Volvo Trucks, the Swedish truck and bus manufacturer, is putting aside SKr4bn ($423mn) in provisions for the first quarter after suspending all operations in Russia.
The move, announced on Friday, marked the latest sign of the corporate impact of the heavy international sanctions imposed on Russia since its invasion of Ukraine on February 24.
The company said it had halted its sales, manufacturing and service operations in the country, which accounted for about 3 per cent of group net sales in 2021.
Its decision to withdraw from Russia was announced on February 28, four days after the invasion.
The company owns a plant in Kaluga, 180km south-west of Moscow, that manufactures vehicles under the Volvo and Renault truck brands. Opened in 2009, it 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 SKr9bn related to Russia, of which SKr6bn was “cash items that could be materialised over the coming years”.
“In the first quarter 2022, assets amounting to approximately SKr4bn 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 SKr33.2bn on SKr372bn in sales for 2021. The company is predominantly dependent on trucks and construction equipment, and is separate from the carmaker.
Volvo said it expressed its “deepest sympathy” with all the people suffering because of the “devastating war in Ukraine” and said it was committed to supporting affected employees, families and communities.
The company’s shares were down 0.9 per cent in Stockholm at SKr154.34 following the announcement.