Renault suspends activities in Moscow and thinks about the future at AvtoVAZ-March 23, 2022 22:37

* Diamond Group evaluates options for AvtoVAZ

* Forced to lower the financial outlook for 2022

* Non-cash adjustment fees expected in the first half of Russia

* Renault has been exposed to growing criticism during the war in Ukraine

(Updated in detail)

By Gilles Guillaume and Tassilo Hummel

Paris, March 23 (Reuters)-Renault RENA.PA, Russia’s most exposed car maker, immediately shuts down production at its Moscow plant on Wednesday night, demonstrating the future of control of the first Russian car maker. Announced that it is considering. , Avtovaz.

The Diamond Group, which has been increasingly criticized in the face of the recent resumption of activity in Russian soil, has also announced that it will lower its 2022 financial target accordingly. With 3% compared to at least 4% before, free cash flow from the automotive industry expects only “plus” and is no longer at least € 1 billion.

Renault has not officially contacted Russia’s outlook by Wednesday night since Russia’s offensive in Ukraine, but has carefully monitored criticisms of the resumption of production at this week’s Moscow plant and last week’s AvtoVAZ plant. Was there. A source familiar with the matter told Reuters.

Pressure increased on Wednesday when Ukrainian President Volodymyr Zelensky, citing Ochan, Leroy Merlin and Renault, called on French companies to leave Russia and stop becoming “war sponsors.”

Ukrainian Foreign Minister Dmitro Kouleba immediately demanded a global boycott of French car makers.

“The Renault Group recalls that it has already taken the necessary steps to comply with international sanctions,” manufactured in a press release released after the board of directors dedicated to the Russian file. The vendor said.

“The group is valuing possible options for investing in AvtoVAZ while acting responsibly for its 45,000 employees in Russia,” he added.

According to Citibank, Renault accounts for 8% of operating profit in Russia and holds a 69% stake in JV, which mainly owns Avtovaz, the owner of the Lada brand.

He has designated a non-cash adjustment expense corresponding to the value of the Group’s intangible, tangible and goodwill consolidated assets in Russia (€ 2,195 million as of December 31) in the first half of the year.

Sales in 2 weeks

Renault’s board had already considered various Russian scenarios two weeks ago, two other sources familiar with the matter told Reuters.

However, like management, fearing that the final withdrawal from Russia would undermine Renault’s recovery, the directors followed the sanctions and, with the support of the major shareholders of the contractor, remained the group’s existence. I verified it. French state.

AvtoVAZ accounted for half of Renault’s current operating profit in the automotive sector last year.

After resuming production on March 16, AvtoVAZ announced a further partial suspension this week on the Togliatti and Izhevsk sites due to a shortage of electronic components.

The Renault plant in Moscow, confused by logistics problems associated with the Ukrainian war, had just resumed production on Monday.

Russia joined Reuters in early March, although Russia joined almost 20% of the group’s total volume in 2021, but Renault Chairman Jean-Dominique Senard told Reuters in early March that the crisis would not jeopardize automakers’ rebound plans. ..

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“Renault continues to focus on implementing its Renault strategic plan,” the automaker said in a statement.

(Gilles Guillaume report, edited by Jean Terzian)

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