Renault’s profit for the full year rose nearly 50% during 2015 on the strong sales of its new models, but the carmaker based in France slashed its value of a stake in AvtoVaz the maker of Lada by over 225 million euros amidst a slump in the car market in Russia.
Renault share rose 5% initially before giving back most of the gains after Carlos Ghosn the CEO dampened hopes of a structural change to the alliance of Renault-Nissan.
A standoff of eight months over the voting right of the French government, which was resolved last December, showed the reciprocal shareholdings of the alliance are unlikely to changed unless there is a more strategic purpose, said Ghosn.
Net income at Renault during 2015 was up to over 2.82 billion euros or $3.2 billion compared to the same period a year ago of 1.89 billion.
Revenue was up 10.4% to end the quarter at 45.3 billion euros said Renault on Friday. The company’s operating margin was up to 5.1% from 3.9% beating the mid-term goal of 5% by the company.
Profit however suffered a hit of 620 million euro from the 37% of indirect stake of Renault in AvtoVaz and the bill will likely increase as it put more capital to shore up the maker of cars due to the collapsing demand in Russia.
Discussions with shareholders are ongoing said Dominique Thorman the CFO at Renault.
Beside the write down of the value it holds to 96 million euros from 321 million, Renault booked losses of 395 million euros for AvtoVaz.
Renault is expecting the market in Russia, which had halved in the past four years, to fall close to 12% in 2016.
Ghosn during the earnings call said he did not expect the news to be good from Russia during 2016.
At the worldwide level, Renault’s registrations increase of 3.3% announced in January reflected its runaway sales for new SUVs Kadjar and Captur, along with strong gains for the updated budget sedan Logan and van Trafic.