© Reuters. FILE PHOTO: Heineken logo is seen at the company’s building in Sao Paulo, Brazil April 30, 2019. REUTERS/Amanda Perobelli
By Toby Sterling, Philip Blenkinsop and Sarah Morland
AMSTERDAM/BRUSSELS (Reuters) -Dutch brewing giant Heineken said on Monday it has decided to exit its business in Russia at an expected cost of 400 million euros ($438 million), after previously saying it would only halt new investment and exports to the country.
The company joins a raft of Western brands shuttering businesses in Russia following its invasion of Ukraine, with Heineken’s move likely to dial up pressure on Danish rival Carlsberg (CSE:CARLa), the owner of Russia’s biggest brewer, Baltika.
“We have concluded that Heineken’s ownership of the business in Russia is no longer sustainable nor viable in the current environment,” the company said in a statement, adding that it would not profit from any transfer of ownership.
Heineken is the third largest brewer in Russia, where it owns local brands Bochkarev, Okhota and Tri Medvedya. It said it aimed for an “orderly transfer” and would continue the business with reduced operations during a transition period to minimise the risk of nationalisation.
The company said it would guarantee the salaries of its 1,800 Russian employees to the end of this year and expected an impairment charge and other non-cash exceptional charges of around 400 million euros.
Ukraine’s President Volodymyr Zelenskiy has urged international companies to leave the Russian market after Moscow launched what it termed its “special military operation” against its neighbour.
Although Heineken is a major player on the Russian market, sales there account for just 2% of the company’s total.
Shares were up 0.8% at 88.16 euros by 0835 GMT in Amsterdam.
Carlsberg, with a 27.3% local market share, is still selling beer under the Baltika brand but said earlier this month it had begun a strategic review of its business in the country and was suspending Russian brewing of its namesake brand of beer. “Heineken’s decision probably does not make the situation easier for Carlsberg,” said Nordnet analyst Per Hansen in a research note.
Russia’s second largest brewer is a joint venture owned by Turkey’s Anadolu Efes and Belgium’s InBev.
InBev said earlier in March it would stop selling Bud beer in Russia and forego profits from the joint venture, which has 11 breweries and 3,500 employees in the country.
($1 = 0.9125 euros)
Heineken to exit Russia at cost of around 400 million euros
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.