MOSCOW, Feb 10 (Reuters) - French carmaker Renault’s struggling Russian venture Avtovaz reported on Friday a 39 percent reduction in losses last year after pushing through efficiency improvements and cost-cutting measures.
Renault invested more than $1 billion into Avtovaz for an initial 25 percent stake in 2008 but the Russian carmaker has since fallen victim to the collapse of the local market, where annual vehicle sales have more than halved since 2012.
But the market is now seen growing 4 percent in 2017 to almost 1.5 million vehicles, after four straight years of decline, a welcome relief for foreign carmakers with local tie-ins such as Renault and U.S. car giant Ford.
Avtovaz, majority-owned by Renault and its alliance partner Nissan, said it incurred a net loss last year of 44.8 billion roubles ($761.75 million), including impairment and restructuring costs of 25 billion roubles.
That compares with a record loss of 73.9 billion roubles in the previous year - a hit which prompted Renault to slash the value of its stake in the firm by 225 million euros ($240 million).
Revenues rose 5 percent in 2016 to 185 billion roubles, supported by a new “prudent” pricing policy and increased demand for its higher-end Lada Vesta and XRAY models, Avtovaz said.
The company said the improvement in its financial performance had been helped by moves such as cutting production to three assembly lines at its home plant in Togliatti, reducing inventories, and further localising the production of parts.
“The company’s intensive recovery measures show the first positive trend in (its) financials thanks to the active contribution of every employee and partner in Avtovaz,” said CEO Nicolas Maure. “Our goal is to reach the break-even point for operations in 2018.”
Sales of Avtovaz’s ex-Soviet Lada brand fell 1 percent last year to 266,000 vehicles, outperforming an 11 percent decline in the overall market and cementing its position as Russia’s leading carmaker. In 2015 Avtovaz’s sales plunged 31 percent. ($1 = 58.8117 roubles) ($1 = 0.9386 euros) (Reporting by Jack Stubbs and Gleb Stolyarov; Editing by Greg Mahlich)