Hundreds of global multinationals quit Russia in the wake of the Ukraine invasion including ExxonMobil, Apple, Meta/Facebook, and the list continues to grow.
Since Moscow’s invasion of Ukraine in February, about 500 international corporations have left the country. Many announced divestments in Russia within days of the attacks. Some pledged to unwind their investments after being pressured by investors. A few decided to stay.
Truth is, for most firms that have operations in the region, cutting ties with the Kremlin is logistically complicated and financially painful. For some, the price to pay is high. There could be write-offs for millions, or even billions, of dollars.
BP, one of the world’s major energy firms and the largest foreign investor in Russia, decided to quit its 19.75% stake in Russian oil company Rosneft after 30 years in the country. BP is facing write-downs for about $25 billion.
It’s a similar scenario for oil super-major Shell, now exiting its joint ventures with Russian state-owned energy conglomerate Gazprom and other downstream projects, risking hefty impairments. Shell is invested in Russia for about $3 billion.
Oil giant ExxonMobil also quit Russia in the wake of the invasion, as did hundreds of other global multinationals. Among these, top tech firms like Apple, Samsung, IBM, Oracle, HP, Dell, Google, Twitter, Meta/Facebook. Most carmakers also left: Volkswagen, Toyota, Honda, Ford, GM, Jaguar Land Rover, BMW, Mercedes, Rolls Royce. Among luxury brands, Hermes, Prada, Chanel, LVMH lead the exit. In food services, Starbucks and Coca Cola pulled out. McDonald’s relinquished its 847 restaurants, now seized by the Russian government.
Indeed, most companies left behind billions of dollars in physical assets, which Moscow has already started to nationalize. It will be difficult—if not impossible—to ever get them back, and corporates might have to write them off entirely.
Even so, “the impact of these write-offs on earnings shouldn’t be significant,” explains Marco Pirondini, Head of Equities, Amundi. “Most American multinationals only make a small percentage of revenues in Russia. I doubt we’ll see the 1%-2% reduction in profits that some predicted. The impact on some European energy companies could be more severe, but that should be offset by the increase in oil and gas prices.”