AKRON — Continental A.G. and Group Michelin continue to work toward exiting the Russian market nearly nine months after announcing their decisions to dispose of their operations in the country in the aftermath of Russia's invasion of Ukraine.
Continental disclosed in its fiscal 2022 earnings report that it is pursuing a "controlled withdrawal" from the Russian market, which involves selling its business operations in Russia, including a tire plant in Kaluga.
Speaking at the firm's year-end financials press conference March 8, CEO Nicolai Setzer cited rising prices for goods, raw materials and energy that are tied to the war as reasons for the withdrawal.
"We are already at an advanced stage of the sale process here," Setzer said, noting that regulatory approvals required to ensure completion have yet to be received.
Continental opened the factory in Kaluga in 2013. In March last year, the tire maker halted operations there following the breakout of the war.
In April, Conti said it was "temporarily resuming" production of passenger tires for the local market to "fulfill our duty of care to our employees in Russia" and protect them from prosecution.
According to Tire Business' 2022 Global Tire Report, the Kaluga plant's capacity is rated at 3 million passenger and light truck tires and has up to 1,000 employees.
For its part, Michelin said in its fiscal 2022 results statement that it is working on exit scenarios which includes a sale to a third-party.
Michelin's documents show the Russian subsidiaries, including the car and light truck tire plant in Davydovo, still are controlled by the Group.
The French tire maker suspended all of its industrial operations in Russia and exports to the country in March last year. At the end of June, it disclosed plans to exit Russia due to the "technical impossibility" of resuming operations, in particular due to procurement difficulties.
Michelin Russia employs around 1,000, including 750 at the Davydovo plant, which has a rated production capacity of 1.5 million to 2 million tires a year. That amount of output represents about 1% of the group's worldwide capacity in this segment.
Most of the output from Davydovo consists of mass-market sizes, intended primarily for the Russian market, the company said. Michelin's sales in Russia, across every segment, accounted for around 2% of Michelin's consolidated total in 2021.
Before the war in Ukraine broke out, Michelin said that it, like other tire makers, sourced certain raw materials from Russia for its European production plants. Given the subsequent procurement issues and supply-chain disruptions, the group stopped production at some of its European plants for a few days in March 2022.
Thereafter, Michelin deployed alternative sourcing solutions to address future risks of supply-chain and production interruptions.
"As a result, since the end of the first semester of 2022, none of the group's operations are dependent on any Russian sourcing," Michelin noted in its 2022 financial statement.
Story includes input from European Rubber Journal