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European companies saw 143 trillion won in losses due to Ukraine’s war

European companies saw 143 trillion won in losses due to Ukraine’s war

Posted August. 08, 2023 08:02,   

Updated August. 08, 2023 08:02


According to Britain's Financial Times (FT) on Sunday, Major European companies that closed their Russian operations in response to Russia's invasion of Ukraine and subsequent Western economic sanctions have reportedly incurred losses of at least 100 billion euros, or 143 trillion won. However, this figure does not include other costs, such as elevated international oil prices resulting from the conflict in Ukraine, implying that the actual losses are likely to be even higher. This situation underscores the substantial impact of the war on Europe, which is directly affected by the ongoing conflict.

The FT analyzed the annual reports and 2023 financial statements of 600 major European companies. The analysis revealed that out of these companies, 176 of them (29.3%) suffered losses totaling 100 billion euros due to the sale of businesses and stakes in Russia at reduced prices, as well as closures. The impact was especially pronounced for companies operating in the energy, finance, and utilities sectors, which include electricity and water.

The losses incurred by Europe's 'big three' energy companies – British Petroleum (BP), Shell of the Netherlands, and France's TotalEnergies – all of which had significant operations in oil-producing Russia, reached a staggering 40.6 billion euros or 58 trillion won. Additionally, the financial sector, including banks, insurance, and investment firms, experienced losses of 17.5 billion euros, while the utility sector saw losses totaling 14.7 billion euros.

European companies are poised to experience further damage, as Russia passed legislation in April that empowers it to forcibly acquire the assets of companies from other countries it considers unfriendly. Firms originating from nations labeled as unfriendly by Russia are constrained to sell their assets within Russia at a maximum of half their original value. Moreover, they are required to contribute 5 to 10 percent of the proceeds to the Russian military.

One company highly likely to face this situation is Fortum, a gas importer from Finland, a country that recently joined the North Atlantic Treaty Organization (NATO) despite Russia's opposition. Shortly after the bill's passage, Russia began nationalizing Fortum's Russian assets. Similar actions were taken with the assets of Carlsberg, a leading Danish brewer, and the French food company Danone, both of which have been actively supportive of Ukraine.

Russia is using this money to fund the war without sparing its own companies. According to the Moscow Times, Russian President Vladimir Putin signed a bill into law on Friday that mandates Russian companies which generated over 1 billion rubles in revenue during 2021-2022 – roughly equivalent to 13.6 billion won – to “pay 10 percent of the surplus profits compared to their earnings in 2018-2019 in taxes.”