February 15, 2018 / 10:29 AM / 10 months ago

UPDATE 1-Lada-maker Avtovaz cuts annual losses as auto market recovers

(Adds details, analyst comment)

Feb 15 (Reuters) - Russia’s biggest auto maker Avtovaz , which produces Lada cars, reported a sharp reduction in annual losses on Thursday, helped by cost cuts and the recovery of the Russian car market.

Avtovaz said its annual net loss narrowed to 9.7 billion roubles ($171.3 million) from a loss of 44.8 billion roubles in 2016.

The company said losses were due to restructuring costs of 2.2 billion roubles, interest expenses of 7.3 billion roubles, and an impairment charge by a joint-venture company.

Avtovaz, majority-owned by France’s Renault, pushed through initiatives to reduce costs and added new models to its line-up, amid a steep decline in its local market over recent years.

Its efforts were boosted by recovery of the Russian market, which grew 11.9 percent last year, after four years of decline, and is seen growing again in 2018.

Revenues jumped 22 percent to 225.6 billion roubles, with Lada’s sales rising 17 percent.

Sales were driven by the success of new models, including the higher-end Vesta and XRAY, VTB Capital analyst Vladimir Bespalov said.

“They offer a decent quality to price ratio”, Bespalov added.

The company plans to increase Lada sales in Russia by at least 10 percent in 2018, in line with the market, Avtovaz president Nicolas Maure told reporters on Friday.

Avtovaz confirmed its goal to reach a positive operating margin in 2018.

$1 = 56.6390 roubles Reporting by Anna Pruchnicka and Anna Rzhevkina, additional reporting by Gleb Stolyarov, Editing by Keith Weir and Kirsten Donovan

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