(Additional details Renault (PA.) Company history and Russia operations.

Gilles Guillaume and Tassilo Humel

PARIS (Reuters) – Renault SA, the Western automaker most at risk in Russia, announced Wednesday that it would temporarily suspend operations at Moscow’s plant while it examines the options available to it regarding its major stake in Avtovaz. The Russian No. 1 carmaker.

It was done amid increasing pressure regarding the French company’s ongoing presence in Russia following the Ukrainian invasion. Dmytro Kuleba (the Ukraine’s foreign minister) has demanded a boycott worldwide of Renault

The Renault Group reaffirmed that it has taken all necessary steps to comply with the international sanctions, the company announced in Wednesday’s statement. It was the first time the company had made a statement about the matter since the beginning of the war. The crisis in Ukraine was not mentioned.

On Wednesday, the French automaker revised its operating margin to 3%. This is a decrease of at least 4% from 2022. It also adjusted its outlook for automotive cash flow to “positive” after adjusting its previous estimate of 1 Billion euros ($1.10B).

Volodymyr Zelenskiy, the Ukrainian president, had earlier accused Renault that he was financing war. He said Renault and other French companies must cease “financing murder of children, women and rape”.

Russia calls its actions in Ukraine a “special operation” that it says is not designed to occupy territory but to destroy its southern neighbour’s military capabilities and capture what it regards as dangerous nationalists.

Citibank estimates that Renault receives 8% from Russia via its 69% stake at Avtovaz (the company behind Lada cars).

Two sources familiar with the situation say that Renault’s board considered several scenarios, but ultimately decided to keep a Russian presence.

French officials have repeatedly stated that it is up to French companies decide how Russia will be operated in the future, provided they adhere to international sanctions.

The company had resumed Russian production earlier in the month. However, it announced this week that another partial shut down at its Togliatti-Izhevsk locations was being implemented due to shortages of electronic parts.

Last year, its Russian operations accounted for nearly 20% of the total volume. However, Renault Chairman Jean-Dominique Senard stated on March 10 that, two weeks into the war, the crisis would not threaten Renault’s recovery.

Renault announced Wednesday that the company will calculate the cost of assets that were affected by its decision to close the Moscow plant. These assets were worth 2.2 billion euro ($2.42billion) last year, the company stated.

($1 = 0.9084 euro)