Prepared by the KSE Institute team and KSE members of the Board of Directors; 23-29.05.2022
Number of the companies that continue Russian operations (KSE’s status “stay”) – 590 (+8 per week)
Number of the companies that have reduced current operations and hold off new Investments (KSE’s status “wait”) – 438 (+8 per week)
Number of the companies that have curtailed Russian operations (KSE’s status “leave”) – 1 037 (+4 per week)
As of May 29, we have identified about 2,065 companies and organizations from 70 countries and 55 industries and analyzed their position on the Russian market. About half of them are public ones, for ~ 400 public groups of companies, we also identified (where it was possible) their operating business in Russia (the presence of a controlling stake in a legal entity), which allowed us to calculate the value of capital invested in the country (about $113 billion), local revenue (about $200 billion), as well as staff (almost 0.7 million people). 1,475 foreign companies have reduced, suspended or ceased operations in Russia. As can be seen from the tables below, As of May 29, companies that declared a complete withdrawal from Russia had $32.5bn in revenues and $19.9bn in capital; companies that suspended their operations on the Russian market had yearly revenue of $58.7bn and $32.7bn in capital. TOP-70 companies-the largest taxpayers paid ~ $20,2bn of taxes annually – haven’t completely withdrawn yet, although suspended or scaled back.
The following table is based on data available for ~400 TOP public companies operated/operating in RF:
If since the beginning of the Russian invasion of Ukraine, the percentage of companies that closed operations in Russia has risen sharply by mid-March, in the last month the ratio of those who leave or stay is virtually unchanged. although we still see a periodic increase in the share of those companies that remain in the Russian market. However, more than half (50.2%) of foreign companies have already announced their withdrawal from the Russian market, but another 28.6% are still remaining in the country.
The actions of companies by sector (based on the KSE database, with at least 50 companies representing the industry and with at least 40 companies per country) are shown in the graphs below.
How the capitalization of the largest public companies changed during the war
The only industry that has shown steady growth is Energy, Oil and Gas.
WEEKLY FOCUS. AGRICULTURAL SECTOR
Western agricultural companies have remained in the market despite being pressured to leave Russia, citing humanitarian reasons.
Economic sanctions imposed by the EU, the US and other countries have not been applied to agricultural products due to humanitarian and food safety concerns. Russia is the largest wheat exporter globally, while Ukraine is the world’s fifth-largest exporter of wheat, fourth-largest exporter of corn and top exporter of sunflower oil and meal. The war will undoubtedly affect global food security.
Companies themselves are announcing scaling back operations but remain in Russia, including the largest western agricultural companies such as Archer Daniels Midland (ADM), Bunge, Cargill, and Louis Dreyfus (also known as the “Big 4 of World Agriculture” or as the “ABCDs”).
International companies in grain exports
Russia imposed a strict quota on grain export, 11 million tonnes from February 15 till June 30, 2022. Three foreign companies out of this top-10 list are supposed to ship 1.83 million tonnes, 16.6% of the total export. If they leave, their volume can be easily absorbed by other traders. The largest foreign traders are:Viterra (#4, 8.5% of planned quota), a large global trader of Canadian origin, said it had suspended any new development and expansion projects within the region. However, it continued to operate its existing businesses in Russia in compliance with all current sanctions.
Cargill (#6, 4.7%), the American global commodity trader, declared the termination of new investments in Russia and claims to “scale down activities” without any additional details.
Louis Dreyfus (#7, 3.45%), a French global commodity trader, suspended its operations in Russia.
Seeds suppliers show a very similar trend.
Syngenta Group (Switzerland) continues to support Russian farmers. KWS SAAT SE (Germany) has decided not to invest in expanding or launching new business activities in Russia but will continue operations and seed supply for farmers. Only a few announced their plans of withdrawal in the future. For example, Corteva (USA)has decided to withdraw from Russia and, having already paused new sales, is initiating a plan to stop production and business activities.