According to General Motors financial statements filed with the US Secretaries and Exchange Commission, Holden’s value has dropped from $500 million to just $71 million after the automaker announced plans to cease its Australian manufacturing operations in December.
The financial reports disclosed the full year results for GM’s global operations, revealing a $3.8 billion profit before taxes, down from the $4.9 billion in profits the automaker posted last year.
The documents also revealed that the restructuring of GM’s international operations, including the end of car manufacturing in Australia, will cost the company more than $1.1 billion by the end of 2017. GM’s Consolidated International Operations, the division that encompasses Holden, proved to be a money pit in recent years. If you factor out the booming Chinese division, GM’s CIO posted a $200 million loss, a big difference from the $300 million in profit it posted last year.
GM executive vice-president and chief financial officer, Chuck Stevens, recognized there would be more financial woes as major parts of the business, including Holden’s manufacturing operations, wound down.
“In the three months ended December 31, 2013 we recorded pre-tax charges of $0.5 billion consisting of asset impairment charges including property, plant and equipment and exit-related costs including certain employee severance related costs,” Stevens said in the SEC filing. “We expect to incur additional charges through 2017 for incremental future cash payments of employee severance once negotiations of the amount are completed.”
Factory closures in Australia and Europe, as well as the decision to pull the Chevrolet brand out of Europe, cost the company $420 million in 2013. As further restructuring takes place between now and 2017, GM is expected to post another $640 million in losses.
According to the report, the decision to stop manufacturing cars in Australia cost GM $477 million. Company balance sheets also show that Holden may take a big tax hit, as it won’t write off any future losses generated against future income.
“At December 31, 2013 as a result of our plans to cease vehicle and engine manufacturing at Holden, we determined that it was more likely than not Holden would not realize a portion of the deferred tax assets and recorded a valuation allowance in the amount of $133 million.”