Heineken plans to exit Russia in the first half of 2023, although it is having difficulties with the sale of its Russian assets.
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"In early March 2022, we announced that Heineken would stop new investments and exports to Russia, ended the production, sale and advertising of the Heineken brand, and announced that we will not accept any net financial benefits or profit (ring-fencing) from our business in Russia, the Dutch brewer said.
"At the end of March 2022, we made the decision to leave Russia. We were the first global brewer to do so. At the time, we were clear that the process of leaving would need to be handled very carefully with the ongoing safety and wellbeing of our employees at the front of our minds.
"We also faced – and continue to do so today – the very real risk that if we were to stop our operations or become insolvent, the Russian Government would take action against employees or decide to nationalise our business.
"Shortly after we announced our decision to remove the Heineken® brand from the market, local operations in Russia received official warnings from Russian prosecutors that if this decision led to the suspension or closure of our business, it would be deemed to be an 'intentional bankruptcy’, which continues to be a criminal offence in Russia to this day.
"At the same time, the Russian Government was drafting legislation that would make ‘intentional bankruptcy’ a trigger for nationalisation. While that legislation hasn’t yet been passed, the local laws still allow the government to appoint external management in the case of an ‘intentional bankruptcy.’
"Insolvency is also a form of bankruptcy and would likely lead to the same outcome. We continue to interpret this risk to our people and business as significant.
"Heineken will not receive any royalties in the future related to the Russia business. Regarding the anticipated negative financial impact related to the sale of the business, on 28th March 2022, Heineken expected an impairment and other non-cash exceptional charges of approximately EUR 0.4 billion in total.
"The final loss will be determined at the moment we transfer our business to a new owner. The amount will also partially depend on the Rouble vs. € exchange rate at the time of transfer.
"As stated in our 2022 Full Year Results press release, an impairment of €88 million was recorded for the period ended 31 December 2022. At the moment of disposal, the cumulative foreign exchange losses relating to Russia currently recorded in equity (€0.2 billion as per 31 December 2022) will be recognised in the income statement.
"The €88 million in addition to the €0.2 billion adds up to our current best estimate of circa €300 million of negative financial impact," the company said. ■