Stora Enso, Smurfit Kappa, Mondi, Siemens, Brødrene Hartmann, Huhtamaki, HP, Valmet, Andritz are among them. At the same time, according to a recent study by Yale School of Management, the share-price gains for companies pulling out have “far surpassed the cost of one-time impairments for companies that have written down the value of their Russian assets”
“Since Russia’s invasion of Ukraine began in February 2022, [Founder & President of Yale Chief Executive Leadership Institute Jeffrey A. Sonnenfeld] has led an intensive effort to track the responses of well over 1,200 public and private companies from across the globe, with almost 1,000 companies publicly announcing they are voluntarily curtailing operations in Russia to some degree beyond the bare minimum legally required by international sanctions,” the study begins…
After analyzing the document, The Wall Street Journal concluded that the total global business losses due to Russia exceeded $59 billion after the imposition of Western sanctions.
“The write-downs to date span a range of industries, from banks and brewers to manufacturers, retailers, restaurants and shipping companies – even a wind-turbine maker and a forestry firm,” the story reads.
“The fast-food giant McDonald’s Corp. expects to record an accounting charge of $1.2 billion to $1.4 billion after agreeing to sell its Russian restaurants to a local licensee; Exxon Mobil Corp. took a $3.4 billion charge after halting operations at an oil and gas project in Russia’s Far East; Budweiser brewer Anheuser-Busch InBev SA took a $1.1 billion charge after deciding to sell its stake in a Russian joint venture.
“The financial fallout of the conflict isn’t significant for most multinationals, in part because of the relatively small size of the Russian economy. Fewer than 50 companies account for most of the $59 billion tally. Even for those, the Russian losses are typically a relatively small part of their overall finances. McDonald’s, for example, said its Russia and Ukraine businesses represented less than 3% of its operating income last year.
“Some companies are writing off assets stranded in Russia. The Irish aircraft leasing company AerCap Holdings NV last month took an accounting charge of $2.7 billion, which included writing off the value of more than 100 of its planes that are stuck in the country. The aircraft were leased to Russian airlines. Other leasing companies are taking similar hits.
“Other businesses are assuming that they will realize no money from their Russian operations, even before they have finalized exit plans. The British oil major BP PLC’s $25.5 billion accounting charge on its Russian holdings last month included writing off $13.5 billion of shares in the oil producer Rosneft. The company hasn’t said how or when it plans to divest its Russian assets.
“Even some companies that are retaining a presence in Russia are writing down assets. The French energy giant TotalEnergies SE took a $4.1 billion charge in April on the value of its natural-gas reserves, citing the impact of Western sanctions targeting Russia.”
Meanwhile, according to Yale researchers, financial markets are rewarding companies for leaving Russia.
“Using our proprietary dataset tracking 1,200 companies, we find that equity markets are actually rewarding companies for leaving Russia while punishing those that remain behind, with divergent stock performance generally corresponding with the degree of Russian exit – which holds true across regions, sectors, and company sizes.
“Despite disproportionate focus on asset write-downs and lost revenue from Russia, we demonstrate that the shareholder wealth created through equity gains have already far surpassed the cost of one-time impairments for companies that have written down the value of their Russian assets.
“Furthermore, we find the pattern of financial markets rewarding companies for exiting Russia is not confined to only public equity markets through our analysis of credit and derivative markets, in particular longer maturity corporate debt, credit spreads, and related credit default swap pricing, showing that the investor response has been incredibly broad-based across financial markets.
“Our sweeping analysis of global capital flows demonstrates the importance investors attribute to the decision to withdraw from Russia – and that investors believe the global reputational risk incurred by remaining in Russia at a time when nearly 1,000 major global corporations have exited far outweigh the costs of leaving. Clearly, doing well has not been antithetical to doing good – at least when it comes to withdrawing from Russia,” the study summarizes.