Volvo sets aside $423 million in provisions due to Russia-Ukraine war
Volvo (VOLVb.ST) expects its first-quarter operating income to take a hit from uncertainty caused by the Russia-Ukraine war and will set aside provisions worth 4 billion crowns ($423.2 million) to cover that, the Swedish truck maker said on Friday.
Russia’s six-week long incursion in Ukraine has seen more than 4 million people flee abroad, killed or injured thousands, turned cities into rubble and led to sweeping sanctions on its leaders and companies. read more
“The Volvo Group has total assets of about 9 billion crowns related to Russia, of which about 6 billion crowns is cash items that could be materialized over the coming years,” it said in a statement.
“In the first quarter 2022, assets amounting to approximately 4 billion crowns will be provided for and have a negative impact on operating income, primarily in the Financial Services segment,” it added.
Volvo in February suspended all sales, service and production in Russia, which last year accounted for about 3% of its net group sales of about 372.2 billion crowns.
The company’s production site in Kaluga, near Moscow, has a capacity to produce 15,000 vehicles per year and employed over 600 people.
Shares in the company have lost a quarter of their value since the start of the year as shortages of components and freight capacity led to production disruptions and increased costs, denting profits.