Smurfit leads Iseq multinationals when counting costs of retreat from Russia

A year to the month since Russia invaded Ukraine, most of the hundreds of companies globally that pledged to quit the market have yet to deliver on their promises.

Research published by Switzerland’s University of St Gallen last week showed that of 1,404 companies across the EU and Group of Seven (G7) industrialised nations that had Russian subsidiaries at the time of the first military incursion into Ukraine, fewer than 9 per cent had divested at least one business by November last year.

Among those yet to fully sever ties is Smurfit Kappa, which said last April that it was exiting the market. However, the Dublin-based cardboard box maker revealed on Wednesday that it has agreed to sell its Russian assets – comprised of three plants in and around St Petersburg and a corrugated packaging plant in Moscow – to local management subject to the nod from Russian authorities.

The cost of the exit: €128 million – as it wrote down the value of its local asserts to zero. It is by far the biggest financial hit taken by an Iseq multinational to live up to its promise to get out of what’s become a pariah state.

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Kerry Group ranks second, having absorbed an almost €38 million impairment charge in the first half of last year reducing the value of its assets in Russia and Belarus to nil. The company subsequently completed the sale of its Russian business to local management by the end of September, and agreed the disposal of its Belarussian taste and nutrition unit to a third party.

Kingspan also sold its Russian operations, comprised of two insulation manufacturing factories, in the first half of last year to local management, booking a €16 million financial hit in the process.

CRH said last March that it had decided to exit its small operation in the Russian market, in line with a number of western businesses. However, the business – made up of stakes in six small readymix plants – had effectively been mothballed from the previous summer due to low demand and the assets were valued at only €1.5 million at the end of 2021.