29 Sep 2009 12:45

Sollers expects increase in losses in 2009, sales fall 40%-45%

MOSCOW. Sept 29 (Interfax) - Automaker Sollers forecast that its losses in 2009 will be higher than 2008.

"Loss will likely be higher," the company's president, Vadim Shvetsov, told journalists at the Russia Calling investment forum, which had been organized by VTB Capital.

Nonetheless the company hopes to post an EBITDA coming to 2.5 billion rubles while also reducing debt to 20.5 billion rubles. In 2010, Sollers intends to lower its debt/EBITDA ratio to 2.5-3.

Shvetsov said that the company's sales would likely drop by 40%-45% in 2009. "We believe that total market sales this year will fall on average 50%. Our goal is to top the market by 10%. We hope to hold around 40%-45% [in decreased automobile sales]," he said.

He stressed that Sollers was currently working at full capacity even through production capacity had been idle for almost the entire first half. Since last year, the company had relied on its warehouse reserves for sales.

Shvetsov added that the main cause of the company's losses in 2009 had been the changing rate of the Russian ruble since a large part of Sollers' turnover was in imports.

Commenting on a revival of automobile sales, Shvetsov expressed the opinion that this would happen no earlier than in the middle of 2010. "We believe that we have hit the bottom and will not fall any further. We expect a revival of demand in the middle of next year," he said, adding that the first quarter could be difficult. Shvetsov said that if the Russian government wants to support automakers through state orders this would be needed in the first half of 2010 and not at the end of the year as usual.

Shevtsov said that a consortium consisting of Magna and Sberbank offers Sollers an industrial partnership, the company would consider such a proposal. "If we receive an offer then we will consider it. We have the free capacity," he said, adding that Sollers had yet to receive any concrete proposals.