Volvo Trucks, has said it has made provision for losses of up to $AUD570 million for the first quarter of 2022 as a result of the conflict in Ukraine after suspending all its operations in Russia.
The announcement last week marked the latest sign of the corporate impact of the heavy international sanctions imposed on Russia since its invasion of Ukraine in February.
The company said it had halted its sales, manufacturing and service operations in the country, which accounted for about three per cent of group net sales in 2021.
Its decision to withdraw from Russia was announced on 28 February, four days after the invasion shutting down its plant in Kaluga, 180km south-west of Moscow, which manufactures Volvo and Renault trucks. \
the plant employed about 700 people until work stopped, according to Volvo’s website, and produced roughly 3,000 vehicles a year.
The group said it had total assets of about $AUD1.3 billion related to Russia, of which $AUD850 million was “cash items that could be materialised over the coming years”.
“In the first quarter 2022, assets amounting to approximately $AUD560 million will be provided for and have a negative impact on operating income, primarily in the financial services segment,” it added.
A range of companies, from retailer Ikea to industrial giant Siemens, have halted operations in Russia since the invasion of Ukraine, as a result both of the unprecedented sanctions and through so-called self-sanctioning to head off any reputational impact of continuing to do business in the country.
Volodymyr Zelensky, Ukraine’s president, told the US Congress in March that foreign companies should leave Russia because it was “flooded” with Ukrainians’ blood.
However, companies have been cautious in their statements about the matter for fear of provoking the Russian government into nationalising their facilities in the country.
Some groups, such as BP and Shell, have announced plans to sell Russian assets, although they face questions about how far they will be allowed to benefit from any proceeds.
Volvo Group reported operating income of $AUD4.7 billion on $AUD52.76 billion in sales for 2021.
