Volvo takes a financial hit on business in Russia
Heavy-duty truck maker AB Volvo is setting aside $423.2 million to cover losses resulting from the suspension of operations in Russia due to the invasion of Ukraine.
Among the major truck makers, the Sweden-based company had the most exposure to Russia, making about 3% of its net sales there. The provision, mainly due to financial services, will impact the operating result of the first quarter. Volvo publishes its results on April 22.
Russia’s six-week invasion of Ukraine has seen more than 4 million Ukrainians flee abroad, killed or injured thousands and turned cities to rubble, Reuters reported. This led to sweeping sanctions against its leaders and companies.
“The Volvo Group expresses its deepest sympathy to all those who are suffering because of the devastating war in Ukraine and is committed to supporting the employees, families and communities affected,” the company said. in a statement Friday.
Volvo Group’s net sales were $39.3 billion in 2021. The company’s operations in Russia include a production site in Kaluga, near Moscow. It can produce 15,000 vehicles a year and employs more than 600 people, according to Reuters.
Volvo shares (OTC: VLVLY) have lost a quarter of their value since the beginning of the year. Shortages of components and freight capacity are responsible for production disruptions and increased costs.
The company has total assets of around 9 billion Swedish krona ($952 million) tied to Russia, two-thirds of which could materialize in the coming years.
Volvo Group is the parent company of Volvo Trucks North America and Mack Trucks. They build all heavy and medium trucks for the United States and Canada in Virginia and Pennsylvania.
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