Nissan sells Russian business for 1 euro, loses $687 million

TOKYO, Oct 11 (Reuters) – Nissan Motor Co Ltd (7201.T) said on Tuesday it will hand over its operations in Russia to a state-owned entity for 1 euro ($0.97) The latest costly exit of a global company from the country.

The Japanese automaker transferred its stake in Nissan Manufacturing Russia LLC to state-owned NAMI, it said. Russia’s Ministry of Industry and Trade said the deal would give Nissan the right to buy back the business within six years.

The deal makes Nissan the latest major company to leave Russia since Moscow sent tens of thousands of soldiers to Ukraine in February. It also reflects a move by Nissan’s biggest shareholder, French automaker Renault (RENA.PA), which sold its majority stake in Russian automaker Avtovaz (AVAZI_p.MM) to a Russian investor in May.

The projects sold to NAMI will include Nissan’s production and research facilities in St. Petersburg and a sales and marketing center in Moscow, the ministry said.

Nissan said it expected an unusual loss of about 100 billion yen ($687 million), but maintained its profit forecast for the fiscal year ending in March.

Renault, which owns 43 percent of Nissan, estimates that the decision by its Japanese partner will reduce its net income by 331 million euros in the second half of 2022.

Nissan has suspended its St. Petersburg production. The St. Petersburg plant opened in March due to supply chain disruptions. Since then, the company and its local unit have been monitoring the situation, it said. But Nissan said there was “no visibility” to changes in the external environment, prompting its decision to pull out.

Junior alliance partner Mitsubishi Motors Corp (7211.T) is also considering an exit from Russia, the Nikkei said. A Mitsubishi spokesman said no decision had been made.

The exit comes as Nissan’s relationship with Renault begins to take a major turn. The two said on Monday they were discussing the future of the alliance, including Nissan considering an investment in a new Renault electric car business.

The talks could lead to the biggest restructuring of the alliance since the arrest of longtime executive Carlos Ghosn in 2018, two people familiar with the matter told Reuters, which also includes the possibility of Renault selling some of its controlling stake in Nissan. .

Renault reportedly sold its stake in Avtovaz for one ruble ($0.02).

Russian Industry and Trade Minister Denis Manturov said in a statement that the Nissan deal was “of great significance for the industry.”

(1 USD = 145.6200 yen)

(1 USD = 63.8500 rubles)

Reporting by Gleb Stolyarov, Caleb Davis and Satoshi Sugiyama; Writing by Alexander Marrow and David Dolan; Editing by Louise Heavens and Mark Potter

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