Carlsberg and Heineken, two of the world’s largest breweries, announced on Monday that they will leave Russia, joining an exodus of Western corporations as pressure mounts on Moscow following its invasion of Ukraine.
Following the commencement last month of what Moscow described as a “special military operation” against Ukraine, Ukraine’s President Volodymyr Zelenskiy has advised multinational corporations to abandon the Russian market. find out more
The pullout would result in a “significant non-cash impairment charge” this year for Carlsberg, the Western brewer most exposed to Russia, according to the company, which did not provide any information.
Through its ownership of Baltika, the country’s largest brewer, the business has a 27 percent share of the local market.
“We have taken the difficult and immediate decision to seek a full disposal of our business in Russia, which we believe is the right thing to do in the current environment,” Carlsberg said. “Upon completion we will have no presence in Russia.”
The company’s shares, which have lost over a quarter of their value since the invasion began, were up 4.2 per cent on Monday, on track for their highest day since November 2020.
Heineken, Russia’s third-largest brewer, has previously stated that it aimed for a “orderly transfer” of its local company, which accounts for only 2 per cent of total sales, and that it would reduce its operations during the transition period to reduce the possibility of nationalisation.
The Dutch brewer expects to incur corresponding costs of roughly 400 million euros ($438 million) and has stated that its 1,800 employees in Russia will be paid until the end of the year.
“We have concluded that Heineken’s ownership of the business in Russia is no longer sustainable nor viable,” the company said in a statement, adding that it would not profit from any transfer of ownership.
Carlsberg’s revenue and operating profit in Russia, where it has eight breweries and 8,400 people, accounted for 10 per cent of overall revenue and 6 per cent of operating profit last year. It assumed full ownership of Baltika in 2008, but sales have been slow due to the economy’s sanctions and rules aimed at reducing alcohol misuse.
“The announcement that Carlsberg will leave Russia should help to clear the air and removes the overhang risk,” Jefferies analysts wrote in a research note.
According to the Danish brewer’s annual report, non-current assets in Russia were 19.2 billion Danish crowns ($2.83 billion) at the end of 2021, accounting for about 15 per cent of total assets and 44 per cent of total equity.
The joint venture between Turkey’s Anadolu Efes and Belgium’s InBev is Russia’s second largest brewer.
InBev announced in March that it would stop selling Bud beer in Russia and forego income from the joint company, which employs 3,500 people and has 11 breweries.
(Adapted from NST.com)