28 Jun 2022 13:58

Michelin planning to transfer Russian business to local management before end of year

MOSCOW. June 28 (Interfax) - France's Compagnie Generale des Etablissements Michelin, one of the world's leading automobile tire manufacturers, plans to transfer its Russian business to local management by the end of this year after suspending operations in the country, the company said.

Michelin's local production at its plant in Davydovo near Moscow was reportedly suspended in mid-March after the start of the military operation in Ukraine. The plant, with a capacity of 1.5-2 million tires a year, produced mainly tires for passenger cars, most of which were supplied to the local market, with a smaller portion going to Northern European countries. Michelin has 1,000 employees in Russia, including 750 employees at the Davydovo plant.

The French company said in a statement that resuming production is technically impossible, in particular because of supply problems in the context of general uncertainty. The group is forced to plan to move all operations out of Russia until the end of 2022 and is considering transferring control of administrative, sales and production operations to the current local management, Michelin said in the statement.

The French company estimated the balance risks of leaving Russia at 250 million euros.

Michelin began operations in Russia in 1997, and was the first foreign tire manufacturer with a local plant in Russia, opened in 2004.

Russia accounted for 2% of Michelin's global sales and 1% of its total production of tires for passenger cars.