According to calculations by the Kiev School of Economics (KSE), multinational companies from “unfriendly” countries managed to generate significant profits in Russia last year, despite the sanctions placed on Moscow by their home countries. The Financial Times reported on Monday that major Western brands that chose to continue operating in Russia recorded over $18 billion in Russian profits in 2022 out of the $20 billion reported by all foreign businesses operating in the country.
The KSE calculations were based on various sources, including the Russian company register, news reports, and corporate statements. The data revealed that US-based companies made the largest total profit at $4.9 billion, followed by German firms with $2.4 billion, Austrian businesses with approximately $2 billion, and Swiss entities with around $1 billion.
Among Western firms, Austria-based Raiffeisen Bank earned the highest profits in Russia, amounting to around $2 billion in 2022. This was followed by US tobacco giant Philip Morris with $775 million, and beverage major PepsiCo with $718 million. Swedish truck maker Scania also made significant earnings in Russia, with $621 million in 2022, making it the highest earner among businesses that have since exited the Russian market.
However, despite the profits generated, most Western companies face difficulties accessing these earnings. Shortly after the conflict in Ukraine began, Moscow compiled a list of countries that had imposed sanctions on Russia and deemed them “unfriendly.” This list includes the US, UK, EU states, Canada, Japan, and others. As a result, all transactions with companies from these unfriendly countries must be approved by the Russian government, and the local earnings of these companies are subject to a dividend payout ban. Although dividend payments can still be approved if a special permit is granted by the Russian authorities, the report indicates that few such permits have been issued so far.
Furthermore, Western firms have the option to seek permission from a government commission to sell their business in Russia. However, these sales usually come at a significant discount, and buyers of Western assets must make a mandatory contribution to the Russian budget.
When asked to comment on the situation, Raiffeisen stated that it does not have access to its profits in Russia. However, the lender has not written off the value of its Russian business. Philip Morris, PepsiCo, and Scania did not respond to requests for comment on this matter.
It is worth noting that the figures mentioned in the report are based on 2022 data, and it is expected that the profits of multinational companies in Russia have increased significantly since then. However, due to the fact that most international businesses operating in Russia only disclose their local results annually, it is difficult to assess the exact growth of these figures.
In conclusion, despite the sanctions imposed on Russia by their home countries, multinational companies from “unfriendly” nations managed to generate substantial profits in Russia. However, accessing these profits has proven to be a challenge for Western firms, as they face restrictions on dividend payouts and limited access to their earnings.
Source link
