Unilever has completed the sale of its Russian business to Arnest Group, a local manufacturer of perfume, cosmetics, and household products. The sale includes all of Unilever’s business and four factories in Russia, as well as its business in Belarus. The terms of the transaction were not disclosed, but it marks a significant move for the British consumer goods company. Unilever’s CEO Hein Schumacher has been focused on restructuring the company, including plans to spin off the ice cream business, lay off staff, and focus on key brands to reverse years of underperformance.
Despite criticism for its continued presence in Russia after Moscow’s invasion of Ukraine, Unilever was the first major European food company to stop imports into and exports out of Russia in March 2022. Schumacher stated that the preparation for the sale of the Unilever Russia business had been complex, involving separating IT platforms and supply chains, as well as migrating brands to Cyrillic. The decision to sell its assets in Russia was welcomed by B4Ukraine, a coalition of civil society groups that seeks to compel Western companies to sever ties with Russia. The Kremlin demands at least a 50% discount on exit deals involving firms from unfriendly countries.
Arnest Group, the local manufacturer that acquired Unilever’s Russian business, did not immediately respond to requests for comment. The exodus of foreign firms from Russia has cost companies over $107 billion in writedowns and lost revenues, according to a Reuters analysis in March. Another major company, Danone, also announced earlier this year that it had received regulatory approvals to dispose of its Russian assets, resulting in a loss of $1.3 billion. Unilever’s sale of its business in Russia is part of a larger trend of companies reevaluating their presence in the country in light of geopolitical tensions and international sanctions.
Unilever’s sale of its business in Russia reflects the company’s efforts to adapt to changing global dynamics and geopolitical pressures. The decision comes as part of CEO Hein Schumacher’s broader strategy to restructure the company and focus on core brands. The move was welcomed by activists and Ukraine’s government, who have been calling on Western companies to sever ties with Russia. The Kremlin’s demands for discounts on exit deals further highlight the challenges companies face in navigating geopolitical risks and the impact of sanctions on their operations in Russia.
As more foreign firms exit Russia and incur financial losses, the business landscape in the country is shifting. The sale of Unilever’s Russian business to Arnest Group is a significant development in this ongoing trend. It remains to be seen how other global companies will respond to calls to sever ties with Russia and navigate the complex geopolitical environment. The financial implications of exiting the Russian market are substantial, as evidenced by the losses incurred by companies like Danone. Overall, Unilever’s sale of its Russian business is a reflection of the broader economic and political challenges facing multinational companies operating in Russia.
