MAN and Scania are leaving Russia

MAN and Scania are leaving Russia



Key European truck manufacturers Scania and MAN will withdraw from trading companies in Russia by early 2023. Such a deal will be considered by Traton SE, which includes both companies, and the parent Volkswagen Group. Scania's leasing structure in Russia is also put up for sale. Traton estimated the losses from leaving the Russian Federation at up to €550 million, which is less than the amount of the company's cash in the country and receivables. Analysts believe that the difference is mainly due to the discounting of liabilities.

Traton, owned by the Volkswagen Group, is going to transfer its trading companies (MAN and Scania) in Russia to local trading partners, follows from Traton's statement. A similar fate may befall Scania's leasing division in Russia (Scania Leasing). The deals are yet to be approved by the company, parent VW AG and Russian regulators, but Traton expects them to close by the first quarter of 2023.

Traton estimated the loss from exiting the Russian Federation at up to €550 million, depending on the change in the ruble exchange rate.

In the first half of the year, the company already reported write-offs of assets and additional expenses related to the direct impact of military operations in Ukraine in the amount of €113 million, of which €65 million was a write-off of receivables due to increased credit risks in financial services. The carrying value of receivables for financial services was estimated at €670 million (at the end of 2021 - €606 million), cash and cash equivalents, which are difficult to access, at €327 million.

Automotive expert Vladimir Bespalov notes that the difference between these estimates and the reported losses may be due to the discounting of cash under leasing agreements, which the company does not receive immediately.

Scania also said in a separate statement that as of September 1, the company's net assets related to Russia were estimated at SEK 11 billion (€1 billion). In 2021, about 6% of Scania's global sales came from Russia. Scania Group on September 13 reserved 5 billion Swedish kronor as potential losses from leaving the Russian Federation. MAN did not comment on Traton's report, but in the first half of the year the company wrote off €32 million in connection with military operations in Ukraine.

MAN and Scania suspended deliveries to Russia in early March. Since the end of February, trucks have repeatedly appeared in various EU sanctions packages, and the supply of components is also limited by sanctions.

At the same time, Kommersant's interlocutors say that formally not all equipment was banned and at least some dump trucks can be delivered.

The decision depends on the national regulator, and in Sweden, where Scania is based, the approach is tougher than in Germany (MAN). Against the background of uncertainty with the possibility of supplies, few people are interested in obtaining the rights of an official distributor, Kommersant's sources say. Potentially interesting they call the service segment of this technique.

Scania and MAN imported and sold trucks and buses in the Russian Federation through Scania Rus and Man Truck and Bus Rus, and rented an office for trading companies. The net profit of Scania Rus in 2021 amounted to 4.6 billion rubles, net assets - 8.2 billion rubles, Man Truck and Bus Rus - 544.2 million and 6.7 billion rubles. respectively. Trucks of the brands were also produced at the plant in St. Petersburg through the parity joint venture between Scania and MAN Trak Production Rus: the equipment located there belongs to Traton. In addition, the companies have their own service centers in the Russian Federation.

Scania Leasing, according to SPARK-Interfax, has 623 active vehicle leasing agreements (the last ones are dated February 22, 2022), net profit in 2021 amounted to 2.6 billion rubles. The company was not among the leaders among foreign captive leasing companies, however, as Kommersant's interlocutors say, it may be of interest because of the opportunity to become a successor under the contracts and get a loyal customer base. One of Kommersant's sources notes that, as a rule, at least 35% of lessors' clients in the automotive business are returnable.

Olga Nikitina



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