European companies in Russia lose €100 billion since the start of war – FT
European companies have lost at least €100 billion due to their activities in Russia after the full-scale invasion of Ukraine began, the Financial Times reported on August 7, citing its analysis of 600 European companies.
A total of 176 companies recorded depreciation of assets, expenses related to the exchange of foreign currency, and other one-time expenses due to the sale, closure, or reduction of their Russian operations, reported FT. These figures do not include the indirect macroeconomic effects of the war, such as rising energy and commodity prices.
"Moscow's decision to seize control of Russian gas importers Fortum and Uniper in April, followed by the expropriation of Danone and Carlsberg last month, suggests that more trouble lies ahead," said FT.
According to data collected by the Kyiv School of Economics (KSE), more than 50% of 1,871 European companies that worked in the Russian Federation before the war continue to operate in the aggressor country.
Some of these companies include UniCredit, Raiffeisen, Nestlé, and Unilever.
"Even if a company lost a lot of money by leaving Russia, those who stay risk losing much more," said Nabi Abdullayev, a partner at strategic consultancy Control Risks.
"It turns out that the cut-and-run strategy was the best strategy for companies deciding what to do at the start of a war. The faster you left, the smaller your losses,” he added.
In the oil and gas sector, just three companies - BP, Shell, and TotalEnergies - reported a combined loss of €40.6 billion. However, these losses were offset by higher oil and gas prices, which helped them report an unprecedented combined profit of around €95 billion in 2022.
Financial companies, including banks, insurance, and investment companies, recorded write-offs and other expenses in the amount of €17.5 billion. Utilities suffered direct losses in the amount of €14.7 billion. Industrial companies, in particular car manufacturers, lost €13.6 billion.
British companies experienced the most losses, at more than €30 billion. Germany and France tied for second, with each country seeing €20 billion in losses.
Other countries in the Top 10 most affected include: Finland, Italy, Austria, Ireland, Denmark, Belgium, and Switzerland.
Groups still operating in Russia are taking a risk as stricter exit rules introduced by Moscow since the beginning of the war made expropriation probable, and receiving any dividends from these enterprises is practically impossible, said Anna Vlasiuk, a KSE researcher.
“Companies that are still around [in Russia] would be better off just writing off the business. I don't think anyone is safe,” she said.
"What was the reason for the appropriation of Carlsberg? Is this really a matter of national security? I do not think so".
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