AvtoVAZ has posted a 2017 net loss of US$172m, largely due to restructuring cost of RUB2.2bn, interest expenses of RUB7.3bn, still-high debt and an impairment by a joint-venture company.
Nonetheless, AvtoVAS recorded consolidated revenue of RUB225.6bn, 22% better than in 2016, while growth of Lada sales in the Russian and export markets, as well as intensive recovery and restructuring activities led to considerable improvement of the company’s financials.
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In 2017, retail sales of new Lada passenger cars and light commercial vehicles reached 311,588 units, 17% more than in 2016. This exceeds the growth of the overall car market, which grew by 12%. Lada’s domestic market share (PC+LCV) increased by one point to 19.5% (20.5% for PC only).
This growth is largely driven by the success of the new Lada models – the Lada Vesta (including SW and SW Cross launched in October 2017), the Lada Xray, and sustained sales volumes of the other Lada models. Four Lada cars are in the top ten of the Russian bestsellers in 2017: the Lada Granta (2nd), the Lada Vesta (3rd), the Lada Largus (8th) and the Lada Xray (9th).
The start of sales of the newest Lada Vesta SW/SW Cross is extending the market coverage of the Lada brand in Russia into more premium-price segments
For 2018, AvtoVAZ underlines ongoing risks which may negatively affect the Group’s commercial and financial performance. Raw material price increases, changing foreign exchange rates and uncertainty about the State tax and automotive industry support policies are among them. To offset these, the Group continues its cost optimisation plan and the renewal of the Lada brand’s model line-up.
“Avtovaz Group teams made an excellent job in 2017,” said AvtoVAZ Group president and CEO, Nicolas Maure. “We launched the Vesta SW/SW Cross and many new derivatives, increased overall efficiency and strengthened our cooperation with Renault and the Alliance.
“We fulfilled our cost reduction plan, keeping a favourable social climate and increasing the cooperation with our suppliers. The financials of the company are much healthier, but we must overcome the 2018 headwinds and achieve further development of the Avtovaz Group and of the Lada vehicle line up.
“Given the 2018 Russian market growth outlook and continued export opportunities, we maintain our forecast to have positive operating margin in 2018 and further improve the net result.”
