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MOSCOW, Feb 12 (PRIME) -- The steep widening of a net loss of Russian car producer AvtoVAZ in 2015 can make the company unable to continue uninterrupted production, auditor Ernst & Young said in a note to the company’s financial report published Friday.
“Without changing the opinion about trustworthiness of the consolidated financial report, we warn that AvtoVAZ and its affiliates sustained losses amounting to 73.851 billion rubles in 2015 and their short-term debt exceeded working assets by 67.78 billion rubles as of December 31, 2015,” the auditor said.
Revenue fell 8% to 176.482 billion rubles.
“These conditions in combination with other circumstances point to the existence of significant uncertainty in the ability of AvtoVAZ and its affiliates to continue their activities uninterruptedly,” Ernst & Young said.
French automaker Renault said its loss from equity holding in AvtoVAZ jumped to 620 million euros in 2015 from 182 million euros in 2014.
Alliance Rostec Auto BV, a joint venture between Renault-Nissan alliance and Russia’s state-owned industrial corporation Rostec, holds 74.5% in AvtoVAZ.
Rostec said in a statement that AvtoVAZ needs additional support measures to improve the condition and to continue implementing its investment program.
“We are closely tracking the situation and we will take measures to improve financial health of AvtoVAZ together with other shareholders. We consider a capital injection through contribution of money into the charter capital and conversion of a part of its debt as a possible support scenario. At the same time, Rostec plans to keep its stake in the capital (of AvtoVAZ) at 25%,” the company said.
CEO of Renault Carlos Ghosn said that the company will make all possible steps to support AvtoVAZ. The French company has started negotiations with the other shareholders on recapitalization of AvtoVAZ, it said in its statement. Ghosn did not mention the sum of recapitalization and dates of negotiations.
Ghosn said that Renault is preparing for recovery of the Russian car market.
(79.1144 rubles – U.S. $1)
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