AvtoVAZ Group has reported revenue of RUB131.2bn (US$2.04bn) for the first nine months of 2015, compared to RUB135.2bn for the same period in 2014. The operating loss amounted to RUB14.5bn under IFRS standards (-11.1% of revenue) comparing to RUB10bn loss in first nine months of 2014 (-7.4% of revenue).
AvtoVAZ's production volume of Lada, Renault, Nissan and Datsun brands in the first nine months reached to 368,000 units (down 9.8% versus the same period in 2014). Lada retail sales were down by 28.3% and amounted to 203,000 units. The Lada brand is increasing its market share from 16.8% (in first nine months of 2014) to 18.1% (in first nine months of 2015). The overall Russian car market declined in the first nine months of 2015 by 33.5%.
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Beyond the market drop, the main reasons for the losses were purchasing prices inflation and unfavourable RUB exchange rate. AvtoVAZ's anti-crisis programme, which has already contributed RUB6bn in the first nine months of 2015, could not fully offset these negative market and economic effects.
To return to profitability, AvtoVAZ Group is preparing strong corrective actions, it says. These include a programme to decrease purchasing cost, the closure of unprofitable businesses, the reduction of fixed costs and labour costs. The group will work closely with its shareholders, the national and the regional governments, and the trade unions on this programme.
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 25 September, Xray start of production is scheduled for 15 December. 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.
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The group is currently changing its financial management reporting standards, shifting from Russian Accounting Standards (RAS) for AvtoVAX 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 RUB15.4bn under RAS comparing to RUB3.5bn loss under RAS in the same period of 2014.
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