Stock Markets 52 minutes ago (Oct 11, 2022 06:46AM ET)
© Reuters. FILE PHOTO: A view shows the logo of Nissan on a car in Moscow, Russia, July 6, 2016. REUTERS/Maxim Zmeyev
TOKYO (Reuters) -Nissan Motor Co Ltd will hand over its business in Russia to a state-owned entity for 1 euro ($0.97), it said on Tuesday, taking a loss of around $687 million in the latest costly exit from the country by a global company.
The Japanese automaker transfer its shares in Nissan (OTC:) Manufacturing Russia LLC to state-owned NAMI, it said. The deal will give Nissan the right to buy back the business within six years, Russia’s industry and trade ministry said.
The deal makes Nissan the latest major company to leave Russia since Moscow sent tens of thousands of troops into Ukraine in February. It also mirrors a move by Nissan’s top shareholder, French automaker Renault (EPA:), which sold its majority stake in Russian carmaker Avtovaz to a Russian investor in May.
The sale to NAMI will include Nissan’s production and research facilities in St Petersburg as well as its sales and marketing centre in Moscow, the ministry said.
Nissan said it expected an extraordinary loss of around 100 billion yen ($687 million), but maintained its earnings forecast for the financial year ending in March.
Renault, which owns 43% of Nissan, estimated the decision by its Japanese partner would lead to a 331 million euro hit to its net income for the second half of 2022.
Nissan had suspended production at its St. Petersburg plant in March due to supply chain disruptions. Since then, the company and its local unit had been monitoring the situation, it said. But there was “no visibility” of a change to the external environment, Nissan said, prompting it to decide to exit.
Junior alliance partner Mitsubishi Motors (OTC:) Corp is also considering exiting Russia, the newspaper said. A spokesperson for Mitsubishi said nothing had been decided.
The exit comes as Nissan has embarked on a major shift in its relationship with Renault. The two said on Monday they were in talks about the future of their alliance, including Nissan considering investing in a new electric vehicle venture by Renault.
Those talks, which could prompt the biggest reset in the alliance since the 2018 arrest of long-time executive Carlos Ghosn, have also included the possibility of Renault selling some of its controlling stake in Nissan, two people with knowledge of the talks have told Reuters.
Renault reportedly sold its stake in Avtovaz for one rouble ($0.02).
The Nissan deal was “of great significance for the industry,” Russia’s Industry and Trade Minister Denis Manturov said in a statement.
($1 = 145.6200 yen)
($1 = 63.8500 roubles)