Renault sells Russian operations and stake in Lada maker for 2 rubles

Renault is selling its entire Russian operations, including its stake in Lada maker Avtovaz, for 2 rubles, in one of the most significant retreats by foreign companies since the invasion of Ukraine.

The French group’s exit, which involved a 2.2 billion euro write-down and the sale of its Russian operations to a state-backed group and the city of Moscow, underscored the lack of options Businesses trying to leave the country There will be no huge loss of their investment.

Chief executive Luca De Mayo told the Financial Times last week that the decision to leave Russia was “painful” but the company was “forced to make a decision” because it could not produce cars in the country.

Renault employs 45,000 people in Russia, mainly at its sprawling Togliatti plant in Avtovaz on the banks of the Volga River. It is more vulnerable to the country than its rivals, and a lack of parts has brought business to a halt.

De Meo told the Financial Times The future of automotive summits Last week, the business was “looking for a solution that would allow [people] to keep their jobs into the future.”

The deal involved the transfer of the company’s entire stake in Renault’s Russian operations to the city of Moscow and its 67.69% stake in Avtovaz to state-backed automotive research agency NAMI.

The sale also gave Renault a six-year buyback option for the business, which was traded at 1 ruble per share, according to people familiar with the matter. At current exchange rates, 1 US dollar is 64 rubles.

Renault owns 15 percent of the French government.If the company does not exit Russia, “its sales [there] The French Economy Ministry said.

Russia accounts for about 10 percent of Renault’s sales and half of its operating profit.

International businesses from oil companies to banks have been trying to find ways to get rid of Russia, and many are simply suspending operations for now. This method allows them to pay employee wage bills, but has little or no income in the country. At the same time, buyers are scarce and dealing with sanctioned Russian entities poses problems.

British Shell Agreed last week The sale of its retail and lubricants business in Russia to Lukoil is the first major deal in the oil and gas industry.Societe Generale takes 3.1 billion euros in write-downs by selling its Rosbank network to oligarch-controlled group Vladimir Potanin.

McDonald’s said Monday it will sell in Russia and hopes to find native Buyer employs its employees.

Renault’s joint venture in Russia is part of its expansion strategy in emerging markets.its First investment in the country in 2007 Encouraged by Vladimir Putin.

It spent years modernizing and improving operations at some of Avtovaz’s Soviet-era facilities until the war had wanted to expand exports of new Lada models.

Moscow’s mayor Sergei Sobyanin said in a blog post that Russia will resume production of Moskvitch cars – a Soviet-era car brand dating back to 1946 – to keep the Renault plant working . They will be produced with Russian truck maker Kamaz, Sobyanin said, with the help of the government to find and build parts.

Renault’s exit from Russia comes as the company races to invest in electric vehicles as the manufacturer positions itself to produce low-emission vehicles.

The company has cut its 2022 operating margin forecast to 3% from 4% and stuck to its financial guidance on Monday.

Additional reporting by Nastassia Astrasheuskaya in Riga

Source link