Heavy-duty truck manufacturer AB Volvo is setting aside $423.2 million to cover losses from suspending its business in Russia because of the invasion of Ukraine.
Among major truck makers, the Sweden-based company had the greatest exposure to Russia, counting about 3% of its net sales there. The provision, mostly due to financial services, will impact Q1 operating income. Volvo reports earnings on April 22.
Russia’s six-week-long invasion of Ukraine has seen more than 4 million Ukrainians flee abroad, killed or injured thousands, and turned cities into rubble, Reuters reported. That has led to sweeping sanctions on its leaders and companies.
“The Volvo Group expresses its deepest sympathy with all the people suffering due to the devastating war in Ukraine and is committed to supporting affected employees, families and communities,” the company said in a statement Friday.
Volvo’s Group net sales were $39.3 billion in 2021. The company’s business in Russia includes a production site in Kaluga, near Moscow. It can produce 15,000 vehicles per year and employed more than 600 people, according to Reuters.
Volvo shares (OTC: VLVLY) have lost a quarter of their value since the start of the year. Shortages of components and freight capacity bear the blame amid production disruptions and increased costs.
The company has total assets of approximately 9 billion Swedish crowns ($952 million) related to Russia, two-thirds of which could be materialized in coming years.
Volvo Group is the parent of Volvo Trucks North America and Mack Trucks. They build all heavy- and medium duty trucks for the U.S. and Canada in Virginia and Pennsylvania.