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CNH Industrial (CNHI) Exits Russia Amid Ukraine Conflict Fallout
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CNH Industrial (CNHI - Free Report) announced its decision to divest its business activities in Russia for $60 million. This move comes in the wake of the company's previous announcement in March 2022, when it declared the suspension of supplies to the Russian market due to the ongoing conflict in Ukraine and subsequent international sanctions.
Up until the decision to divest, CNH Industrial had ensured the payment of employee salaries and other administrative expenses in Russia. The company had been operating a corporate office in the Moscow region, which played a crucial role in managing the import and distribution of its products within Russia. This office was also responsible for regional business activities and commercial financing.
CNH Industrial's presence in Russia included manufacturing sites for agricultural equipment, implements, and construction equipment, as well as a parts depot. These facilities employed roughly 200 people. In 2021, the last full year of operations, CNH Industrial's Russian business generated revenues of around $380 million, which constituted 2% of the company's consolidated revenues for that year.
The divestiture is a strategic move by CNH Industrial to focus on its core markets and optimize its global footprint. With the Russian operations generating only 2% of the company's consolidated revenues in 2021, it makes sense to divest these assets and reallocate resources to more profitable regions. The move will also allow the company to simplify its business and reduce operational complexity.
In the first quarter of 2022, CNH Industrial recorded charges of $71 million associated with the write-down of assets, financial receivable allowances, and a valuation allowance against deferred tax assets. This was in response to the company's decision to suspend its Russian operations. CNH Industrial also estimates additional pre-tax charges of approximately $20 million in relation to the divestiture of its business activities in Russia.
The divestiture of CNH Industrial's Russian operations is a significant move, as it demonstrates the company's response to the evolving geopolitical landscape and its commitment to adhering to international sanctions. It also highlights the impact of the Russia-Ukraine conflict on multinational businesses and the challenges they face in navigating this complex situation.
Major peers of CNHI, such as Caterpillar (CAT - Free Report) , Deere & Company (DE - Free Report) , and AGCO Corporation (AGCO - Free Report) , have also curtailed their operations in Russia in response to the crisis in Ukraine.
In March 2022, Caterpillar suspended its manufacturing activities in Russia, citing supply chain disruptions and sanctions. However, the company continues to use Russia as a supply-chain route, highlighting the dependence of EU and China on Russian shipping routes. Deere also suspended shipments of machines to Russia and Belarus, expressing deep sadness over the escalating events in Ukraine. The company is closely monitoring the situation and adhering to U.S. and international sanctions. AGCO stopped the sale of new tractors and machinery to Russia and Belarus. The company stated that Russia and Ukraine are vital to the global food supply, and it has carefully considered how best to serve farmers while taking necessary action in response to the attacks on Ukraine.
The exit of CNHI from Russia and suspension of operations by its peers reflect the significant impact of the Russia-Ukraine conflict on the global business environment. Companies are faced with tough decisions on how to navigate this crisis while adhering to international sanctions and protecting their interests. As the situation continues to evolve, businesses operating in the region must carefully assess the risks and adapt to the rapidly changing landscape.
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CNH Industrial (CNHI) Exits Russia Amid Ukraine Conflict Fallout
CNH Industrial (CNHI - Free Report) announced its decision to divest its business activities in Russia for $60 million. This move comes in the wake of the company's previous announcement in March 2022, when it declared the suspension of supplies to the Russian market due to the ongoing conflict in Ukraine and subsequent international sanctions.
Up until the decision to divest, CNH Industrial had ensured the payment of employee salaries and other administrative expenses in Russia. The company had been operating a corporate office in the Moscow region, which played a crucial role in managing the import and distribution of its products within Russia. This office was also responsible for regional business activities and commercial financing.
CNH Industrial's presence in Russia included manufacturing sites for agricultural equipment, implements, and construction equipment, as well as a parts depot. These facilities employed roughly 200 people. In 2021, the last full year of operations, CNH Industrial's Russian business generated revenues of around $380 million, which constituted 2% of the company's consolidated revenues for that year.
The divestiture is a strategic move by CNH Industrial to focus on its core markets and optimize its global footprint. With the Russian operations generating only 2% of the company's consolidated revenues in 2021, it makes sense to divest these assets and reallocate resources to more profitable regions. The move will also allow the company to simplify its business and reduce operational complexity.
In the first quarter of 2022, CNH Industrial recorded charges of $71 million associated with the write-down of assets, financial receivable allowances, and a valuation allowance against deferred tax assets. This was in response to the company's decision to suspend its Russian operations. CNH Industrial also estimates additional pre-tax charges of approximately $20 million in relation to the divestiture of its business activities in Russia.
The divestiture of CNH Industrial's Russian operations is a significant move, as it demonstrates the company's response to the evolving geopolitical landscape and its commitment to adhering to international sanctions. It also highlights the impact of the Russia-Ukraine conflict on multinational businesses and the challenges they face in navigating this complex situation.
CNHI currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Major peers of CNHI, such as Caterpillar (CAT - Free Report) , Deere & Company (DE - Free Report) , and AGCO Corporation (AGCO - Free Report) , have also curtailed their operations in Russia in response to the crisis in Ukraine.
In March 2022, Caterpillar suspended its manufacturing activities in Russia, citing supply chain disruptions and sanctions. However, the company continues to use Russia as a supply-chain route, highlighting the dependence of EU and China on Russian shipping routes. Deere also suspended shipments of machines to Russia and Belarus, expressing deep sadness over the escalating events in Ukraine. The company is closely monitoring the situation and adhering to U.S. and international sanctions. AGCO stopped the sale of new tractors and machinery to Russia and Belarus. The company stated that Russia and Ukraine are vital to the global food supply, and it has carefully considered how best to serve farmers while taking necessary action in response to the attacks on Ukraine.
The exit of CNHI from Russia and suspension of operations by its peers reflect the significant impact of the Russia-Ukraine conflict on the global business environment. Companies are faced with tough decisions on how to navigate this crisis while adhering to international sanctions and protecting their interests. As the situation continues to evolve, businesses operating in the region must carefully assess the risks and adapt to the rapidly changing landscape.