Austrian insurer Uniqa is considering a complete exit from Russia, where it has operated since 2009. “We want to get out, but it will probably take some time,” said CEO Andreas Brandstetter on Friday. Many companies that do business in the Russian Federation, which has been sanctioned because of the Ukraine war, feel the same way as the insurer. But for most Austrians, the motto is: persevere.
A number of international corporations have nevertheless already taken the step, some with high financial losses: The Munich-based energy technology group Siemens Energy has just sold its 65 percent stake in the gas turbine joint venture with the Russian Power Machines to the Russian state-owned utility InterRao for an undisclosed price. The German consumer goods group Henkel also announced its withdrawal from Russia. South Korean automaker Hyundai and its subsidiary Kia are considering selling their St. Petersburg plant, which produces 200,000 vehicles a year. And the French food company Danone also wants to withdraw from Russia. That could trigger a write-down requirement of up to one billion euros.
Almost all of the 650 Austrian companies that have their own branches or subsidiaries or representative offices in Russia have held out so far. “Only a few have sold to date,” says Lukas Zitz from the Foreign Trade Center in Moscow. The sale of the company is not an easy decision, since capital transfers after the sale of company shares in Russia are very difficult.
“Most of the Austrian companies are trying to continue their business activities – especially if they have invested in their own production facilities in Russia”, says Zitz, who is confronted with many inquiries from Austrian companies every day. According to the WKO, only two Austrian companies have officially withdrawn from Russia so far: the Vorarlberg fittings manufacturer Julius Blum, who sold his branch in Moscow with 60 employees to long-standing sales partners, and the paper and cardboard manufacturer Mondi.
However, it is realistic that companies that would leave the Russian market would re-enter at a later date, says Zitz. When that will be is unpredictable. “For them, however, an end to the war and thus the lifting of the sanctions imposed on Russia will be a prerequisite for them to return.”
It is rumored that even the sales of (parts of) companies in Russia that have already taken place are often parked with Russian trustees so that they can return to the market as quickly as possible.
Bizarre: record in bilateral foreign trade
According to current assessments by the Foreign Trade Organization/WKO, the military invasion of Ukraine and the sanctions will lead to a 6.2 percent drop in Russian GDP in 2022. A number of foreign companies have stopped supplying Russia in protest, although this would not violate the sanctions. Exports to Russia from the high-technology, shipping and energy sectors, among others, are under the embargo.
In the first half of 2022, bilateral foreign trade between Austria and Russia doubled to 5.35 billion euros, reaching a new all-time high. Austrian exports to Russia remained stable at EUR 975 million in the first half of the year (due to industrial goods ordered before the sanctions began), but imports from Russia to Austria almost tripled to EUR 4.37 billion. The reason: the higher gas delivery volumes and the sharp rise in prices. In this respect, the largest ever foreign trade volume (7.3 billion euros) Austria-Russia should be reached in 2022.
Source: Nachrichten
