'Limited Credit Implications' From Russia's Takeover Of Carlsberg, Danone Assets

By Steve Wynne-Jones
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'Limited Credit Implications' From Russia's Takeover Of Carlsberg, Danone Assets

The Russian government's decree that it has taken control of assets belonging to Danone and Carlsberg in Russia is likely to have limited credit implications for both firms, Moody's has said.

On 16 July, Russia said that it was placing the foreign-owned stakes in Danone Russia and Baltika Breweries under the 'temporary management' of Rosimushchestvo, a government property agency.

Commenting on the announcement in a briefing note, Moody's noted that both Danone and Carlsberg are in the process of selling their Russian activities, adding, 'The decision from the Russian government adds uncertainty to the process and makes it less clear what the proceeds of the sale might be.'

Remain in Russia?

While many Western-owned companies have withdrawn from Russia since it launched its offensive against Ukraine last year, many others continue to have operations there, including Nestlé, Unilever, Pernod Ricard and Coca-Cola HBC.

'Russia's action might compel them to remain in the country, because exiting the market looks increasingly difficult,' Moody's said.


Limited Exposure

Moody's said that its forecast for both Danone and Carlsberg already excludes the contributions from their Russian business – at Danone, Russia accounted for around 5% of revenue, while for Carlsberg, Baltika represented 10% of sales and approximately 6% of operating profit.

'We also expected the proceeds from the disposal of these businesses to be very modest, if any, given the difficult operating environment in Russia and limited potential buyers,' Moody's said.

'As a result, if Danone and Carlsberg fail to sell their assets or lose control of them without any proceeds it will have limited impact on either company's credit quality.'

Read More: 'Stable' Outlook For Consumer Products Amid Economic Uncertainty: Moody's

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