Mercedes-Benz Group AG – Annual report – 31 December 2021
Industry: automotive
41. Events after the reporting period (extract)
Russia-Ukraine War
Russia has been at war with Ukraine since end of February 2022 (“Russia-Ukraine War”). The effects of the Russia-Ukraine War represent a value-affecting event after the reporting period and therefore have no impact on the recognition and measurement of assets and liabilities as at the reporting date. On 2 March 2022, the Mercedes-Benz Group decided to discontinue the export of cars and vans to Russia as well as local production in Russia until further notice. Effects on profitability, cash flows and financial position in 2022 cannot be ruled out at this time. Due to the volatile geopolitical situation, the effects cannot be quantified at present.
At 31 December 2021, the Russian subsidiaries had total assets of approximately €2 billion. In addition, Russian subsidiaries have liabilities to banks of approximately €1 billion, for which the Group has issued a global guarantee. The increased risks resulting from the Russia-Ukraine War are described in the Risk and Opportunity Report. Among other things, the default, country and currency risks described in Note 34 have increased. The increased country risks mainly relate to potential impairments of trade receivables, property, plant and equipment, and inventories. In addition, higher risks may arise from the insolvency of subsidiaries. These risks would be exacerbated by the potential expropriation of assets of Russian subsidiaries. Risks from the Russia-Ukraine War are being continually monitored; possible scenarios are being continually adapted to the current geopolitical situation and analysed.
Risk and Opportunity Report (extract)
Far-reaching risks can result from the Russia-Ukraine War. The war can have a negative impact on the development of unit sales, production processes, and procurement and logistics, for example through interruptions in supply chains or energy supply, or bottleneck situations for components as well as raw materials and upstream products. Even higher cyber risk can not be ruled out. Collaboration with partners and cooperative ventures are also subject to higher risks. Outstanding trade receivables may result in higher default, country and currency risks due to restrictions on cross-border payment transactions and limited convertibility of the russian rouble. The higher country risks mainly include potential impairments on trade receivables as well as property, plant and equipment and inventories of the automobile segments. In the Mercedes-Benz Mobility segment, negative effects may result from sanctions and a weaker economic environment for our customers in Russia and other markets, which may be reflected in increased payment arrears and credit defaults. Furthermore, as a result of higher inflation rising refinancing costs in the capital markets may lead to negative effects on the segment’s interest margin as well as cost development.
In addition, temporary capital bottlenecks may arise in the context of refinancing in the Russian banking market, which may result in a claim on a global guarantee in connection with outstanding financial liabilities to banks. In addition, higher risks may arise from the insolvency of subsidiaries. These risks could be exacerbated by the potential expropriation of assets of Russian subsidiaries. Risks from the Russia-Ukraine War are being continually monitored; possible scenarios are being continually adapted to the current geopolitical situation and analysed.
Accounts examples 