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War in Ukraine | Danone plans to cede control of most of its activities in Russia



(Paris) French agribusiness giant Danone, one of the few multinationals that remained in Russia more than seven months after the invasion of Ukraine, announced on Friday its intention to cede control of most of its activities in the country.

The group, which had initially assumed its presence in Russia with the aim of meeting “the essential food needs of civilian populations”, plans to withdraw from its “dairy and vegetable products” subsidiary, retaining only the smaller one. , infant nutrition.

He did not announce who might eventually take over that unit’s Russian factories and operations, or when exactly.

Danone markets milk and yoghurts in Russia under the Danone, Danissimo or Prostokvashino brands. In 2010, the group had bought 57.5% of the number two Russian dairy products, Unimilk (21% market share and 25 factories), with the ambition of strengthening its presence in this market.

Symbol of the end of the Cold War, the French group – which was then called BSN – was one of the first multinationals to settle in the country in August 1992, a few months after the collapse of the Soviet Union.

At the time, he inaugurated his first store of 200 m2 near Red Square, on Tverskaya Avenue, in Moscow, in order to “introduce the products and the brand to the nine million Moscow consumers”.

On the Paris Stock Exchange, Danone shares rose by +1.96% on Friday shortly before 11:30 a.m., reaching 48.62 euros in a market up 0.85%. It was the third largest increase in the CAC40 index.

The “dairy and vegetable products” branch (milk, yoghurts) constitutes the major part of Danone’s activity in Russia, where the group operates 13 factories. Since January 2022, this Russian division “has represented around 5% of the consolidated turnover” of the group.

“Ensuring continuity”

The announced sale will weigh heavily in Danone’s accounts: it could, in fact, “result in a depreciation of up to 1 billion euros”, underlines the group.

In March, after the Russian invasion of Ukraine, Danone announced that it would maintain its activities in Russia, where it employs 8,000 people, “in order to meet the essential food needs of civilian populations”, said its general secretary, Laurent Sacchi. . The agrifood giant had then also “taken the decision to suspend all investment projects in Russia”.

Danone will retain the activities of its “specialized nutrition” branch in Russia, which produces infant milk in particular (Blédina, Aptamil).

The “dairy and plant-based products” unit is Danone’s largest globally, with 7 billion euros in sales in the first half of 2022, up 10.2% compared to the same period of 2021 .

Since the invasion of Ukraine by Russia on February 24 and the first economic sanctions decided by the West, many multinationals have left Russia, others have suspended their activities there, in the sectors of oil, automobile or luxury.

Finally, others like Danone or Auchan, which have invested heavily in Russia, have been more hesitant.

“We have a responsibility to the people we feed, the farmers who supply us with milk and the tens of thousands of people who depend on us,” Danone boss Antoine de Saint-Affrique defended in March. an interview with the Financial Times.

As early as July, however, the French group spoke of “extremely tense operational conditions in Russia and Ukraine”.

He now believes that this disengagement is the “best option to ensure the continuity” of this activity with its employees, partners and consumers. The operation will be subject to the approval of the competent authorities.

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