MOSCOW, RAW – Sneaker maker Nike and home furnishings firm IKEA have shut down stores in Russia, as trade restrictions and supply shutdowns added to political pressure for companies to stop business in Russia because of its invasion of Ukraine.
French bank Societe Generale said it was working to cut its risks in Russia, fearing a tit-for-tat response by Moscow to Western sanctions, as more companies from vodka maker Diageo to IKEA suspended business in the country.
Globally known companies including Apple, Ford and Shell have condemned Russia’s attack, but some of the announcements on Thursday were more practical, focused on supplies and sanctions as shipping routes closes and governments banned exports to Russia.
Boeing chief executive David Calhoun, in a note to staff, acknowledged the violence in Ukraine but avoided politics.
“Moving forward, Boeing will continue to follow the lead of the US government and strictly adhere to the export controls and restrictions that have been announced governing work in Russia,” he said in the note seen by Reuters, which described suspension of work in Russia and Ukraine.
Brazilian plane-maker Embraer joined Airbus and Boeing in halting parts supplies to Russian airlines.
Home furnishings retailer IKEA said it would close outlets in Russia and Russian ally Belarus, affecting 15,000 workers, and described its shutdowns in non-political terms.
“The war has both a huge human impact and is resulting in serious disruptions to supply chain and trading conditions, which is why the company groups have decided to temporarily pause IKEA operations in Russia,” IKEA said in a statement.
Nike said it was “deeply troubled by the devastating crisis in Ukraine” and described its closing of stores in this way: “Given the rapidly evolving situation, and the increasing challenges of operating our business, Nike will be pausing operations in Russia.”
Some companies and investors added up the costs of their actions.
Norway’s $US1.3 trillion ($A1.8 trillion) wealth fund said its Russian assets, worth around $US3 billion ($A4.1 billion) before the invasion, have now become effectively worthless. “They are pretty much written off,” CEO Nicolai Tangen told Reuters.
TJX Cos Inc said on Thursday it would sell its 25 per cent stake in Russian low-cost apparel retailer Familia, which cost it $US225 million in 2019. Because of a decline in the rouble and TJX said it may take an impairment charge due to the sale.
Underscoring the challenges global companies are facing as they comply with sanctions against 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 $US20 billion exposure to Russia.
Citigroup said on Wednesday it could face billions of dollars in losses on its exposure to Russia and was looking to exit Russian assets. Bank shares have taken a drubbing in recent days amid fears of possible writedowns and weaker economies.
Western sanctions, including shutting out some Russian banks from the SWIFT global financial network, new export controls, and closure of air space, have led dozens of global companies to pause operations in the country, hammered the rouble and forced the central bank to jack up interest rates.