Russian carmaker AvtoVAZ moves back into profit

MOSCOW, Oct 5 (Reuters) - Russian carmaker AvtoVAZ made an underlying net profit of 700 million roubles ($23 million) in the first half of the year, it reported on Friday, which compared with a 500 million-rouble loss in the same period last year despite a fall in vehicle sales.

AvtoVAZ's domestic sales in the period were down 14 percent on a year ago at 250,732 vehicles, suffering from the end of a state-backed car scrappage programme aimed at supporting local car makers.

The company, which is due to be taken over by Renault

and Nissan by 2014, raised prices on July 1 and sales in Russia are expected to fall by around 9 percent this year to 525,000-530,000 vehicles.

PricewaterhouseCoopers predicts the total market in Russia will grow by 4 percent this year to around 2.6 million vehicles and Russia is on track to become Europe's biggest car market by the middle of the decade as rising incomes and a surge in consumer spending boosts demand.

AvtoVAZ also reported a 23 percent rise in its first-half earnings before interest, taxation, depreciation and amortisation to 5.4 billion roubles but did not give any explanation.

Mikhail Pak, an analyst with Aton, said that profits were boosted by unspecified asset sales reckoned to be worth 2.5 billion roubles.

"Our estimates show that they would have posted a loss if no sale was made," he said.

Including a non-cash gain from extending the repayment period on its debt, AvtoVAZ said its reported net profit more than quadrupled in the half-year to 27.4 billion roubles.

AvtoVAZ said the gain came from discounting the cost of future debt payments added 26.7 billion roubles to the overall net profit result.

($1=30.9922 Russian roubles)

(Reporting by Gleb Stolyarov; Writing by Katya Golubkova; Editing by Megan Davies, Greg Mahlich)

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