Siemens, Raiffeisen, Valio: victims of Russia

Western business in Russia is suffering billions in losses, but it is not going to leave.
22.05.2015
Kompania
Origin source
During a recent visit to Russia, the Greek Prime Minister Alexis Tsipras has become known for the amount of the Greek economy as a result of losses Russian retaliatory sanctions - Euro 30-35 million in 2014 Tsipras came to bargain: you give us - the weakening of the trade embargo, we will - some no support for the EU.

In the queue for a bargain, anyway, it is not only Greece. Also called Hungary and Cyprus, and perhaps this information is not without reason, since the representatives of the Russian government were in favor of the possibility of a point of weakening kontrsanktsy imposed by Moscow. There is a possibility that the dot can be taken into account and the problems of some foreign companies.

Western business failed and unveiled the results of 2014, plus some already and the results of I quarter of 2015 and they clearly indicate that Russian assets are for the most part at the moment are a burden balance sheets and cause significant losses. And this is connected not so much with the sanctions, as with all complex problems of our economy and world politics.

Numbers do not lie

"The numbers do not lie», & ndash; said in a video message to employees is not so long ago led the McDonald's Steve Easterbrook. Top manager admitted that things are not going well, and said that now the business is supposed to be structured in four sectors: giving basic income US market, well-established European markets and only then - promising, such as Russia and China, and others where the company is represented slightly . In fairness it should be noted that McDonald's problem is actually much more complicated and confusing, and are connected not only with the difficulties of the Russian market, but in a much greater extent with internal business difficulties.

Other business - the company is always to bet on our country. Very eloquent annual report of the US oil Exxon Mobil, hold on to their Russian projects until recently. Clearly, that is not of great love for the Russian Federation or to your partner in this market - "Rosneft", but because it is very significant investments made. As a result, Exxon Mobil had yet to recede, when sanctions were imposed on the Russian energy sector. Exxon Mobil was forced to withdraw from the most promising jointth project with "Rosneft" for drilling in the Kara Sea. The shock was strong: the company began drilling in August, and in October because of the work of the sanctions were suspended. The language of the annual report, the picture is described as follows: "In accordance with the sanctions and all the general and special licenses prohibited with the participation of Russia in the Black Sea, the Arctic and in Western Siberia have been stopped. The maximum loss of a corporation associated with these joint ventures, on December 31, 2014 amounted to $ 1.0 billion. "

Halve the business in Russia, the German multi Siemens conglomerate. Directly in connection with the introduction of sanctions against Russia sales collapsed by 50%. The figure comes from the company's CEO, Joe Kaeser, who revealed it in an interview with the German newspaper Bild am Sonntag: «Our business with Russia as a whole has been hit - declined by about half." The amount of losses incurred by the Corporation Joe Kaeser did not specify but, according to the Frankfurter Allgemaine Zeitung, Siemens annual turnover in Russia is about $ 2 billion.

It should be noted that the company Siemens is also very wanted zamorazhivats activity in Russia and made desperate efforts to prevent it or at least get some preferences. In the spring of 2014, Joe Kaeser even made his way with his aspirations to the reception to Russian President Vladimir Putin. The Germans then noted that the tradition of cooperation with our country, there are 160 years, and the amount already invested conglomerate in Russia reached 800 million euros. However, in November 2014 Siemens top managers stated that compliance with the sanctions regime for them is more important than business. Now that the results of 2014 announced, we can expect the new pirouettes.

Halving the Russian business, no doubt, affect the position of the German company as a whole. According to the results of I quarter 2015 the company announced a decrease in profits and announced that it will continue to carry out mass layoffs.

Layoffs - a sign of the day for the Finnish manufacturer Valio dairy products, where there is a question of reducing the 4% of the workforce. Valio's revenue in Russia because of the food embargo in 2014 fell by 36%, to 258 million euros. "Net sales" Valio Russia "in 2014 amounted to approximately 258 million euro, whilenormal circumstances she had to exceed 400 million euros, according to the forecast year "- said in a press release. The documents also stated that "the favorable development of exports to Russia collapsed in early August because of the embargo, and hundreds of millions of liters of milk had to be processed into industrial butter and milk powder for sale on the world market, and on it the prices were record low." The net turnover of the whole Valio Group in 2014 decreased by almost 4%, to 1.95 billion euros. On international markets, the company's net sales fell by 9%.

At the end of 2014, Russia has ceased to be the largest market for the world for the production of giant Danone dairy products. The point here is not primarily in the sanctions, especially since Danone localized production in Russia, and in races of our currency, and a general decline in consumer spending Russians in their reorientation to cheaper products. The company opted for the native French market for it. This is not surprising, since, according to the press, for 2014 the share of Russian sales decreased from 11 to 9% of consolidated revenue,on time, as France has maintained a share of 10% of all sales of Danone and is now comparable to the manufacturer of dairy products to the US market, whose share in sales of 9% of group revenues. Global sales of Danone in 2014 reached EUR 21.1 billion. Thus, the Russian business revenue last year could amount to 1.9 billion euros versus 2.34 billion euros a year earlier. At the beginning of 2015 the general director of Danone in Russia and the CIS Bernard Ducrot said that the company has no plans to close the plant, but in the case of deterioration of the economic situation, Danone may reconsider its position. In 2014, Danone has closed three plants in Russia.

The fall of the beer market in Russia and devaluation of the ruble in the IV quarter of 2014 brought down the financial results of the Danish group Carlsberg. Operating profit decreased compared to October-December last year by almost a quarter. Due to the volatility of the ruble in Carlsberg found it difficult to forecast for 2015

Results Carlsberg main competitors in Russia, too, were not very comforting. According to Nielsen data, the proportion of Dutch Heineken in Russia decreased by 1 percentage point for the year, up 12.5%; a global leader Anheuser-Busch InBev has lost 1.7 percentage points Russian marketska, ending the year with a share of 12.2%. Turkish Efes only managed to maintain its share of 13.6%.

Significant losses in our market suffers company Adidas. Profit in rubles increased, but the rate difference all left at the same level, purchase products in Russia as a whole have become smaller. Exchange rate fluctuations have led to the fact that Adidas has lost more than 550 million euros. Gross profit decreased by 1.1% to € 6.9 billion. Net profit for the year slipped by 37.6% to 490 million euros.

2014 was the failure of the Austrian banking group Raiffeiesen, has made in his time a significant bet on Eastern Europe and, in particular, Russia. Following the results of 2014 the profit of the Russian bank Raiffeisen Bank International fell by 10% in rubles and 100 million euros. As the head of the group Karl Sevelda, Russia has ceased to be a priority market for the group. Priority will now Romania, Czech Republic, Slovakia and Austria. According Sevelda, the sharp depreciation of the Russian currency and the poor economic outlook in the Russian Federation are able to request cancellation of part of the company's value, and it could reach 148 million euros. Such decisions will be taken in the first halfe 2015

Finally, the French group Societe Generale is already in the I quarter 2015 has lost 91 million euros for the Russian business. These data led the company in its report. In I quarter revenue fell by more than a third - 38.7%, to 114 million euros, while revenues Societe Generale as a whole has grown five-fold, to 868 million euros.

Blue cheese

In late April - early May, on the shelves of one of the Moscow premiumnyh retailers were cheeses from France. Many and different. Sellers with stupid jokes such as: "What do managers in the luggage brought?" Did not respond, but at the price tag, without any constraint, as a country producer and exporter specified was honestly it was France. By itself, the story is worthy of a separate investigation, but it clearly shows that business on both sides of the sanctions feels a variety of ways to survive.

Confronting the loss, the company changed the strategy to restructure, cut costs and seek new markets, but none of these individually and in combination is not able to reliably fill the loss of positions in the Russian market. And as far as we can judge, flto understand everything and because of the Russian Federation in no hurry to leave. The idea is to wait out the current political situation, and perhaps in part a hand to, to hasten its spread in a more favorable business side. So, as of January 2015, 40% of German companies surveyed by the German-Russian Chamber of Commerce, announced their intention to suspend or cancel projects in the Russian Federation due to Western sanctions. 41% of German companies in Russia reduced investments in our country, 28% said that they planned to lay off workers from Russia. But at the same time only 35% of firms are leaving Russian forever.

Siemens does not refer to their number. Siemens President in Russia Dietrich Meller on the sidelines of the conference "Modernization markets. Middle class "in Berlin in February 2015 stated that the Russian market will take several years to recover, but the company will continue to invest. "We expect growth without lifts. This is due to the fall in oil prices, with the development of the political situation, sanctions. But I think that the recovery will take several years ", - said Dietrich Meller. "In Russia, there are projects that we want toealizovat ", - he added, saying that within one to two years to be completed the construction of a technical center for maintenance of trains, investment in this project will amount to 50 million euros. Siemens is involved in the production of locomotives and electric trains, produces transformers and other power equipment.

The same mood prevails in the Finnish Valio. "Despite the difficulties, do not stop Valio business in Russia, and Russia is a strategic market for it," - told reporters the press service of the Russian Federation in Valio. After the introduction of the embargo Finns localized product we release a processed cheese, cream, milk, yoghurt, curd desserts and butter. Earlier, the Finnish company has produced only cheese in triangles and yoghurt.

Adidas, forced to close hundreds of stores in Russia, said the reluctance to lose customers entirely, which intends to keep the prices of their products, or at least not "bully" them so that they become unaffordable for the Russian consumer.

Neither the Raiffeisen, Societe Generale or refusal of the Russian market did not think.

Methaneinvestors Ia

Throw everything and leave or wait in hope for the best: which strategy will lead to triumph? The answer to this question, and it is best to talk about it throwing the world's investors. Studies show that they constantly move their assets in the search for a "quiet coast", that's just about 'quiet beach' they are constantly changing. So much so, that on the eve of the British general election has information about the outflow of foreign investments from the UK. Over the last 15 months investors have withdrawn from this country $ 356 billion. In the first three months of 2015, net capital outflow from the United Kingdom totaled $ 68 billion, while the March figure was $ 24 billion, reports The Times citing CrossBorder Capital consulting firm data.

As for the Russian Federation, international investors are equally divided in assessing the acceptability of Russian market conditions for doing business in the medium term (three to five years): half evaluates the business environment in our country as favorable or highly affordable, half - as the minimum acceptable or even Nepriemlemuyu. These findings come authors of the study conducted by AT Kearney. It is from 1998 forms the investment trust rating in the top 25 of which Russia is not included for the second year in a row. RF is the second year the list of attractive countries for investors, from which it fell before the crisis over Ukraine. But in January 2015, more than 50% of the managers of the companies surveyed said that if not for the sanctions and growing geopolitical tensions, they have this year increased direct investment in Russia and its neighboring states. According to AT Kearney, the greatest interest in the Russian Federation are ready to show the companies working in the areas of health and pharmaceuticals (65%), light industry (61%) and financial services (58%). According to the study, the most optimistic assessment of the domestic economy have given Asian companies: if the survey involved only them, then Russia would again hit the Top 25. The most negative assessment - American companies. However, according to the American Chamber of Commerce, 87% of commercial structures of the United States, working in the Russian market is not going to close its business in the Russian Federation, stating that heimportant for the competitiveness of their companies.

Clearly, therefore, the tone sets in a global economy geopolitics. And any sign of geopolitical stabilization can give a start to the investment and business renaissance.