These 2 Sin Stocks Are Still Operating In Russia And 1 May Not Leave, As Ukraine War Rages On

Zinger Key Points
  • Many U.S. based businesses have exited Russia since the invasion of Ukraine one year ago.
  • Several European companies have kept their operations in Russia, despite promises to exit the country.

Since Russia invaded Ukraine a year ago, many global companies have exited their Russian operations, closing down retail locations, ending joint ventures, and in some cases selling off their business operations in the country. Two companies are among the examples of businesses choosing to still operate in Russia.

What Happened: Last week marked the one-year anniversary of Russia invading Ukraine, in what Russian President Vladimir Putin called a “special military operation.”

As a result of the war and international conflict, many U.S. and global businesses decided to pull their operations from Russia, either voluntarily or due to pressure from their customers and followers.

This included technology companies shutting down Russian operations, media companies pausing theatrical releases in the country, and automakers stopping exports to Russia.

Benzinga reported previously that Russia was not going to protect trademarks and intellectual property rights for companies from countries considered unfriendly, including the United States.

One of the most public examples of a company exiting Russia was fast food giant McDonald’s Corp MCD, which sold its restaurants in the country to a local restaurant operator. The company has the option to buy back the restaurants down the road. The sale came as trademarks showed that Russia was willing to let anyone take over the McDonald’s restaurants and not respect the company's intellectual property.

Related Link: If You Invested $1,000 In SPY STock The Day Russia Invaded Ukraine, Here's How Much You'd Have Now Sin Stocks Remain in Russia: Philip Morris International PM is one of the companies still operating in Russia. The company said recently that it has no plans to leave.

Russia is a large market for tobacco companies with high smoking rates, according to the Financial Times. Russia and Ukraine represented 8% of Philip Morris’ $31.7 billion in revenues in the last fiscal year.

In Russia, Philip Morris sells brands like Marlboro, L&M and Chesterfield and its smokeless tobacco product iQOS.

“I know some people…think that we made a decision not to leave, but we haven’t made any decisions because…we cannot execute the decision,” Philip Morris International CEO Jacek Olczak said.

Olczak said the company has scaled down operations in Russia and suspended new investments, and has tried to leave the country.

One sticking point for the company is a buyback clause from whoever Philip Morris sells its Russian assets to, allowing the tobacco giant the ability to regain entry to the country and its assets if the war between Russia and Ukraine ends.

Companies like Philip Morris have faced criticism from the Ukrainian government that they are helping to bankroll Russia’s war effort by not exiting.

“I’m not supporting anybody. I just get trapped in that situation and … what’s the way out?”

The four largest tobacco companies including Philip Morris paid $7.8 billion in annual taxes to the Kremlin, according to the report.

Olczak said he has a “duty to my shareholders to recover” value, putting an emphasis on Russia not offering fair value for the company’s operations in the country.

“I cannot just lose the patience and I leave it. It’s their money, it’s not my money, I’m managing this for them. If I had a buyer who could execute the transactions, yes we would do it.”

Global brewer Heineken HEINY is also still operating in Russia, which prompted the term “boycottheineken” to trend on Twitter on Friday as the one-year anniversary of the war was among the biggest global topics.

“Heineken launched no less than 61 new products on the Russian market last year after promising to stop investing there because of the war in Ukraine. What say you?” a user tweeted asking people to share and tag Heineken with hashtags of #BoycottHeineken, #OpRussia and #RussiaIsATerroristState.

Heineken shared in a press release Thursday that the brewing company is planning to exit Russia.

“Heineken continues to work hard to find a suitable buyer for its business in Russia while taking care of local employees. We are very concerned with recent news publications incorrectly stating ‘Heineken has broken its promise to leave Russia,’” the company said.

Heineken called the allegations “untrue and misleading.”

The global beverage company said it expects a significant financial loss to the company on its Heineken Russia business. The company wants to exit Russia “the right way” with a commitment to its people. The company’s goal is to reach an agreement for the exit in the first half of 2023.

Heineken said it stopped new investments and exports to Russia in March 2022 along with ending production and advertising of the Heineken brand in the country. The company has not accepted any financial benefits or profit from the business in Russia.

“The very real risk that if we were to stop our operations or become insolvent, the Russian Government would take action against employees or decide to nationalize our business.”

Read Next: Bill Gates Isn't A Big Beer Drinker, But Just Bought A 4% Stake In This Global Brewery 

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Posted In: NewsPoliticsGeneralbeverage stocksKremlinRussiaRussia Ukraine ConflictRussia Ukraine Invasionsin stocksTobacco StocksUkraineVladimir Putin
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