Sunday 18 March 2018

Companies prepare for economic losses from ongoing Ukrainian crisis

Pro-Russian activists clash with police in front of the prosecutors office in Donetsk, Ukraine
Pro-Russian activists clash with police in front of the prosecutors office in Donetsk, Ukraine


Companies reporting results in recent weeks have been casting an increasingly nervous eye over the situation in Ukraine and the impact of a possible broadening of US sanctions against Russia – as well as Moscow's threat of responding in kind.

Many companies are feeling the effects of the economic fallout and amending forward results guidance as a result.

* Italian tyre maker Pirelli said it will hit its full-year targets, despite a weaker-than-expected outlook for the Russian market. "We expect a better environment in Europe to compensate for a slightly worse outlook in Russia and Latin America," CEO Marco Tronchetti Provera said.

* Danish brewer Carlsberg lowered its forecast for Russia's beer market and warned a weak rouble would hit its earnings in 2014.

* French bank Societe Generale cited the economic uncertainty caused by Russia's soured relations with Ukraine as it announced a €525m writedown on the acquisition value of its Russian arm, Rosbank.

* Norwegian telecoms company Telenor said on Wednesday it would stick with an investment in Russia-focused Vimpelcom, in which it holds a 43pc stake.

* Drugmaker Richter cut its 2014 operating profit guidance because of the turmoil in Ukraine and Russia. The Hungarian company reported a 51pc fall in first-quarter net profit.

* E.ON remains committed to business in Russia, Germany's largest utility said, as it reiterated guidance for 2014 EBITDA of €8-8.6bn and underlying net income of €1.5-1.9bn. "In the long-term, we view the Russian power market as stable," CEO Johannes Teyssen said.

* Austria's Erste Group Bank stuck to a forecast of flat operating profit, saying the crisis could derail an improving economic outlook in its central and eastern European markets.

* Visa said the US sanctions were hurting card transaction volumes and revenue growth would slow further this quarter.

The company stopped providing services to two Russian banks in March, but faces President Vladimir Putin's threat of Russia developing its own credit card system.

* Nokian Tyres cut its full-year profit guidance after the weak rouble reduced its euro-denominated sales in the country. (© Reuters)

Irish Independent

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