Reckitt, BAT stay the course on Russian business plans

By Richa Naidu

LONDON (Reuters) -Household products group Reckitt and Lucky Strike maker British American Tobacco said on Wednesday they will stick to their existing plans on how to deal with their Russia businesses despite growing pressures to leave the country.

Several major Western consumer goods companies have faced criticism for continuing operations in Russia since its invasion of Ukraine. And the process of exiting the country is becoming more complex.

The Russian state this month took control of French yoghurt maker Danone’s Russian subsidiary along with beer company Carlsberg’s stake in a local brewer.

Moscow’s latest actions highlight the vulnerability of other consumer products companies that still have operations in Russia.

Reckitt said in April last year that it had begun a process aimed at transferring ownership of its Russian business, becoming the first major personal goods company to do so.

The maker of Strepsils throat lozenges and Dettol cleaning products said at that time that its decision may include a transfer to a third party or to its local employees.

The company, which reported earnings results on Wednesday, said “nothing has changed” in its plans to begin a process “aimed at” transferring ownership of its Russian business.

“We made a statement (on Russia) one year ago … Nothing has changed,” CEO Nicandro Durante said in response to a question from Reuters following the company’s second-quarter update.

“Things are getting more difficult with the restrictions on how we do that,” Durante said, adding that the company will keep to what “what we have promised one year ago.”

BAT, which also makes Dunhill cigarettes, said in March last year that it would exit Russia – a major market for the cigarette maker – and cut its fiscal 2022 guidance as a result.

Reuters later that month reported that the company was in advanced talks to transfer its Russian business to its distributor in the country, SNS Group of Companies.

“BAT is determined to transfer the business out of Russia and we are following international and local laws in order to be able to do that,” BAT’s CEO Tadeu Marroco told Reuters on Wednesday.

“It is a complex process, that you can acknowledge. And it is very difficult to make further comments.”

Dove soap maker Unilever said on Tuesday that it could abandon, sell or retain its operations in Russia but the “least bad” option is to “pursue our business but in a highly constrained manner”.

The company, which also makes Ben & Jerry’s ice cream, said it had not spoken with Russian authorities since the Danone and Carlsberg takeovers.

Danone said on Wednesday it will write down its Russia business in July and trigger a non-cash foreign exchange translation difference of about 500 million euros.

(Reporting by Richa Naidu; Editing by Jane Merriman)

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