Renault said yesterday net profit for 2015 was up nearly 50% to €2.96bn ($3.3bn) despite a hit from its Russian subsidiary which Renault said it may recapitalise and take over to save it from collapse.
The French carmaker said it was in talks with the holding company of its Russian unit, Avtovaz, after it took a €620mn loss in Russia as the economy slowed drastically last year.
Renault said in a statement the talks would examine the feasibility of “a recapitalisation which could lead to the consolidation of the company by Renault”.
Avtovaz warned in a separate statement that without assistance, market conditions “create a material uncertainty that gives rise to significant doubt about the group’s ability to continue as a going concern”.
Avtovaz, which makes Lada cars, said it would further “optimise the workforce” as part of its “anti-crisis plan” to improve finances in 2016, having already switched all of its employees and management to a four-day week in February last year.
The Russian car market slumped 35% in 2015 as international sanctions over Ukraine and the crash in oil prices took their toll.
Avtovaz, based on the Volga river in the city of Togliatti, has been majority-owned since 2013 by Renault and Renault’s global partner Nissan and employs 44,000 people, not counting jobs it generates for its suppliers.
Globally, the success of new models such as the new Captur and Kadjar SUVs allowed Renault to hit profitability targets two years early.
The company exceeded its 5.0% target for operational profitability—the 5.1% it registered was a marked improvement on the 3.9% in 2014.
Turnover surged 10.4% to €45.3bn, with net profits up 48.1%. Chief executive Carlos Ghosn said 2015 had been “a good year”.