Global Companies Flee From Russia

Major international companies are fleeing Russia en mass due to Russia’s invasion of Ukraine. Worldwide sanctions, the closure of airspace and transport links due to the war, some restrictions on Russia’s use of SWIFT, and capital controls have made it nearly impossible for companies to supply parts, make payments, or deliver goods to and from Russia.

The mass exodus from Russia reverses more than 30 years of investment by foreign businesses since the Soviet Union broke apart in 1991.  Businesses are also fleeing Russia on concern about potential international consumer backlash against any company perceived as helping Russian President Putin’s regime. 

In the energy sector, Russia’s largest foreign investor, BP Plc (BP), announced that it would exit its 20% stake in state-controlled Rosneft, a move that could result in a $25 billion write-off and cut the company’s global oil and gas production by a third.  Shell Plc (SHEL) also said it would end its partnership with Russia’s state-controlled Gazprom, including its involvement in the Nord Stream 2 pipeline project, which Germany blocked last week.

In finance,  American Express (AXP), Visa (V), and Mastercard (MA) said they are all suspending operations in Russia due to its invasion of Ukraine.   Each company gets about 4% of its net revenue from businesses linked to Russia.  Two of the Big Four global auditors, PricewaterhouseCoopers LLP and KPMG LLP, also said they are cutting their ties to Russian companies.

Most of the world’s biggest carmakers, including General Motors (GM), Ford Motor (F), Volkswagen AG (VWAGY), and Toyota Motor (TM), announced that they would halt shipments to Russia or idle plants in the country.   Also, truckmakers Volvo AB (VLVLY) and Daimler Truck Holding AG (DTGHF) halted business activities in the country. 

In consumer goods, Samsung Electronics (SSNHZ), the leading smartphone seller in Russia with more than 30% of the market, suspended exports of all its products to the country.  Apple (AAPL) has halted sales of iPhones and started limiting Apple Pay services in Russia, and removed the RT News and Sputnik News applications from App Stores outside the country.  HP Inc (HPQ), the largest supplier of PCs to Russia, stopped exports to the country, and Microsoft (MSFT) said it is suspending all new sales of products and services in Russia.