International companies have lost nearly $60 billion due to exiting or reducing their business in Russia, The Wall Street Journal reported on Friday.
Nearly 1,000 Western companies pledged to shut down or scale back operations in Russia after President Vladimir Putin’s unprovoked invasion of Ukraine, Yale researchers have found.
These companies have lost more than $59 billion, the WSJ reported on Friday.
The WSJ added that more financial hardship was expected as sanctions hit the Russian economy and sales and shutdowns continue, according to a review of public statements and headline filings.
Companies are reassessing the declared value of their Russian operations, the WSJ reported. Companies subject to US and international reporting standards are required to take impairment charges (write-offs) when the value of an asset declines.
“This series of impairments is not the end,” Carla Nunes, managing director of risk advisory firm Kroll LLC, told the WSJ. “As the crisis continues, we may see more financial fallout, including the indirect impact of the conflict.”
Businesses affected by Russia’s attack on Ukraine cover a variety of sectors, including banking, retail, catering and shipping.
Last month, the Securities and Exchange Commission told companies they must clearly disclose Russia-related losses and should not adjust revenue to add back estimated revenue that had been lost.
An accounting specialist told the WSJ that companies may delay announcing a writedown until they have a good understanding of the size of the loss.
“You don’t want to release a number until you’re sure it’s not likely to change,” Jack Ciesielski, owner of investment research firm RG Associates Inc., told the WSJ.
Some companies write off frozen assets in Russia. Irish aircraft leasing company AerCap Holdings NV took a $2.7 billion accounting charge last month, which included writing off the value of more than 100 planes remaining in the country.
McDonald’s announced last month that it was selling its restaurants in Russia to one of its local licensees, Alexander Govor. The company’s former restaurants will reopen on Sunday under a new brand and new ownership.
Last week, Microsoft Corp. said it was significantly reducing its activities in Russia, joining a series of companies that are reducing their exposure or withdrawing from the country after its invasion of Ukraine.
Oil giant Exxon was hit hard as it abandoned its Russian operations due to the war, logging $3.4 billion, the company said in late April.
Material from The Associated Press and Reuters was used in this report.
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