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 period.

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 export growth.

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)