After a month of wait and see, Smurfit Kappa Group joined the procession of major multinationals heading for the exit doors in Russia. The packaging company says it will wind down its European operation "in an orderly manner", while it also committed to paying its 800 staff at its four facilities in Russia until it leaves.
The company did not give a timeline for its exit. Given the chilly attitude of the Russian regime towards foreign investors that abandon the country now, Smurfit Kappa may find it hard to ever go back.
Russia was a good market for Smurfit Kappa until President Vladimir Putin ordered his troops into Ukraine last month. Just a year ago, the company gleefully announced that it had experienced 80 per cent growth in Russia in sales of packaging to retailers for online commerce. Russia was repeatedly highlighted as a growth opportunity for the company in recent years.
‘Unjustified attack’
But after four weeks of near-silence over its operation, and as it became clear that the crisis in western relations with Russia would be prolonged, the company has now taken the wise, if belated, decision to leave. Smurfit Kappa tried on Friday to play down the significance of its Russian unit, saying it generates less than “1 per cent of forecasted sales”. That could still be €100 million, which is hardly chump change.
Pointedly, it directly criticised “the totally unjustified attack on Ukraine and its people”.
The only other Irish industrials company left in Russia is the Cavan insulation giant Kingspan, which continues to say that it is "a complex situation". Kingspan, which owns two factories in Russia, says it is "determined to reach the right decision in the near future". The company, which has major operations in the US from where sanctions against Russia are being pushed hardest, should read the room.
