Russian Government Takes Control of Danone and Carlsberg Subsidiaries
The Russian government has announced that it is taking control of the Russian subsidiary of global food company Danone. In an order signed by Russian President Vladimir Putin yesterday (Sunday, July 16), the government said that Danone’s operation will be taken under the temporary management of the state property agency, Rosimushchestvo. Russia said that it is also taking control of the operations of beer company Carlsberg. The move is part of Moscow’s response to a raft of international companies deciding to halt their operations in the country, following the Russian invasion of Ukraine in February 2022.
Danone, in a statement, said that it has “taken note” of the decision of the Russian government. The Paris-headquartered global food and beverage group added that it is “currently investigating the situation”. In October 2022, Danone announced that it was selling its business in Russia and this was “progressing according to the expected schedule”.
“Danone is preparing to take all necessary measures to protect its rights as a shareholder of Danone Russia, and the continuity of the operations of the business in the interest of all stakeholders, in particular its employees.
“This decision has no impact on Danone’s financial guidance for 2023,” the statement added. In April, the company raised its forecasted sales growth for 2023 following a “strong start” to the year. The group recorded net sales of €6.9 billion in the first quarter of 2023, a 10.5% like-for-like increase on the same period the previous year. The result was driven by a 10.3% jump in prices, along with a 0.2% increase in volume/mix. Danone, whose brands include Activia yoghurt, Evian water, and Alpro, said this means that like-for-like sales growth is now expected to be between 4-6%, compared to the previously announced 3-5%.
This move by the Russian government comes as a response to international companies halting their operations in the country due to the Russian invasion of Ukraine in February 2022. The decision to take control of Danone and Carlsberg is seen as a measure to safeguard the country’s economy and ensure the continuity of these businesses.
Danone’s decision to sell its business in Russia was already in progress before the Russian government’s intervention. The company stated that it is currently investigating the situation and will take all necessary measures to protect its rights as a shareholder and the interests of its employees.
Despite the government’s takeover, Danone assured that this will not impact its financial guidance for 2023. The company had already raised its sales growth forecast for the year after a strong first quarter, with net sales of €6.9 billion and a 10.5% increase compared to the previous year. Danone’s diverse portfolio of brands, including Activia yoghurt, Evian water, and Alpro, has contributed to this growth, with like-for-like sales now expected to be between 4-6% for 2023.
The Russian government’s move to take control of Danone and Carlsberg is indicative of the country’s efforts to stabilize its economy amidst the fallout from the Ukrainian conflict. It remains to be seen how this development will impact the operations of these companies and the broader business landscape in Russia.