Factbox-Companies count the cost of ditching Russia -Breaking
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© Reuters. FILEPHOTO: This is a closed McDonald’s in Moscow Region, Russia. March 17, 2022. REUTERS/REUTERS PHOTOGRAPHER/File photo(Reuters) – Companies that have announced an exit from Russia or suspended activities after the invasion of Ukraine began to estimate losses.
Here is a listing of Russian companies by industry that has provided estimates of the cost of their Russia-based temporary or permanent business halt.
APPAREL
ADIDAS
German sportswear brand, Sportwear Deutschland warned that Russia would close its business. However, it did not give an estimated amount. The country has 500 of the company’s total stores. The company also stated that Ukraine may pose a threat to its sales, with a potential loss of 250 million euros ($271million), which is about 1% of their total group turnover in 2021.
LPP
LPP’s fourth quarter results, Poland’s largest fashion retailer, suffered a write-down of 335M Zloty (78.05 Million) to cover the closure of its Russian stores. Russia was LPP’s second-largest market in 2021/2022. This represented 19.2% the retailers’ full-year sales revenues. It expects that the 25% loss of revenue from Russia and Ukraine could be caused by the closing of Russian-owned stores.
TJX: The U.S.-based clothing retailer TJX announced it was selling its 25% share in Familia, the Russian low cost apparel chain. At the end January, the stake was worth $186 million. This is less than what TJX spent on it in 2019 at $225 million. TJX stated that it may need to report impairment as a result of divestiture in the event the Fair Value of Familia Investment falls below its carrying amount on the Balance Sheet.
AUTOMAKERS
RENT Renault (EPA:) In March, EPA stated that it had considered a 2.2-billion-euro ($2.38billion) non-cash writedown in order to cover the possible costs associated with Russia’s suspension of operations. Although Russia was the second largest market for the company, revenue lost in the first quarter of 2011 was 166 millions euros.
VOLVO
Swedish truckmaker Volvo said that it has set aside $423 Million after Russia suspended activities, which amounted to about 3% of the group’s sales.
BANKS
CITIGROUP According to the U.S. Bank, it estimates that its Russia exposures could result in losses of as high as $3.0 billion in an extremely adverse situation. According to the company, its exposures to Russia have been reduced by $2.0 billion to $7.8 million since December 2021. To prepare for potential losses due to direct Russian exposures and economic effects of war in Ukraine, the largest American bank added $1.9Billion to its reserves during the first quarter.
CREDIT SUPISSE On April 20, the Swiss Bank estimated that the Russian War in Ukraine would cost them 200 million Swiss Francs (or $209.10 Million) during Q1 2022.
SOCIETE GENERAL The French bank declared it would leave Russia and write down 3.1 billion euros (or $3.35 billion) that was earned from its Rosbank unit sale to Interros Capital. This amount includes a 2Billion-euro loss on Rosbank’s books and the remainder linked to the reverse of rouble currency conversion reserves.
CONSUMABLES
ESSITY A Swedish company that makes hygiene products said it will report a write down of 1.4 billion crowns ($147.66m) following the March shutdown of all Russian sales and production. About 2% of total Russian sales were generated by the company, which equates to $295.32million.
PHILIP MORIS
Following the cessation of sales in Russia of several Marlboro cigarettes and Parliament cigarettes, the tobacco company took a 3 cents share charge for war in Ukraine. Philip Morris (NYSE) Q1 earnings dropped 3.6% to $2.32 Billion, which is $1.50 per Share, including the 3-cent fee. Russia, which accounted for 6% of the global sales of Philip Morris (NYSE:), generated more than $1.8billion in revenue last year.
ENERGY
EXXON Mobil CORP
Oil giant Russia will leave and cease oil and gas operations. This decision will impact earnings. Exxon Mobil (NYSE:) Russia’s oil and gas activities were worth more than $4B.
OMV
On April 8, the Austrian energy company stated that it will take a 2Billion-euro loss in the first quarter of Russia’s pullback. This would be split equally between the Nord Stream 2 pipeline connection and the adjustments made to the consolidation process by two Russian entities.
SHELL
Following its exit from Russia, the largest liquefied trading company in the world will have to write off $5 billion. That’s more than the $3.4 million previously disclosed. This was in addition to potential consequences around contracts and writedowns receivables as well as credit losses.
SERVICE STREAMING
NETFLIX
Global streaming company Spotify announced on April 19 that it had suspended services in Russia, resulting in 700,000. This was the company’s first loss in over a decade.
FOOD & BEVERAGES
AB INBEV
On April 22, the Belgian brewer, InBev Efes, announced that it was selling its controlling stake in Russian joint venture AB InBev Efes. A $1.1 billion impairment charge will result from the divestiture in the first quarter. Joint venture includes 11 Russian breweries and three Ukrainian breweries.
CARLSBERG
According to the Danish brewery, the sale of its Russian operations would lead to a write down of approximately 9.5 billion Crowns ($1.4 Billion). It generated 10% of the company’s revenue in Russia and 6% in operating profit there in 2021. The company also stated that it expects 300 million Ukrainian crowns to be impaired charges and goodwill writedowns totaling 700 million crowns in the Central and Eastern Europe region.
HEINEKEN NV A Dutch brewer, Heineken NV, decided to exit Russia in March. It concluded that any ownership in a business is not sustainable and viable in the current economic environment. Heineken (OTC-) said it won’t profit from any ownership transfer and anticipates an impairment as well as other non cash exceptional charges in the range of 0.4 billion euro ($432.96m).
MCDONALD’S
McDonald’s (NYSE) announced in March that it would spend about $50M per month to close its Russian restaurant. Of its total over 38,000 locations worldwide, 847 are located in Russia. Brokerage Piper Sandler predicts that Russia’s closure of operations will result in earnings per share reaching $1.19 in 2022.
TOY MAKERS
HASBRO
American Toymaker warned of potential revenue losses of $100 million in the wake of its April 19 decision to stop Russian toys shipments.
OTHER
HUSQVARNA
According to the Swedish manufacturer of gardening equipment, April 21 saw write-downs in excess of 119,000,000 crowns (or $122.6 million) for its first quarter 2022. This was due to Russia’s ban on all Russian exports. Russia was responsible for 1.5% group sales in 2021.
KONECRANES
According to the Finnish engineering company, it had to write down 79 million euro in Russian orders in its first quarter. The company also cancelled 32million euros (34.62 millions) in sales to Russia, which had a negative impact on the quarter’s operating profits by around 39 million.
METSO OUTOTEC
According to the Finnish supplier of mining solutions that stopped deliveries to Russia in March and stated on April 21st, operative assets of Russian customers worth about 100 million euro ($109 million), could be in danger if it is not able to end existing contracts in a controlled manner. The Russian-related sales made up 10% of the company’s revenue in 2021. At March’s end, it added 269 million euro of advanced payment guarantees linked to Russian deliveries.
SKF
Swedish bearings-and seal manufacturer, Swedish Bearings and Seal Maker announced on April 22 that Russia will be closed and it plans to exit its Russian operations. In the second quarter, the decision results in a writedown of 500 million Swedish Crowns ($52.70million). Russian sales made up about 2% in total Group sales for 2021.
STORA ENSO On April 25, the Finnish forestry firm announced that it had sold its Russian sawmills to local management. This resulted in an impairment of approximately 70 million Euros ($75 Million) for Q1. The transaction also triggered an additional loss of 60 million Euros under IFRS accounting regulations upon close of the deal.
The company previously stated that it will cease all sales and production in Russia. The company’s Russian revenue accounted for approximately 3% of the total group revenues.
($1 = 0.9243 euro)
($1 = 9.4870 Swedish crowns
($1 = 6.8341 Danish crowns)
($1 = 4.2921 zlotys)
($1 = 0.9565 Swiss franc)
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