Foreign Firms Lose over $107 Billion Exiting Russia Since Ukraine Invasion
The corporate exodus from Russia following its 2022 invasion of Ukraine has resulted in foreign companies incurring losses of more than $107 billion in writedowns and lost revenue, according to a Reuters analysis of company filings and statements.
The total volume of losses has increased by one-third since the last tally in August last year, highlighting the significant financial impact on the corporate world from Moscow’s invasion and the sudden loss of Western expertise from Russia’s economy.
Ian Massey, Head of Corporate Intelligence, EMEA at global risk consultancy S-RM, noted that companies still aiming to exit Russia may face further challenges and increased writedowns and losses as Russia’s invasion continues and Western sanctions become more stringent.
Recent announcements of asset sales by companies like Shell, HSBC, Polymetal International, and Yandex NV have totaled nearly $10 billion, with discounts as high as 90 percent. Danone also revealed a total loss of $1.3 billion after receiving regulatory approvals to dispose of its Russian assets.
While around 1,000 companies have exited Russia, some, including French retailer Auchan and Benetton, are still operational or have put their business on hold in the country.
Western nations froze approximately $300 billion of the Bank of Russia’s gold and foreign exchange reserves, and Germany nationalized Gazprom’s Germania plant. Russia has vowed to retaliate against EU proposals to redistribute interest earned on its frozen assets.
Amid concerns over legal issues tied to potential confiscation, Moscow has already taken temporary control of assets owned by Western companies like Fortum, Carlsberg, OMV, and Uniper.
However, Russia’s hardened stance may also inflict damage on its own economy as Western companies across various industries are opting to exit Russia entirely due to ongoing hostilities, with no certainty of returning even after conflicts cease.
Sanctions expert Jeremy Zucker highlighted the potential economic harm to Russia, noting that significant technologies have left the country, potentially hampering its ability to support specific high-tech production.
Despite these challenges, certain companies, particularly producers of everyday staples and consumer goods, have refrained from fully leaving Russia, citing reliance on their products by ordinary Russians.
Overall, as tensions continue and companies navigate the complex landscape of exiting Russia, the financial repercussions for both foreign entities and the Russian economy remain significant.
