STOCKHOLM -AB Volvo 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.
“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.
($1 = 9.4512 Swedish crowns)
(Reporting by Johan Ahlander and Supantha Mukherjee in Stockholm; Editing by Sherry Jacob-Phillips and Jan Harvey)
