PARIS (Bloomberg) -- Renault may delay adding Russian unit AvtoVAZ to its books, insulating the automaker from the country's political and economic turmoil.
Renault originally intended to consolidate AvtoVAZ, the Soviet-era manufacturer that makes Lada-brand vehicles, this year after securing majority control of Russia's biggest carmaker together with alliance partner Nissan Motor Corp.
Presenting Renault's 2014 financial results on Thursday, Chief Financial Officer Dominique Thorman said that probably will not happen in 2015.
Renault CEO Carlos Ghosn said he is confident that the Russian market will recover, adding that the company remains committed to its AvoVAZ investment. "The Russian market has fallen quickly in the past but it has also come back quickly. You have to be ready for that," Ghosn said on Thursday.
Philippe Houchois, a London-based analyst with UBS, said: "This postponement may very well sound like it's coming at the right time for Renault, given the dire state of the Russian market."
Still, there are doubts that Renault will so easily dodge the impact of Russia's slowdown. Renault "seems to be in denial about the consequences of the geopolitical and economic turmoil," Max Warburton, an analyst with Sanford C. Bernstein, said in a note to clients. Renault's expectation for a quick recovery in Russia "seems wildly optimistic," Warburton wrote.
AvtoVAZ is cutting 15 percent of its white-collar jobs to lower costs, while Renault is halting production at its Moscow factory to adapt to a market that it expects to plunge about 25 percent this year.
AvtoVAZ burdened Renault's income by 182 million euros last year but the automaker does not expect to take further impairment charges related to the Russian manufacturer this year, CFO Thormann said.
Prospects for a recovery were buoyed after leaders of Russia, Ukraine, Germany and France agreed on a cease-fire to stem a military conflict that's devastated eastern Ukraine and contributed to Russia's economic slowdown.
Renault's move to limit the damage in Russia, as well as 2014 earnings that rose more than analysts expected, propelled the France-based company's stock to its biggest rise in more than two years. Renault shares rose as much as 9.5 percent to 75.75 euros, the biggest gain since October 2012. The stock has climbed 25 percent this year, valuing the company at 22.3 billion euros ($25.3 billion).
Renault expects to continue to limit the impact of Russia's decline this year. It's targeting a higher operating margin after its return on sales widened to 3.9 percent last year from 3 percent in 2013. Renault also forecast higher deliveries and revenue this year, with European and global car demand projected to rise by 2 percent.
Operating profit jumped 30 percent to 1.61 billion euros last year. Earnings were helped by higher sales of budget Dacia models and lower labor costs in Europe.
Luca Ciferri contributed to this report