden posted a $554 million loss last year, as a result of its decision to quit manufacturing in Australia by 2017.
The Australian reports that the loss, which was the company’s worst ever, was due to a one-off impairment charge on property, plant and equipment of just over $500 million. This was a result of the plan to shut its Adelaide and Melbourne plants.
In addition, Holden paid $122m worth of redundancy payments.
According to the company, the exit costs were in line with expectations and the loss was caused by the exit costs.
“There are significant costs associated with our decision to cease domestic manufacturing of vehicles in Australia by the end of 2017,” chief financial officer Jeff Rolfs said.
“Last year, we recorded the initial allocations of our employee separation costs with further charges expected in this area.”
He added that the decision to stop manufacturing operations will help Holden return to profit.
“We are profitable on our imported portfolio and Holden is focused on taking the right decisions to grow sales and revenue in the immediate term,” he said.
As the ABC reports, Adelaide University economist John Spoehr said Holden will have more exit costs to meet and will post more losses. This is because they have to pay out 2,500 employees nationally.
"Part of what we're hearing from Holden might resonate in the wider components sector with the write-down of their assets,” he said.
"If some of the components suppliers are under pressure from the banks they may well be forced to close down, unless Holden provide those components suppliers with strong support and the banks are patient."
Goran Roos, chairman of the South Australian government’s Advanced Manufacturing Council believes that, despite Holden’s wish to remain until 2017, the company may have to quit manufacturing earlier.