CNH Industrial announced recently the divestiture of its business activities in Russia for a total consideration of approximately $60 million. This follows the company's announcement in March 2022 that it was suspending supplies to this market. Up until now, the payment of employee salaries and other administrative expenses in Russia have been duly guaranteed.
Until March of 2022, the company operated a corporate office in the Moscow region through which it managed the import and distribution of its products in Russia, regional business activities and commercial financing.
The industrial footprint included manufacturing sites for agricultural equipment and implements, construction equipment and a parts depot. These sites employed approximately 200 employees.
For the fiscal year ending 2021, the last full year of business, the Russian operations generated revenue of approximately $380 million, representing 2% of CNH Industrial’s consolidated revenue for that fiscal year. During the quarter ended March 31, 2022, the company recorded charges of $71 million related to assets write down, financial receivable allowances, and a valuation allowance against deferred tax assets.
The company estimates that it will take additional pre-tax charges of approximately $20 million in connection with the divestitures.
EDITOR’S TAKE:
Given the current geopolitical situation, this move by CNH is not surprising. As tensions have risen between the U.S. and Russia, especially with the new alliance between China and Russia, such a move will be in the best interest of the company and its shareholders going forward. Will this mean additional resources and supply for the U.S. market – perhaps. The company can now place more focus on other, more stable markets, including the U.S. Farmers and ranchers are looking for new equipment and this may be a partial answer. They are also looking for dealers of new and qualified used trucks that offer AgPack®. Let them know you have inventory that qualifies for AgPack® by putting it on AgTruckTrader.com. After all, AgTT is free for CAD members!
