September 27, 2023


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Coca-Cola, Imperial Brands Join Firms Halting Russia Operations

(Bloomberg) — McDonald’s Corp., Coca-Cola Co. and Paypal Holdings Inc. are temporarily halting operations in Russia, joining a lengthening list of businesses that are cutting ties with the country or suspending activities there because of the fallout over the invasion of Ukraine nearly two weeks ago.

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International sanctions, the closure of airspace and transport links due to the war, and the financial restrictions on SWIFT and capital controls have made it difficult if not impossible for many companies to supply parts, make payments and deliver goods in Russia. Added to that, the potential international consumer backlash against any company perceived as helping Vladimir Putin’s regime means that the exodus of corporations from Russia has become a stampede.

The rout reverses three decades of investment there by foreign businesses after the Soviet Union broke apart in 1991, especially in energy. Here are some of the biggest companies that have begun to untangle their connections or halted business dealings:

Oil and Gas

Russia’s largest foreign investor, BP Plc, led the way with its surprise announcement on Feb. 27 that it would exit its 20% stake in state-controlled Rosneft, a move that could result in a $25 billion write-off and cut the company’s global oil and gas production by a third.

Read More: U.S. and U.K. Ban Russia Oil Impoerts, Squeezing Putin on War

Shell Plc followed, citing Russia’s “senseless act of military aggression.” The company said it would end partnerships with state-controlled Gazprom, including the Sakhalin-II liquefied natural gas facility and its involvement in the Nord Stream 2 pipeline project, which Germany has blocked. Both projects are worth about $3 billion. Exxon Mobil Corp. said it would “discontinue” its Sakhalin-1 operations.

Equinor ASA, Norway’s state-owned energy giant, said it will start withdrawing from its joint ventures in Russia, worth about $1.2 billion. In parallel, Norway’s sovereign wealth fund, the world’s largest, is freezing Russian assets worth about $2.8 billion and said it will come up with a plan to exit by March 15.


Visa Inc. and Mastercard Inc. said on March 5 they are suspending operations in Russia. Ukrainian President Volodymyr Zelenskiy had called on the companies to halt all business in Russia during a video call with U.S. lawmakers. Each of the firms gets about 4% of its net revenue from business linked to the country. American Express followed the next day.

Some critics argued that the steps aren’t enough. While the companies said any transactions initiated with their cards issued in Russia will no longer work outside the country and cards issued outside of Russia won’t work at Russian merchants or ATMs, consumers inside Russia who have a locally issued card can still pay for goods and services there.

Paypal said on Tuesday it’s also suspending services. The company said it can’t “reasonably estimate the total potential financial impact that may ultimately result from this situation.”

Fitch Group and Moody’s Corp. both said they are suspending operations in Russia. The two ratings companies have both slashed Russia’s ratings to junk.


In the space of a week, most of the world’s biggest carmakers including General Motors Co., Ford Motor Co., Volkswagen AG, and Toyota Motor Corp. announced they would halt shipments to Russia or idle plants in the country. Truckmakers Volvo AB and Daimler Truck Holding AG also stopped business activities there.

The automaker with the most to lose, Renault SA, has remained quiet.

The French company’s majority control of AvtoVaz, the Soviet-era maker of Ladas, and reliance on Russia for about 10% of its revenue have unnerved investors and Renault has lost more than a third quarter of its market value in two weeks. The automaker’s turnaround could be jeopardized and potential losses from the Russian operations might lead to cash burn for the next two years, Fitch Ratings said in a report Tuesday. “Renault has promised to abide by sanctions,” Gabriel Attal, the French government spokesman, said on March 3 on France Info radio.

Consumer Goods

McDonald’s, Coca-Cola and Starbucks Corp. announced they would temporarily halt operations in Russia in a flurry of announcements on Tuesday afternoon. Some companies’ withdrawal makes it easier for others to do the same, said Gene Grabowski, a partner at communications firm KGlobal. Coca-Cola, for example, is a supplier for McDonald’s, so McDonald’s action deprives it of a major client in the country.

Kraft Heinz Co. has suspended all exports of its products to Russia as well as new investment in the country. The maker of Oscar Mayer hot dogs and Philadelphia cream cheese has also stopped imports of products from Russia.

Cereal giant Kellogg Co. has also suspended all shipments into Russia and investment there. The company said it will continue to produce food locally at its three Russian plants, which make a variety of snacks and cereal. Those plants represent just over 1% of the company’s business, Kellogg said.

Papa John’s International Inc. suspended operations in Russia and is reviewing whether it needs to take a one-time asset-impairment charge related to about $15 million in loans it made to a master franchisee there. The pizza chain said it has stopped all support to the Russian market, where it has 188 franchised restaurants. The company said it isn’t currently receiving any royalties from these stores. Last year, those royalties accounted for less than 1% of company revenue and about 1% of operating income, according to a filing.

Tobacco company Philip Morris International Inc. has started to scale down its manufacturing operations in Russia amid supply-chain disruptions and evolving regulations. Philip Morris has also suspended investments in Russia, including all new product launches.

Levi Strauss & Co. whose jeans were a coveted black-market item in the Soviet Union, also suspended commercial operations in Russia, where it gets about 2% of its sales. The “enormous disruption occurring in the region” has made it “untenable” to conduct business as normal, the company said earlier this week. “Any business considerations are clearly secondary to the human suffering experienced by so many.”

Samsung Electronics Co., the leading smartphone seller in Russia with more than 30% of the market, suspended exports to Russia of all its products. Samsung said it will donate $6 million to humanitarian efforts in the region, including $1 million in consumer electronics products. Inc.’s cloud-computing unit announced in a blog post it will stop accepting new customers in Russia or Belarus. The company said its Amazon Web Services unit had “no data centers, infrastructure or offices in Russia, and we have a long-standing policy of not doing business with the Russian government. We have also stopped allowing new sign-ups for AWS in Russia and Belarus.”

Microsoft on March 4 condemned the “unjustified, unprovoked and unlawful invasion” of Ukraine and said it’s suspending all new sales of products and services in Russia. Apple Inc. halted sales of iPhones and started limiting Apple Pay services and other products in Russia, and removed the RT News and Sputnik News applications from App Stores outside the country. HP Inc., the largest supplier of PCs to Russia, has stopped exports to the country, as has Intel Corp.

Nike Inc. is one of several consumer goods companies that have cited logistical problems as a reason for suspending sales in Russia. Spanish fashion retailer Inditex SA, which has 502 stores in Russia, including 86 Zara outlets, is also temporarily closing all its shops there and halting online sales, saying it “canno
t guarantee the continuity of operations and trading conditions.”

Heineken NV stopped the production and sale of its namesake beer in Russia, after previously halting all new investments in the country as well as exports of other brands. The Dutch brewer is now assessing strategic options for the business in Russia, where it has operated for two decades, the company said Wednesday.

Brown-Forman Corp., whose brands include Jack Daniel’s whiskey and Woodford Reserve bourbon, said Wednesday that it is suspending commercial operations in Russia. It has been a growing market for the company and accounts for 1% of its global business.

Mothercare Plc, the U.K. mother-and-child retailer, said Wednesday it has suspended all business in Russia, including shipments. The company makes about 20% to 25% of its sales in Russia, operating through a local partner. It said 120 stores will be immediately shut and online sales paused.

Imperial Brands Plc became the first major cigarette maker to halt all operations in Russia. The company, which sells Kool and Gauloises cigarettes, said Wednesday it’s halting production at its Volgograd factory as well as all sales and marketing in the country. Its 1,000 employees in Russia will continue to be paid.

Others have taken more limited steps. PepsiCo Inc. took a suspended soft-drink sales in the country but continues to sell daily essentials such as milk and baby formula. Danone SA’s general secretary, Laurent Sacchi, said the world’s largest yogurt maker would suspend investment in Russia, but will still sell dairy and baby food.

Danone Chief Executive Officer Antoine de Saint-Affrique was among the corporate leaders of some of France’s biggest companies who met with Emmanuel Macron on March 4, according to Le Figaro. The French president urged them not to leave Russia hastily, and in any case not without consulting the government, the newspaper reported.


Netflix Inc. is shutting its operations in Russia and said no new customers will be able to sign up, though it’s unclear what will happen with existing accounts.

Netflix has fewer than one million customers in Russia and has been operating in the country through a partnership with National Media Group. The streaming giant said previously it won’t be carrying required Russian news channels on its local-language service in the country and has paused all projects and acquisitions from Russia, including four programs in production.

Hollywood studios including Walt Disney Co., Paramount Pictures, Sony Corp., and AT&T Inc.’s WarnerMedia and Comcast Corp.’s Universal Pictures have also halted or postponed the release of movies in Russia.

Meanwhile other platforms, including TikTok, are suspending or closing services because of Russia’s new “fake news” law aimed at silencing dissent and limiting information about the invasion of Ukraine. The company, owned by China-based ByteDance Ltd., said its in-app messaging service would not be affected.

On March 4, the Russian government said it was blocking access to Meta Platforms Inc.’s Facebook as part of the crackdown. Hours after the announcement, Meta said it would pause all advertising in the nation and would stop selling ads to Russian businesses. The company’s Instagram platform will start to label posts from Russian state media with a warning, ranking them lower and making them harder to find on the app worldwide.


Alstom SA is halting all deliveries to Russia and will suspend future investment in the country, it said Wednesday. The French rail-equipment maker will reassess the book value of its 20% stake in Transmashholding, the biggest supplier of rolling stock to Russia’s railways.

Iveco Group NV has halted vehicle deliveries to Russia and Belarus and is weighing pulling out of a Russian joint venture. Gerrit Marx, the truckmaker’s CEO, said in an interview that as long as the current regime is in power “it’s impossible for me to do business with Russia.”

Law and Accounting

Wall Street law firm Cleary Gottlieb Steen & Hamilton said Tuesday it’s exiting its engagements with Russian government and state-owned entities, as well as shuttering its Moscow office. The firm is representing the Russian government in a long-running dispute with Ukraine over a $3 billion bond default. The case is awaiting a ruling in the U.K. Supreme Court.

Baker McKenzie said last week it was reviewing its operations in Russia and will sever ties with several Russian clients in order to comply with sanctions. The Chicago-headquartered firm’s clients include Russia’s finance ministry and VTB, Russia’s second largest bank.

London-based Linklaters said in a statement it was “reviewing all of the firm’s Russia-related work.”

The big four auditors, EY, PricewaterhouseCoopers LLP, KPMG LLP and Deloitte all said they are pulling out of Russia. Between them, the four have more than 15,000 staff in Russia and Belarus.

McKinsey & Co. said Thursday it won’t undertake new client work in Russia and will halt all client service in the country after its remaining engagements conclude, though its office will remain open to support staff. Earlier, the consultancy condemned the invasion and said the firm won’t do business with any Russian government entity.

Rising Criticism

Even as more companies sever ties with Russia, criticism is rising of banks and corporations that are perceived as profiting from the war or not doing enough to punish Putin’s invasion.

U.S. Senator Elizabeth Warren, a vocal critic of Wall Street, said some banks are “undermining” sanctions by snapping up Russian corporate bonds and suggesting clients buy the nations’ assets on the cheap.

In a statement released late Friday, Warren called out market makers JPMorgan Chase & Co. and Goldman Sachs Group Inc. following a Bloomberg report that the two banks had been purchasing beaten-down bonds. Banks routinely scoop up debt because clients ask them to, or because they expect to find ready buyers.

JPMorgan analysts also published a note recommending that investors boost holdings of Russian-linked debt to take advantage of a “recovery play” stemming from the selloff that accompanied the country’s invasion of Ukraine.

“Giant Wall Street banks like JPMorgan and Goldman Sachs never miss out on an opportunity to get richer even if it means capitalizing on Russia’s invasion of Ukraine and undermining sanctions placed on Russian businesses,” said Warren, a Massachusetts Democrat.

Representatives for Goldman Sachs and JPMorgan declined to comment on the Bloomberg report that they had been buying up Russian bonds.

The founder of Fast Retailing, which owns fashion giant Uniqlo, said the company wouldn’t be withdrawing from Russia, according to the Nikkei. “Clothes are essential items in daily life,” Tadashi Yanai, Fast Retailing’s chairman and CEO, reportedly said. “Russians have a right to live as well.”

Representatives for Fast Retailing in Tokyo didn’t respond to inquiries from Bloomberg News. The company operated 50 stores in Russia, as of Feb. 28.

(Adds decisions by Kraft Heinz, Kellogg, Philip Morris, Brown-Forman and Papa John’s.)

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