Renault CEO Luca de Meo leaves door open to return to Russia in the future "in a different context'
Renault has sold its stake in Russian car maker Avtovaz to the Russian Central Research and Development Automobile and Engine Institute, following the country’s invasion of Ukraine.
The French firm owned a 67.69% stake in Avtovaz, which employs over 45,000 people in Russia and builds various Renault, Lada and Dacia models.
Part of the deal with the Russian research institute includes a six-year option to re-purchase its stake in Avtovaz, indicating the company could return to Russia in the future. Renault Russia, meanwhile, will be sold off entirely to the city of Moscow.
“Today, we have taken a difficult but necessary decision; and we are making a responsible choice towards our 45,000 employees in Russia, while preserving the Group’s performance and our ability to return to the country in the future, in a different context,” said Luca de Meo, Renault Group CEO.
“I am confident in the Renault Group’s ability to further accelerate its transformation and exceed its mid-term targets.”
Renault initially suspended activities in Russia back in March, in what was a rapid U-turn after announcing only a day earlier that it would restart production at its Moscow plant.
The French firm will continue to target a “positive automotive operating free cash flow”. The company was previously aiming for a figure in excess of €1 billion (£840 million).
“A non-cash adjustment charge amounting to the accounting value of the consolidated intangible assets, property, plant and equipment and goodwill should be recorded at the time of the 2022 first-half results,” Renault said, adding that as of 31 December 2021, this value amounted to almost €2.2bn (£1.85bn).
The French car maker originally suspended Russian production of its cars – which include the Renault Captur, Renault Arkana, Dacia Duster, Dacia Logan and Dacia Sandero – citing issues with ‘production logistics’ in late February. This was just one day after Russia invaded Ukraine.
Russia accounted for a fifth of the firm’s global production output and 10% of its revenue, and Renault also adjusted its 2022 financial outlook to aim for a group operating margin of around 3%, instead of its previous 4% target.
The firm has received criticism for continuing its Russian operations, while other brands such as Volkswagen, BMW and Mercedes-Benz have suspended all activities.
Ukraine president Volodymyr Zelenskiy told French law makers that Renault, among other French firms, should cease activities in Russia, which were “financing the murder of children and women, of rape”.
“French companies must leave the Russian market,” Zelenskiy said. Renault is 15% owned by the French government, prompting further criticism towards French president Emmanuel Macron.
Keyword: Renault sells Avtovaz stake with six-year buy-back option