Thursday July 2, 02:40 PM
UPDATE 1-AvtoVAZ loss triggered "going concern" warning
MOSCOW, July 2 (Reuters) - Russian carmaker AvtoVAZ , part owned by France-based Renault (Paris: FR0000131906 - news) , said doubts were raised about its future as a 'going concern' in an audit of 2008 results, but it would survive on government bailout funds.
Auditors found that a 24.7 billion rouble ($792 million) loss last year meant the company's liabilities exceeded assets by 35 billion roubles as of end-2008, AvtoVAZ said on Thursday.
AvtoVAZ's state-controlled shareholder has since granted a 25 billion rouble loan and other non-cash aid measures, such as a subsidy on loans taken out to buy economy cars, AvtoVAZ said.
'While there remains uncertainty as to the group's ability to achieve its short-term objectives ... management is confident that those objectives will be achieved and the group continues as a going concern and has no plans or need to discontinue or significantly reduce activities,' AvtoVAZ said in its 2008 report.
Many Russian companies issue international-standard accounts several months after the end of the reporting period.
AvtoVAZ's short-term targets include improving demand, reducing its operating costs, improving profitability, and refinancing its debt.
Russia's car market grew rapidly until October when the global economic crisis started biting into consumer finance and spending, which resulted in AvtoVAZ seeing an annual decline of 6 percent in number of cars sold.
Revenues ended the year up 2.4 percent but cost growth far outstripped the pace of revenue growth, resulting in an operating loss of 25.9 billion roubles.
AvtoVAZ shares were down 4.8 percent at 12.80 roubles by 1423 GMT, while the MICEX index was down 3 percent.
($1=31.19 roubles)
(Reporting by Anton Doroshev and Melissa Akin; Editing by Dan Lalor and Simon Jessop) Keywords: AVTOVAZ/
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