Konecranes unveils two key impacts of Russian aggression against Ukraine on its business
Finnish manufacturer of lifting equipment Konecranes has faced negative impacts of the Russian aggression against Ukraine on its business. The company was forced to close its manufacturing facility in Ukraine. Moreover, it has scheduled gradual withdrawal from the Russian market due to the EU sanctions on this state.
With the beginning of hostilities in Ukraine caused by the Russian military aggression, Konecranes closed its crane and component factory in Zaporizhzhia, in the south-eastern part of Ukraine, where more than 400 employees work. “Their safety and well-being are the number one priority for Konecranes as a company, and the Konecranes community is supporting them and their compatriots through local and global efforts. Konecranes has supported its employees and their families based in Ukraine throughout the war and continues to pay salaries and wages to the Ukrainian employees,” the Finnish company stated.
Due to the closure of the Zaporizhzhia factory, Konecranes redirected the planned production to its other manufacturing facilities. The Ukrainian site was one of the Industrial Equipment supply factories for crane components and a crane manufacturing unit for Eastern Europe deliveries. It was also used for extra capacity for the company’s crane deliveries in Western Europe, namely for producing large steel structures. Moreover, Konecranes was forced to impair all Ukraine related assets, including inventories and receivables, in the first quarter of the current year for the amount of around 8 million euros.
Withdrawal from Russia
Besides closing the Ukrainian manufacturing facility, Konecranes also decided to withdraw from the Russian market due to the EU sanctions imposed on this state. “The downscaling of the Russian business will be gradual and will be done in accordance with local laws and regulations, and the safety and wellbeing of our Russian employees will be prioritised,” the company specified. According to the 2021 data, Konecranes sold its equipment in Russia for a total amount of 55 million euros.
As a result of this decision, in the first quarter of the current year, Konecranes has written off orders from Russia for the amount of 79 million euros and cancelled sales to Russia for 32 million euros, as these projects have been discontinued. The orders had been booked and the project revenues were recognised prior to 2022. The impact of the cancelled sales on the operating profit in the first quarter is minus around 39 million euros.
In total, in the first quarter, the negative impact of the cancelled sales to Russia and the impairments of assets in Ukraine is 44 million euros on EBITA and 47 million euros on operating profit. The full amount will be included in adjustments.