Sneaker maker Nike and home furnishing company IKEA closed stores in Russia on Thursday as trade restrictions and supply constraints added to political pressure for companies to cease operations in Russia due to its invasion of Ukraine.
French bank Societe Generale said it was scrambling to reduce its risks in Russia, fearing a tit-for-tat response from Moscow to Western sanctions, as more companies from vodka maker Diageo to Toyota, suspended their activities in the country.
World-famous companies including Apple, Ford and Shell condemned Russia’s attack, but some of Thursday’s announcements were more practical, focusing on supplies and sanctions as shipping routes close and governments ban exports to Russia.
Boeing Chief Executive David Calhoun, in a memo to staff, acknowledged the violence in Ukraine but avoided the policy.
“Going forward, Boeing will continue to follow the lead of the U.S. government and strictly adhere to announced export controls and restrictions governing work in Russia,” he said in the note seen. by Reuters, which describes the suspension of work in Russia. and Ukraine.
Brazilian aircraft maker Embraer (EMBR3.SA) has joined Airbus and Boeing in halting parts deliveries to Russian airlines.
Furniture retailer IKEA (IKEA.UL) said it would close outlets in Russia and Belarus, its Russian ally, affecting 15,000 workers, and described its closures in apolitical terms.
“The war has both a huge human impact and is causing severe disruption to the supply chain and business conditions, which is why business groups have decided to temporarily suspend IKEA’s operations in Russia,” IKEA said in a statement.
Nike Inc said it was “deeply troubled by the devastating crisis in Ukraine” and described its store closures as follows: “Given the rapidly changing situation and the increasing challenges in operating our business, Nike will suspend its operations in Russia.”
Some companies, including McDonald’s Corp (MCD.N), PepsiCo (PEP.O) have remained silent on their plans.
The head of the New York state pension fund said Thursday that they and other companies with large footprints in Russia “must consider whether doing business in Russia is worth the risk during this extraordinarily volatile time. “.
Corporate actions costs are starting to pile up, with more than $110 billion of exposure to Russia reported by global corporations, banks and investors.
Norway’s $1.3 trillion wealth fund said its Russian assets, worth around $3 billion before the invasion, have now become effectively worthless.
“They are practically written off,” CEO Nicolai Tangen told Reuters.
TJX Cos Inc announced on Thursday that it would sell its 25% stake in Russian discount clothing retailer Familia, which cost it $225 million in 2019. Due to a falling ruble and TJX said that it could take an impairment charge due to the sale.
RISKS OF SANCTIONS
Highlighting the challenges global businesses face as they comply with sanctions on Russia, Societe Generale said on Thursday it could see an “extreme scenario” where Russia strips the bank of its local operations. The lender has a $20 billion exposure to Russia.
Citigroup Inc (CN) said on Wednesday it could face billions of dollars in losses on its exposure to Russia and was looking to exit Russian assets. Bank stocks have been battered in recent days amid fears of possible writedowns and weaker economies.
Western sanctions – including the closure of some Russian banks from the SWIFT global financial network, new export controls and the closure of airspace – have led dozens of global companies to suspend operations in the country, hammered the ruble and forced the central bank to raise interest rates.
Spanish fashion retailer Mango announced on Thursday that it was temporarily closing its stores and online sales site in Russia, and spirits company Diageo (DGE.L), the maker of Smirnoff vodka and Guinness, said said it suspended exports to Ukraine and Russia. read more Intel and Cisco have announced that they have stopped sales in Russia.
Accenture said it was ending its Russian operations, which had nearly 2,300 employees.
Britain announced on Thursday that it would ban Russian companies from the insurance market in London, the world’s largest center for commercial and specialist insurance.
Hundreds of Russian soldiers and Ukrainian civilians have been killed and more than a million people have fled Ukraine in the week since President Vladimir Putin ordered the attack.
Russia calls its actions in Ukraine a “special operation” which it says is not designed to occupy territory but to destroy the military capabilities of its southern neighbor and capture what it sees as dangerous nationalists.
With a shortage of components, more automakers are shutting down production at their factories in Russia, including Russia’s largest automaker, Avtovaz (AVAZI_p.MM) – controlled by France‘s Renault (RENA.PA).
Nissan Motor Co said on Thursday it had suspended vehicle exports to Russia, while Japanese counterpart Toyota said it would halt production at its Russian plant from Friday and halt vehicle exports to the country indefinitely.
Car supplier Magna said it was shutting down six factories in Russia.
The world’s largest shipping companies, MSC and Maersk (MAERSKb.CO) have suspended container shipping to and from Russia. Read more
Japan Airlines (9201.T) and ANA Holdings (9202.T), which normally use Russian airspace for flights in Europe, said they would cancel all flights to and from Europe on Thursday.