Unilever will sell its business in Russia for $340-450 million
Source: Dairynews.today
The largest producer of consumer goods, Unilever, has received approval from Russian authorities to sell its business in the country, with assets valued at $340-450 million.
The deal was approved by the government commission on foreign investment control at the end of August 2024. The company's main asset in Russia is LLC Unilever Rus, which owns cosmetics and food brands such as Knorr, Dove, "Black Pearl," "Inmarko," and others.
As part of the deal, Unilever localized the names of its international brands, which increased the asset value. However, the company faced several challenges, including geopolitical tensions and a 47.5% drop in net profit in 2023.
In July 2023, Unilever CEO Hein Schumacher explained that the company did not find it appropriate to leave the Russian market and preferred to continue limited operations there. According to him, the company had three scenarios for how to handle its business in Russia. Unilever considered selling but could not find a "viable solution." Stopping production processes could lead to the nationalization of assets, as happened with Danone and "Baltika." "The second option was to sell our business, but the reality is that we couldn't find an appropriate solution that aligned with our stated goals. None of these options are truly good, while the final option of limited business operations is the least bad," Schumacher told reporters.
Unilever has been operating in Russia since 1991. The company employed about 3,000 people there and had four major production clusters. In St. Petersburg, it produces cosmetics and household chemicals, and it also has cosmetic production in Yekaterinburg. In the Tula region and Omsk, Unilever manufactures ice cream. The share of Russian business as of 2022 accounted for 1.4% of Unilever's total turnover and 2% of its net profit (the conglomerate's total turnover was €60.1 billion, with a net profit of €8.3 billion). By the end of 2022, Unilever valued its Russian assets at €900 million. By the end of 2023, the share of Russian business had dropped to 1% of the group's turnover and net profit (€59.6 billion and €7.1 billion, respectively), and the asset valuation fell to €600 million.
As part of the deal, Unilever localized the names of its international brands, which increased the asset value. However, the company faced several challenges, including geopolitical tensions and a 47.5% drop in net profit in 2023.
In July 2023, Unilever CEO Hein Schumacher explained that the company did not find it appropriate to leave the Russian market and preferred to continue limited operations there. According to him, the company had three scenarios for how to handle its business in Russia. Unilever considered selling but could not find a "viable solution." Stopping production processes could lead to the nationalization of assets, as happened with Danone and "Baltika." "The second option was to sell our business, but the reality is that we couldn't find an appropriate solution that aligned with our stated goals. None of these options are truly good, while the final option of limited business operations is the least bad," Schumacher told reporters.
Unilever has been operating in Russia since 1991. The company employed about 3,000 people there and had four major production clusters. In St. Petersburg, it produces cosmetics and household chemicals, and it also has cosmetic production in Yekaterinburg. In the Tula region and Omsk, Unilever manufactures ice cream. The share of Russian business as of 2022 accounted for 1.4% of Unilever's total turnover and 2% of its net profit (the conglomerate's total turnover was €60.1 billion, with a net profit of €8.3 billion). By the end of 2022, Unilever valued its Russian assets at €900 million. By the end of 2023, the share of Russian business had dropped to 1% of the group's turnover and net profit (€59.6 billion and €7.1 billion, respectively), and the asset valuation fell to €600 million.
23.09.2024
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