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A-Brands

Nestlé, Coca-Cola HBC, Imperial Brands, Carlsberg Among Firms To Close Ukraine Production Facilities

Nestlé said it has temporarily closed its factories, warehouses and supply chain in Ukraine following the Russian invasion.

"Ensuring the safety and protection of our employees is our number one priority. For this reason, we have temporarily closed our factories, warehouses and supply chain in Ukraine and we have recommended to our employees to stay at home," the company said in a statement on Thursday.

The group, which has three factories and around 5,000 employees in Ukraine, said it had contingency plans in place to ensure it can restart the supply of products as soon as safe conditions allow.

Imperial Brands Suspends Operations In Ukraine

Tobacco giant Imperial Brands plc suspended operations in Ukraine on Thursday, the company told Reuters, after Russia launched an invasion of the country.

"The local team is continuing to monitor the situation closely and will update our people and plans as appropriate,” a spokesperson said, quoting a memo that was earlier in the day sent to employees.

The British company employs about 600 people in Ukraine.

Commodities Futures Reach High Levels

U.S. wheat and corn futures rose by their daily trading limits on Thursday, while soybeans reached the highest level since 2012, after Russian forces attacked Ukraine, exacerbating worries over global supplies.

Wheat rose for a third day, scaling its highest in more than nine years, while corn climbed to an eight-month peak.

"The surge in prices mirrors fears of a total halt in exports out of the Black Sea," Andree Defois, president of French consultancy Strategie Grains, said.

Silpo To Keep Majority Of Stores Open

Ukrainian retailer Silpo has issued a statement on its Facebook page to say that the majority of its supermarkets will remain open today.

"We are working to supply goods from our distribution centres," it said. "We are in contact with manufacturers to ensure permanent supply of products."

It has also issued details on its website about the stores that are closed, or operating on reduced hours, adding that the "most important thing" is to keep employees and customers safe.

"We work in Ukraine. We live in Ukraine. And we are staying here. Let's do our best to be the most useful to the country," the retailer added.

Disruption To Food Supplies Likely, Says Analyst

Analyst Russ Mould of AJ Bell has weighed in on the markets reaction to the Ukraine crisis, noting that a surge in oil prices is likely to have a significant knock-on effect.

“The surge in the oil price is terrible news for businesses and consumers, and fundamentally this clarifies one of the key impacts of the Russia/Ukraine war – it will serve to further stoke inflation," he said in a briefing note.

“Not only will energy bills keep going up, but food prices look set to jump even higher. Ukraine and Russia are both big food suppliers and any disruption to supplies will force buyers to seek alternative sources, which could jack up prices.

“Investor sentiment was already fragile because of rising inflation and the upwards direction of travel for interest rates, but confirmation of war and the associated alarming news headlines around the world are likely to see equity markets go through a difficult period for longer than people might have previously expected."

Coca-Cola HBC Closes Plant

Soft drinks bottler Coca-Cola HBC has closed its plant in Ukraine, and asked staff in the country to remain at home following Russia's invasion of its former Soviet neighbour, a spokesperson told Reuters via email.

"We will keep this under review over the coming days," the company spokesperson said.

The company, one of Coca-Cola's many bottlers worldwide, also counts Russia among its largest markets.

Maersk Halts Port Calls To Ukraine

Shipping group Maersk has halted all port calls in Ukraine until the end of February, as a consequence of the conflict in Ukraine, a company spokesperson said on Thursday.

DSV Shuts Ukraine Operations

Danish freight forwarder DSV said on Thursday that it has shut down its operations in Ukraine, where it employs about 230 people.

"Today, all air traffic has stopped and the border crossings are also impacted and closed so in reality everything is shut down today," DSV's head of investor relations Flemming Ole Nielsen said, adding that expected sanctions were likely to have a "major impact" on overall trade in Eastern Europe.

Carlsberg Halts Production

Danish brewer Carlsberg has halted operations at two Ukrainian breweries in Kyiv and the southern city of Zaporizhzhya due to the escalating conflict in the country. Elsewhere, a brewery in Lviv has shut after natural gas supplies to the facility were cut off.

Carlsberg, the second-largest brewer in Ukraine with a 31% market share, had taken "several initiatives in Ukraine with the aim of taking care of the safety of our employees in the country," a spokeswoman said.

"We have stopped production at our breweries in Zaporizhzhya and Kyiv and have informed our employees to stay at home and follow the instructions of the Ukrainian authorities," she said.

Analysts Offer Negative Outlook

A number of analysts have weighed in on the situation in Ukraine. According to Keith Temperton at Forte Securities, "There's no denying that [the current situation] puts pressure on supply chains and the likes of the German industrial complex for their energy needs.

"We haven't seen such a confluence of factors like sky-rocketing commodity prices and potential stagflationary scenarios. It's the worst possible recipe for stocks."

Elsewhere, Dan Wang of Hang Seng Bank in China, added, "A war will trigger a food and energy crisis. Emerging-market countries, especially Turkey, Egypt and Lebanon, are highly dependent on wheat produced in Russia and Ukraine. These countries are fighting high inflation.

"But the war has limited impact on global trade, because apart from oil and natural gas, Russia doesn't have supply chains that can impact the world, which is different from China."

'No Impact On Fortenova Group'

In nearby Croatia, business conglomerate Fortenova Group, which owns the Konzum retail chain, said that it doesn't expect sanctions issued against Russia to have a negative impact on its operations.

"Banks in Russian ownership do not have majority management and ownership rights in Fortenova Group," the group said in a statement. "Those are below 50%, and the second largest shareholder of the company are local Croatian owners. Also, Fortenova Group has a stable capital structure with the financing headed by HPS Investment Partners, a US investment company."

'Special Military Operation'

Russian forces fired missiles at a number of locations in Ukraine and landed troops on its south coast on Thursday, officials and media said, after President Vladimir Putin authorised what he called a special military operation.

The United States and its allies will impose "severe sanctions" on Russia, U.S. President Joe Biden said.

News by Reuters, with additional reporting by ESM. For more A-Brands news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

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