(March 10): Nestle, Philip Morris and video game maker Sony on Wednesday joined the list of multinationals pulling out of Russia amid mounting pressure from Western consumers to take a stand against the invasion of Ukraine.
Nestle, the world’s largest packaged food group, and Mondeleze International, followed the actions of rivals Procter & Gamble and Unilever to halt investment in Russia.
But the four companies will continue to supply essential products, with Mondelez aiming to help maintain the “continuity” of Russia’s food supply.
Similarly, while cigarette maker Imperial Brands suspended operations in Russia, rival Philip Morris only said it would reduce manufacturing, and camel maker British American Tobacco Plc said its Russian operations continued to operate, even if it had suspended its capital investments.
Sony, whose film studio has already halted releases in Russia, took further action on Wednesday, saying its PlayStation game unit would halt shipments and operations in Russia. “Sony Interactive Entertainment joins the global community in calling for peace in Ukraine,” he said.
Many companies find it difficult to work in Russia due to sanctions and lack of shipping, in addition to pressure from consumers and investors, and describe the end of work in Russia in more practical terms, without blaming the Russian government. for attacking Ukraine.
Heavy equipment maker Deere & Co, saying it was “deeply saddened by the significant escalation of events in Ukraine”, said it had ended shipments to Russia two weeks ago and then to Belarus, and said he would follow U.S. and international sanctions. Caterpillar Inc said it was suspending operations as supply chain disruptions and sanctions made doing business difficult and 3M followed suit after reassessing its business in Russia.
Yet pressure in the West is mounting.
A Rio Tinto executive said earlier in the day that the miner was working to maintain Russian fuel supplies to its Mongolian copper mine, but the company later announced it was ending all business relations with Russian companies.
Hotel companies Hilton Worldwide Holdings and Hyatt Hotels Corp said they would suspend development in Russia.
Coca-Cola Co and McDonald’s Corp halted sales in Russia on Tuesday in symbolically powerful moves. A senior Russian ruling party official has warned that foreign companies that close could end up having their operations nationalized.
McDonald’s said the temporary closure of its 847 stores nationwide would cost it $50 million a month.
Sportswear company Adidas also quantified the cost of cutting operations, saying it would drive sales of up to 250 million euros ($277 million).
Yum Brands Inc, parent company of fried chicken giant KFC, said it was suspending investment in Russia, a market that helped it achieve record growth last year.
Carlsberg said it was suspending Russian brewing of its eponymous beer brand while keeping its Russian Baltika brand in operation.
“We feel a moral obligation to our Russian colleagues who are an integral part of Carlsberg and who are not responsible for government actions,” Carlsberg said, adding that he was withdrawing his financial guidance for the year.
E-commerce company Shopify Inc joined the crowd, saying it would suspend Russian operations and collect no fees from Ukrainian merchants, citing millions of Ukrainian refugees in need of help.
“Laws of War”
In response to the exodus, Andrei Turchak, secretary of the general council of the ruling United Russia party, warned that Moscow could nationalize idle foreign assets.
“United Russia proposes to nationalize the production plants of the companies announcing their exit and the closure of production in Russia during the special operation in Ukraine,” Turchak wrote in a statement published on the party’s website on Monday.
The statement named Finnish private food companies Fazer, Valio and Paulig as the latest to announce closures.
“We will take severe retaliatory measures, acting in accordance with the laws of war,” Turchak said.
Punishments
Moscow, which calls its invasion of Ukraine a “special military operation”, has been hit by sweeping Western sanctions that have stifled trade, led to the collapse of the ruble and further isolated the country.
Banks and billionaires have also been targeted, with the European Commission preparing new sanctions targeting other Russian oligarchs and politicians and three Belarusian banks, Reuters reported.
While the war in Ukraine and the sanctions have driven up the prices of raw materials that Russia exports like oil, natural gas and titanium, these sanctions have largely prevented Moscow from profiting from the high prices.
On Tuesday, the United States banned imports of Russian oil.
U.S. oil services company Schlumberger, which derives about 5% of its revenue from Russia, said the ongoing dispute would likely hurt results this quarter.
Global commodities trader Trafigura Group has raised a $1.2 billion revolving credit facility from banks to help weather soaring energy and commodity prices.
Norway’s Yara, a leading fertilizer maker, said on Wednesday it would cut ammonia and urea production in Italy and France due to soaring gas prices.
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