AVTOVAZ Group today reported revenue of 131.2 B-RUB for the 9 months of 2015, compared to 135.2 B-RUB for the same period 2014. The operating loss amounted to 14.5 B-RUB under IFRS standards (-11,1% of revenue) comparing to 10.0 B-RUB loss in 9M 2014 (-7,4% of revenue).
AVTOVAZ’s production volume of LADA, Renault, Nissan and Datsun brands in 9M 2015 reached 368 k-units (- 9,8% versus the same period 2014). LADA retail sales on the Russian is down by -28,3% and amounted to 203 K units. The LADA brand is increasing its market share from 16,8% (9M 2014) to 18,1% (9M 2015). The overall Russian car market declined in the 9M 2015 by 33,5%.
Beyond the market drop, the main reasons for the losses were purchasing prices inflation and unfavorable RUB exchange rate. AVTOVAZ’s anti-crisis program, which has already contributed 6 B-RUB in 9M 2015, could not fully offset these negative market and economic effects.
To return to profitability, AVTOVAZ Group is preparing strong corrective actions. These include a program to decrease purchasing cost, the closure of unprofitable businesses, the reduction of fixed costs and labor costs. The Group will work closely with its shareholders, the national and the regional governments, and the trade unions on this program.
The main focus of AVTOVAZ is the successful introduction of the new models Vesta and XRAY to the market. The production of the LADA Vesta was launched in-time on September 25th, XRAY start of production is scheduled for Dec, 15th. This large financial investment in the framework of significant quality improvement and new model offensive is going to significantly change LADA brand and strengthen the Group’s position in 2016.
The Group is currently changing its financial management reporting standards, shifting from Russian Accounting Standards (RAS) for AVTOVAZ JSC to International Financial Reporting Standards (IFRS) for AVTOVAZ Group. In addition to the results under IFRS published above, JSC AVTOVAZ reports an operational loss of 15.4 B-RUB under RAS comparing to 3.5 B-RUB loss under RAS in the same period of 2014.
