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23 May 2023

Andrii Onopriienko,
Oleksii Hrybanovskyi,
Nataliia Shapoval, Kyiv School of Economics

New research by KSE Institute shows companies that announced divestment from Russia lost almost half of revenues in 2022, while those that stay keep profits at the same level

How the income of foreign businesses in the Russian Federation has changed in 2022 and why so many companies still do not leave, 20 May 2023

KSE Institute investigated the results of the work of foreign companies in the Russian Federation in 2022.
Starting from February 24, 2022, many multinational companies operating in the Russian Federation, in response to the armed aggression against Ukraine, began to declare their intention to withdraw from the Russian market, cut off business ties, and stop trade operations. At the same time, some companies ignored the call to stop doing business with the Russian Federation as usual.
Even at the beginning of the full-scale invasion, the "SelfSanctions / LeaveRussia" project from the KSE Institute began to create a database of foreign firms that have their own legal entities (LLCs and JSCs) in the Russian Federation and collected key financial indicators (in particular, headcount, revenue, assets, capital, taxes paid and profit) for 2021.
In this work, we have updated the financial results for 2022 in order to look objectively at how some companies have fulfilled (and are fulfilling) their promises and to what extent the departure of foreign firms had an impact on the financial performance of Russian subsidiaries.
Key findings:
● As of May 2022, the "SelfSanctions / LeaveRussia" project from KSE counted 1850 legal entities in the Russian Federation, which respectively belong to 1350 foreign owners (each owner may own several local legal entities).
● As of May, 2023, there are financial results for 2022 (revenue, profit) only for 1700 legal entities. The revenue of these 1700 legal entities in 2022 fell by 23% - from USD 279 billion to USD 213 billion. Profit fell by 12% - from 16 to 14 billion USD.
● Companies that did not declare their intention to leave the Russian market, continuing to conduct business as usual, kept their income at the previous level. The companies that announced their intention to leave reduced their revenues by almost half. Companies that were sold to local Russian owners have slightly better financial results: perhaps trying to minimize their exit losses or due to the restart of operational activities of assets that were previously sometimes in a frozen state.
● The share of Russian business in global revenue of public companies (half, or 640 out of 1350, are public companies) fell from 3.2% in 2021 to 2.4% in 2022.