Subscribe to receive regular updates on the War in Ukraine. Every morning, our myFT Daily Digest email will provide you with the latest news on the conflict. Analysis conducted by the Financial Times indicates that Europe’s largest companies have suffered direct losses of at least €100bn as a result of their operations in Russia since President Vladimir Putin’s invasion of Ukraine last year. This analysis was based on a survey of 600 European companies’ annual reports and 2023 financial statements, revealing that 176 companies have experienced asset impairments, foreign exchange-related charges, and other expenses due to the sale, closure, or reduction of their Russian businesses. It’s important to note that this figure does not include the indirect macroeconomic impacts of the war. On the flip side, the conflict has resulted in increased profits for oil and gas groups and defense companies. Scenes of companies such as Fortum, Uniper, Danone, and Carlsberg having their Russian businesses seized by Moscow indicate that more challenges lie ahead for European companies in Russia. As per data compiled by the Kyiv School of Economics, over 50% of the European-owned entities in Russia before the war are still operational in the country. This includes companies like UniCredit, Raiffeisen, Nestlé, and Unilever, among others. Nabi Abdullaev, a partner at strategic consultancy Control Risks, warns that even if leaving Russia resulted in significant losses for companies, those who chose to stay could face even greater losses. He suggests that leaving swiftly was the best strategy at the beginning of the war. The costs of withdrawal are primarily concentrated in a few sectors, with oil and gas groups experiencing substantial writedowns and charges totaling €40.6bn. However, the losses were offset by higher oil and gas prices, which boosted the profits of these groups to around €95bn ($104bn) last year. Utilities and industrial companies, including carmakers, have also taken a hit, with losses amounting to €14.7bn and €13.6bn, respectively. Financial companies, such as banks, insurers, and investment firms, have recorded €17.5bn in writedowns and other charges. Simon Evenett, an economics professor at the University of St Gallen, notes that while a small number of companies have experienced significant losses, the average writedown for most companies is manageable given their limited presence in Russia. Even when considering Europe’s total outward investments, Russia only accounts for 3.5% of the investments, emphasizing that the impact of the conflict on European companies is relatively limited. This is further evidenced by BP, which reported a $25.5bn charge and announced the sale of its stake in Rosneft shortly after the invasion. Similarly, Shell and TotalEnergies reported charges of $4.1bn and $14.8bn, respectively. Other companies, such as Equinor, OMV, and Wintershall Dea, have also reported significant losses. Uniper and Fortum, two companies that have not exited Russia, recorded impairments of €5.7bn and €5.3bn, respectively. Among carmakers, Renault and Volkswagen experienced substantial writedowns, with charges totaling €2.3bn and €2bn, respectively. Financial companies like Société Générale, Raiffeisen, UniCredit, and Intesa Sanpaolo have also taken hits, with charges ranging from €1bn to €1.4bn. The companies still operating in Russia are taking a high-risk gamble, according to Anna Vlasyuk, a research fellow at the Kyiv School of Economics. Moscow’s tighter exit rules make expropriation likely, and it is almost impossible to extract dividends from these businesses. Vlasyuk suggests that these companies would be better off writing off their Russian businesses entirely. Additionally, she questions the justification for Moscow’s expropriation of companies like Carlsberg, arguing that it is not a national security issue. It is worth noting that the author of this article is Patrick McGee, with additional reporting by Laura Pitel, Marton Dunai, Patricia Nilsson, Olaf Storbeck, Sarah White, Sylvia Pfeifer, Peter Campbell, Madeleine Speed, Tom Wilson, Leke Oso Alabi, Barney Jopson, Silvia Sciorilli Borelli, and Raphael Minder.
Denial of responsibility! VigourTimes is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
