25 Aug 2010 13:55

Sollers Group hopes to post operational profits for 2010

MOSCOW. Aug 25 (Interfax) - Sollers Group hopes to post positive operational profit results for 2010, the company's CFO Nikolai Sobolev told journalists at the Moscow International Auto Salon on Wednesday.

He said that the group plans to reduce debt in 2011, which currently comes to 23 billion rubles and has not increased since the start of the year.

Commenting on net profit for 2010, Sobolev said this figure would likely come to "around zero."

It was earlier reported that Sollers' IFRS net losses came to 5 billion rubles in 2009.

Sollers' sales revenue in 2009 went down by 44% to 34.7 billion rubles while EBITDA came to 264 million rubles.

It was earlier reported that the group plans to increase its sales revenue for this year by 50% and return to posting positive operational margins.

Sollers has sent an application to Vnesheconombank (VEB) for getting a syndicated loan for a joint venture with Italy's Fiat. The group hopes that the bank decides on this project in the next six months, Sollers' CEO, Vadim Shvetsov, told journalists.

He said that the company has submitted an application but the bank has additional issues. Therefore, Sollers should agree with the Italian company on all details on the application.

VEB plans to organize a loan worth 2.1 billion euro for this JV. The first stage of production at the end of 2011 and start of 2012 foresees output reaching 300,000 vehicles a year under the UAZ, Chrysler, Fiat and Jeep brands.

In addition, Sollers plans to launch a joint venture in Kazakhstan at the start of 2011, Sobolev said.

He added that the facility's capacity during the first stage would reach 10,000 cars a year. The company is currently closing negotiations with banks for project financing.

Sollers plans to form a JV with Kazakhstan's Saryarka Corporation on a parity basis for building an automobile plant in Karaganda. The project's cost is estimated at $200 million-$250 million. A total of $50 million will be allocated by Kazakhstan. The facility's capacity will reach 50,000 cars a year.

Sollers, formerly Severstal-Auto, manages the Ulyanovsk Automotive Plant, Zavolzhsky Motor Plant , Sollers-Naberezhniye Chelny, Sollers Elabuga and Sollers Far East. The company also has an engine manufacturing joint venture with Fiat Powertrain Technologies. Sollers produces UAZ, Fiat, Isuzu and SsangYong models in Russia.

Sollers Far East has the capacity to build 15,000 this year and that may be expanded to 40,000 per year by 2012. Also planned is the setting-up of automotive component production.