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Business

Exclusive: U.S. regulators to vet Alibaba, other Chinese firms’ audits -sources

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  • Alibaba notified of U.S. audit inspection -sources
  • Vetting of U.S.-listed Chinese firms’ audits starts next month
  • Follows landmark U.S.-China audit deal
  • Alibaba shares fall nearly 3%

HONG KONG, Aug 31 (Reuters) – U.S. regulators have selected e-commerce giant Alibaba Group Holding Ltd (9988.HK) and other U.S.-listed Chinese companies for audit inspections starting next month, three sources familiar with the matter said.

The move follows Friday’s landmark audit deal between Beijing and Washington allowing U.S. regulators to vet accounting firms in mainland China and Hong Kong, potentially ending a long-running dispute that threatened to boot more than 200 Chinese companies from U.S. stock exchanges. read more

Alibaba has been notified that it is among the first batch of Chinese companies whose audits will be inspected by the U.S. audit watchdog – Public Company Accounting Oversight Board (PCAOB) – in Hong Kong, the sources told Reuters.

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PwC, the accounting firm of China’s biggest e-commerce company, has also been informed of the audit work inspection, said the sources, declining to be identified due to confidentiality constraints.

Alibaba did not respond to a request for comment while a PwC spokesperson said it was company policy not to comment on any client matters.

A PCAOB spokesperson said the board did not comment on inspections. The China Securities Regulatory Commission (CSRC) did not immediately respond to a request for comment.

Alibaba’s U.S.-listed shares closed down nearly 3% on Tuesday after the Reuters report, having been up about 1% in pre-market trade. Its Hong Kong shares slumped more than 3% in Wednesday morning trade while tech giants listed in the city (.HSTECH) dropped nearly 2%.

U.S. regulators have for more than a decade demanded access to audit papers of U.S.-listed Chinese companies, but Beijing has been reluctant to let U.S. regulators inspect its accounting firms, citing national security concerns.

Alibaba, which went public in New York in 2014 in what was at the time the largest listing in history, is the most valuable Chinese firm listed in the United States with a market value of $248 billion as of Tuesday.

NO SPECIAL TREATMENT

The PCAOB said on Friday that the watchdog had notified the selected companies, without naming them, and its officials are expected to land in Hong Kong, where the inspections will take place, by mid-September.

The regulator, which oversees audits of U.S.-listed companies, would select companies based on risk factors, such as size and sector, and that no companies could expect special treatment, according to the PCAOB. read more

Reuters could not immediately determine how many and which other Chinese companies were in the first batch of U.S. inspections.

Founded in 1999, Alibaba counts e-commerce as its key business and has expanded into fast-growing sectors such as cloud services and internet of things in recent years. It also owns AutoNavi Holdings Ltd, a large Chinese digital mapping and navigation firm.

In July, it was added to the U.S. Securities and Exchange Commission’s (SEC) list of Chinese companies that might be delisted for not complying with audit requirements. read more

The list now has more than 160 Chinese companies including fellow e-commerce group JD.com Inc (9618.HK) and electric vehicle maker Nio Inc .

Current U.S. rules stipulate that Chinese companies that are not in compliance with audit working papers requests will be suspended from trading in the United States in early 2024.

Days before being added to the SEC’s delisting watchlist, Alibaba said it planned to add a primary listing in Hong Kong to its New York presence, targeting investors in mainland China. read more

Already present on the Hong Kong bourse with a secondary listing since 2019, the tech behemoth said it expects the primary listing to be completed by the end of 2022.

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Reporting by Julie Zhu in Hong Kong; Additional reporting by Katanga Johnson in Washington; Editing by Sumeet Chatterjee and Christopher Cushing

Our Standards: The Thomson Reuters Trust Principles.

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Business

Indexes drop after Walmart profit warning; Nasdaq down 2%

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Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 21, 2022. REUTERS/Brendan McDermid

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  • Walmart cuts profit forecast; news hits retailers
  • McDonald’s up as sales, profit top estimates
  • Coca-Cola up on forecast raise
  • Indexes down: Dow 0.8%, S&P 500 1.3%, Nasdaq 2%

NEW YORK, July 26 (Reuters) – U.S. stocks were sharply lower on Tuesday afternoon, with Nasdaq down more than 2%, as a profit warning by Walmart dragged down retail shares and fueled fears about consumer spending.

Walmart (WMT.N) shares fell 8% after the retailer cut its full-year profit forecast late on Monday. Walmart blamed surging prices for food and fuel, and said it needed to cut prices to pare inventories. read more

Shares of Target Corp (TGT.N) declined 3.8% and Amazon.com Inc (AMZN.O) dropped 5.1%. read more

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Also, Amazon said it would raise fees for delivery and streaming service Prime in Europe by up to 43% a year. read more

Amazon was among the biggest drags on the Nasdaq and S&P 500, while consumer discretionary (.SPLRCD) fell more than 3% and led declines among S&P 500 sectors.

“The majority of companies that reported today beat earnings, and that’s been the case. But of course there have been some warnings, and that’s what the market is focusing on,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“Walmart basically pulled the plug, and most retailers are lower across the board.”

Meanwhile, Coca-Cola Co (KO.N) gained 1.9% after the company raised its full-year revenue forecast. McDonald’s Corp (MCD.N) rose 3% after beating quarterly expectations. read more

A busy week for earnings includes reports from Alphabet Inc (GOOGL.O) and Microsoft Corp (MSFT.O) after the bell. Microsoft was down 3.4% and Alphabet was down 2.9%.

The Dow Jones Industrial Average (.DJI) fell 239.66 points, or 0.75%, to 31,750.38, the S&P 500 (.SPX) lost 52.28 points, or 1.32%, to 3,914.56 and the Nasdaq Composite (.IXIC) dropped 239.38 points, or 2.03%, to 11,543.29.

The Federal Reserve started a two-day meeting and on Wednesday, it is expected to announce a 0.75 percentage point interest rate hike to fight inflation. read more Investors have worried that aggressive interest rate hikes by the Fed could tip the economy into recession.

Earnings from S&P 500 companies are expected to have risen 6.2% for the second quarter from the year-ago period, according to Refinitiv data.

Among the week’s heavy slate of economic news, data Tuesday showed U.S. consumer confidence dropped to nearly a 1-1/2-year low in July, pointing to slower economic growth at the start of the third quarter. read more

Advance second-quarter GDP data on Thursday is likely to be negative after the U.S. economy contracted in the first three months of the year.

Declining issues outnumbered advancing ones on the NYSE by a 1.82-to-1 ratio; on Nasdaq, a 1.51-to-1 ratio favored decliners.

The S&P 500 posted 1 new 52-week highs and 30 new lows; the Nasdaq Composite recorded 32 new highs and 123 new lows.

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Additional reporting by Shreyashi Sanyal and Aniruddha Ghosh in Bengaluru; Editing by Arun Koyyur, Anil D’Silva and David Gregorio

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Business

EXCLUSIVE Nike to make full exit from Russia

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PARIS/COPENHAGEN/LONDON, June 23 (Reuters) – Nike (NKE.N) is making a full exit from Russia three months after suspending its operations there, the U.S. sportswear maker told Reuters on Thursday, as the pace of Western companies leaving the country accelerates.

Nike said on March 3 it would temporarily suspend operations at all its Nike-owned and -operated stores in Russia in response to Moscow’s actions in Ukraine, adding that those still open were operated by independent partners.

On Thursday, it joined other major Western brands, like McDonald’s and Renault, in confirming it will leave the country completely.

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“Nike has made the decision to leave the Russian marketplace. Our priority is to ensure we are fully supporting our employees while we responsibly scale down our operations over the coming months,” Nike said in an emailed statement.

Foreign companies seeking to exit Russia over the war in Ukraine face the prospect of new laws being passed in the coming weeks allowing Moscow to seize assets and impose criminal penalties. That has encouraged some businesses to accelerate their departure.

“What was a trickle is becoming a torrent (of Western companies exiting Russia)”, said Paul Musgrave, a political science professor at the University of Massachusetts.

Other sportswear makers have also been pulling back.

People walk past a closed store of the sporting goods retailer Nike at a shopping mall in Saint Petersburg, Russia May 25, 2022. REUTERS/Anton Vaganov

Rival Adidas (ADSGn.DE) said in March it was shutting its Russian stores and pausing online sales. Puma (PUMG.DE) also suspended its operations in March. Reebok suspended sales in March and is in talks to sell more than 100 stores to Turkish shoe retailer FLO Magazacilik. read more

Adidas currently has no plans to resume business in Russia, the German sportswear company told Reuters on Thursday.

“The operation of Adidas’ stores and Adidas’ online retail in Russia continues to be suspended until further notice, this also applies to the delivery of goods to Russia,” it said in an emailed statement.

Musgrave said companies that leave Russia may struggle to return.

“This presents opportunities for domestic firms in some markets but even more for brands from China and elsewhere to make inroads,” he said.

For Nike, which gets less than 1% of its revenue from Ukraine and Russia combined, the move is largely symbolic rather than material to its results.

The company has a history of taking a stand on social and political issues. It supported American football quarterback Colin Kaepernick in his decision to kneel during the U.S. national anthem as a protest against racism and dropped Brazilian soccer star Neymar last year because he refused to cooperate in an investigation into sexual assault allegations.

Russian media reported in May that Nike had not renewed agreements with its largest franchisee in Russia, Inventive Retail Group (IRG), which operates 37 Nike-branded stores in Russia through its subsidiary Up And Run.

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Reporting by Mimosa Spencer, Jacob Gronholt-Pedersen and Richa Naidu. Additional reporting by Praveen Paramasivam; editing by Matt Scuffham, Jason Neely, Bernadette Baum and Jane Merriman

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Business

Tasty name but no Big Mac as rebranded McDonald’s restaurants open in Russia

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June 12 (Reuters) – It might look and smell like McDonald’s but now it’s Vkusno & tochka. The golden arches are gone, the filet-of-fish is simply a fish burger. The Big Mac has left Russia.

A new era for Russia’s fast-food and economic scene dawned on Sunday as McDonald’s (MCD.N) restaurants flung open their doors in Moscow under new Russian ownership and with the new name, which translates as “Tasty and that’s it”.

The rebranding of the outlets, three decades after the U.S. burger giant first opened in Moscow in a symbolic thaw between East and West, is once again a stark sign of a new world order.

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The fortunes of the revamped chain, which McDonald’s sold when it exited the country over the conflict in Ukraine, could provide a test of how successfully Russia’s economy can become more self-sufficient and withstand Western sanctions.

On Sunday, scores of people queued outside what was once McDonald’s flagship restaurant in central Moscow. The outlet sported a new logo – a stylised burger with two fries – plus a slogan reading: “The name changes, love stays”.

The queue was significantly smaller than the thousands of people who thronged to the original McDonald’s opening there in 1990 during the Soviet era.

Vkusno & tochka’s menu was smaller and did not offer the Big Mac and some other burgers. A double cheeseburger was going for 129 roubles ($2.31) compared with roughly 160 under McDonald’s and a fish burger for 169 roubles, compared with about 190 previously.

The composition of burgers has not changed and the equipment from McDonald’s has remained, said Alexander Merkulov, quality manager at the new company.

Sergei, a 15-year-old customer, saw little difference.

“The taste has stayed the same,” he said as tucked into a chicken burger and fries. “The cola is different, but there really is no change to the burger.”

Employees take part in preparations before the opening of a new restaurant, following McDonald’s Corp company’s decision to sell its restaurants in Russia to one of its local licensees that will rebrand them under a new name, in Moscow, Russia June 12, 2022. REUTERS/Evgenia Novozhenina

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MUCH DIFFERENCE?

The flagship Moscow restaurant is among 15 rebranded outlets that will initially open in and around the capital on Sunday. Oleg Paroev, chief executive of Vkusno & tochka, said the company was planning to reopen 200 restaurants in Russia by the end of June and all 850 by the end of the summer.

The chain will keep its old McDonald’s interior but will expunge any references to its former name, said Paroev, who was appointed Russia McDonald’s CEO weeks before Moscow sent tens of thousands of troops into Ukraine on Feb. 24.

“Our goal is that our guests do not notice a difference either in quality or ambience,” Paroev told a media conference in the restaurant. He said the chain would keep “affordable prices” but did not rule out slight rises in the near term.

McDonald’s closed its restaurants in Russia on March 14 and said in mid-May it decided to leave the market.

“For three months we did not work,” said Ruzanna, manager of a Moscow branch that will open in July. “Everyone is very pleased.”

Alexander Govor, the new owner of the chain, said up to 7 billion roubles ($125.56 million) would be invested this year in the business, which employs 51,000 people.

“The corporation asked me to, first of all, keep the headcount, to provide people with work. That’s what I’m going to do,” he added.

Govor said the company was looking for new suppliers of soft drinks as Coca Cola (KO.N), which has said it was suspending its business in Russia.

Moments after the press conference finished a man stood up in front of the cameras holding a sign that read “Bring back the Big Mac”. He was swiftly escorted out by restaurant staff.

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Reporting by Reuters; Editing by Pravin Char

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Business

Goodbye Golden Arches: rebranded McDonald’s to reopen in Russia

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  • McDonald’s has been hugely popular in Russia since early 1990s
  • It is among Western firms exiting Russia over Ukraine
  • Company had operated nearly 850 restaurants across Russia
  • McDonald’s restaurants to reopen on Sunday under new ownership

June 10 (Reuters) – Sunday marks a new dawn for Russia’s fast-food lovers as former McDonald’s Corp (MCD.N) restaurants reopen under new branding and ownership, more than three decades after the arrival of the hugely popular Western fast food chain.

The relaunch will begin on Russia Day, a patriotic holiday celebrating the country’s independence, at the same flagship location in Moscow’s Pushkin Square where McDonald’s first opened in Russia in January 1990.

In the early 1990s, as the Soviet Union crumbled, McDonald’s came to embody a thawing of Cold War tensions and was a vehicle for millions of Russians to sample American food and culture. The brand’s exit is now a powerful symbol of how Russia and the West are once again turning their backs on each other.

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McDonald’s last month said it was selling its restaurants in Russia to one of its local licensees, Alexander Govor. The deal marked one of the most high-profile business departures since Russia sent tens of thousands of troops into Ukraine on Feb. 24. read more

McDonald’s iconic ‘Golden Arches’ have been taken down at sites in Moscow and St Petersburg, where they will make way for a new logo comprising two fries and a hamburger patty against a green background. The reopening will initially cover 15 locations in Moscow and the surrounding region.

The new chain’s name remains a closely guarded secret. A change in the name of the McDonald’s app on Friday to ‘My Burger’ generated some online excitement, but the chain’s press team said this was only temporary, the RBC daily reported.

A motto on the app’s home page read: “Some things are changing, but stable work is here to stay.”

Russian media, citing leaked images of the new menu, have reported the renaming of dishes such as the Filet-O-Fish to ‘Fish Burger’ and Chicken McNuggets to simply ‘Nuggets’. Reuters could not verify the changes.

HEADWINDS

Govor has said he plans to expand the new brand to 1,000 locations across the country and reopen all the chain’s restaurants within two months. But there may be some headwinds.

It takes decades to build a brand, said Peter Gabrielsson, Professor of International Marketing at Finland’s University of Vaasa, and the new launch is crucial for the brand’s future success.

“Opening day is important because it is the first time consumers can really feel and touch and see the brand and what it stands for,” he said. “It’s important what the reaction will be and obviously people will be comparing it to McDonald’s.”

McDonald’s, the world’s largest burger chain, had owned 84% of its nearly 850 restaurants across Russia and it took a charge of up to $1.4 billion following the sale to Govor, whose GiD LLC had previously run 25 restaurants.

Oleg Paroev of McDonald’s Russia has said other franchisees would have the option of working under the new brand, but the traditional McDonald’s brand will leave the country. McDonald’s has said it will retain its trademarks.

McDonald’s last year generated about 9%, or $2 billion, of its revenue from Russia and Ukraine. McDonald’s has the right to buy its Russia restaurants back within 15 years, but many terms of the sale to Govor remain unclear.

The TASS news agency said on Wednesday McDonald’s would stay open as usual at airports and train stations in Moscow and St Petersburg until 2023, quoting a source close to Rosinter Restaurants (ROST.MM), another franchisee.

“Rosinter has a unique agreement under which the American corporation cannot take the franchise away. They can operate in peace,” TASS quoted the source as saying.

Rosinter declined to comment. McDonald’s did not immediately respond.

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Reporting by Reuters
Editing by Matt Scuffham and Gareth Jones

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Business

Golden arches to go dark in Russia as McDonald’s exits after 30 years

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May 16 (Reuters) – McDonald’s Corp (MCD.N) on Monday became one of the biggest global names to exit Russia, laying out plans to sell all its restaurants after operating for more than 30 years in the country following its invasion of Ukraine.

The world’s largest burger chain, which owns about 84% of its nearly 850 restaurants in Russia, will take a related non-cash charge of up to $1.4 billion.

McDonald’s had in March decided to close its restaurants in the country, including the iconic Pushkin Square location in central Moscow – a symbol of flourishing American capitalism in the dying embers of the Soviet Union.

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In the Russia of the early nineties, the burger chain became a way to sample Western food and spirit for millions of people, even though the cost of one burger was several times bigger than many city dwellers’ daily budgets.

“Some might argue that providing access to food and continuing to employ tens of thousands of ordinary citizens is surely the right thing to do,” Chief Executive Chris Kempczinski said in a letter to employees. “But it is impossible to ignore the humanitarian crisis caused by the war in Ukraine.”

Though a vast majority of the stores in Russia are closed, a few franchised stores have stayed open, cashing in on its skyrocketing popularity. It generated about 9%, or $2 billion, of its revenue from Russia and Ukraine last year.

A logo of the McDonald’s restaurant is seen in the window with a reflection of Kremlin’s tower in central Moscow, Russia March 9, 2022. REUTERS/Maxim Shemetov

Over the weekend, long, snaking queues were seen at the restaurant in Moscow’s Leningradsky Station, one of the capital’s only branches that has remained open, social media footage showed.

McDonald’s said it was looking to sell its restaurants in Russia to a local buyer, but will retain its trademarks.

“Given the circumstances of the sale, the financial challenges faced by potential Russian buyers, and the fact that McDonald’s will not license its brand name or identity, it is unlikely the sale price will be anywhere near the pre-invasion book value of the business,” Neil Saunders, managing director of GlobalData, said.

McDonald’s said it would ensure its 62,000 employees in Russia continue to be paid until the close of any transaction and that they have future jobs with any potential buyer.

After McDonald’s decision to close stores in March, several American brands including Starbucks Corp (SBUX.O), PepsiCo Inc (PEP.O) and Coca-Cola Co (KO.N) followed suit, scrambling to comply with sanctions and deal with threats from the Kremlin that foreign-owned assets may be seized. read more

“I would not be surprised to see other companies follow McDonald’s lead of exiting the market,” Edward Jones analyst Brian Yarbrough said.

Earlier in the day, French carmaker Renault (RENA.PA) said it would sell its majority stake in Avtovaz (AVAZI_p.MM) to a Russian science institute. read more

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Reporting by Uday Sampath and Deborah Sophia in Bengaluru; Editing by Sriraj Kalluvila and Arun Koyyur

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Business

Tesla adds to wave of megacap stock splits

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A driver recharges the battery of his Tesla car at a Tesla Super Charging station in a petrol station on the highway in Sailly-Flibeaucourt, France, January 12, 2019. REUTERS/Pascal Rossignol/File Photo/File Photo

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March 28 (Reuters) – Tesla’s (TSLA.O) announcement on Monday that it will seek shareholder approval to increase its share count in order to enable a stock split adds to a recent wave of megacap companies splitting their shares in a bid to attract more investors.

Tesla said in a filing it would hold a vote at its upcoming annual shareholder meeting to increase the number of authorized shares in order to enable a stock split. read more

A stock split by Tesla, which would have be approved by its board of directors, would be the electric car maker’s second since 2020, and it would follow stock split announcements by other major U.S. companies in recent years.

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In the past two years, Apple (AAPL.O), Nvidia (NVDA.O) and Tesla (TSLA.O) have split their shares, while Amazon (AMZN.O) and Google-parent Alphabet (GOOGL.O) have recently announced upcoming share splits.

Megacap stock splits

Companies split their shares to make their stock prices appear less expensive and appeal to more investors. However, splitting a stock does not affect its underlying fundamentals.

Still, BofA Global Research said in recent research note that stock splits “historically are bullish” for companies that enact them, with their shares marking an average returns of 25% one year later versus 9% for the market overall.

Tesla’s stock surged 8% on Monday, adding over $100 billion to its stock market value.

Reuters Graphics

Amazon has gained about 20% since March 9, when the ecommerce heavyweight announced a stock split that will take effect on June 6. That compares to a 7% gain in the Nasdaq (.IXIC) during the same period. During that time, Wall Street has also seen a broad rebound in megacap growth stocks following losses earlier this year, as well as volatility related to rising interest rates and Russia’s invasion of Ukraine.

Tesla was the most traded stock among Fidelity’s online brokerage customers on Monday, with buy and sell orders almost evenly split, suggesting retail investors are cautious about the company.

Reuters Graphics

Since joining the S&P 500 in December 2020, Tesla has been one of its most heavily weighted stocks, currently accounting for over 2% of the index. It has gained about 300% since announcing its first stock split in August 2020.

Other S&P 500 companies with nominally high share prices, which analysts say could hint at a future stock split announcement, include Chipotle Mexican Grill (CMG.N), up 0.1% on Monday at $1,558, as well as Booking Holdings (BKNG.O), trading near flat at about $2,247.

Reuters Graphics
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Reporting by Noel Randewich; Editing by Cynthia Osterman

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World

China’s soaring COVID case load raises concerns about costs of containment

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BEIJING, March 15 (Reuters) – China posted a steep jump in daily COVID-19 infections on Tuesday, with new cases more than doubling from a day earlier to hit a two-year high, raising concerns about the rising economic costs of the country’s tough containment measures.

A total of 3,507 domestically transmitted cases with confirmed symptoms were reported on Monday across more than a dozen provinces and municipalities, up from 1,337 a day earlier, the National Health Commission said. Most of the new cases were in the northeastern province of Jilin.

Though China’s case load is still tiny by global standards, health experts said the rate of increase in daily infections over the next few weeks will be a crucial factor in determining whether its tough “dynamic clearance” approach – aiming to contain each outbreak as soon as it arises – is still effective against the rapidly spreading Omicron variant.

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A COVID-19 forecasting system run by Lanzhou University in China’s northwest predicted that the current round of infections would eventually be brought under control in early April after an accumulated total of around 35,000 cases.

The university said in its latest assessment published on Monday that while the latest outbreak was the most serious on the mainland since Wuhan in 2020, China could bring it under control as long as stringent curbs remained in place.

Chinese businesses from automaker BYD (002594.SZ) to KFC operator Yum China (9987.HK) say their operations have already been hit by the country’s latest COVID-19 curbs, with more disruptions expected as case numbers rise. read more

China’s zero tolerance approach is not only becoming more costly, but also suffering diminishing returns against the highly infectious Omicron, said Yanzhong Huang, senior health policy analyst at Council on Foreign Relations (CFR), a U.S. think tank.

“Now we have two of the wealthiest Chinese cities, Shanghai and Shenzhen, both under lockdown: how is that going to affect the Chinese economy?” he said.

TRAVEL BANS

Though confirmed symptomatic infections in Shanghai stood at 21 on Monday, with an additional 130 asymptomatic cases, authorities were taking no chances, cordoning off individual apartment buildings and testing residents.

China’s aviation regulator said that 106 international flights scheduled to arrive in Shanghai will be diverted to other domestic cities from March 21 to May 1 due to COVID.

In Shenzhen, there were 39 confirmed infections with 21 asymptomatic cases. The government is describing the week of controls aimed at containing the outbreak as a period of “slow living”, with public transport, marriage and funeral services all suspended, and some residents forced to undergo daily tests.

Nearly 90% of the mainland’s confirmed new symptomatic cases on Monday were found in the northeastern province of Jilin, which has banned its 24.1 million population from traveling in and out of the province and across different areas within the province without notifying local police. read more

Jilin officials should step up the preparation of temporary hospitals and designated hospitals and make use of idle venues to ensure all infections and their close contacts are isolated, a local Communist Party authority-backed paper said, citing the provincial head of the Party.

The number of new asymptomatic cases, which China does not classify as confirmed cases, stood at 1,768 compared with 906 a day earlier.

There were no new deaths, leaving the death toll unchanged at 4,636.

As of March 14, mainland China had reported 120,504 cases with confirmed symptoms, including both local ones and those arriving from outside the mainland.

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Reporting by Roxanne Liu, Albee Zhang, Ryan Woo and David Stanway; Editing by Richard Pullin and Stephen Coates

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Business

Nestle, tobacco groups latest companies to pull back from Russia

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March 9 (Reuters) – Nestle(NESN.S), Philip Morris (PM.N)and Imperial Brands (IMB.L)joined the list of multinationals stepping back from Russia on Wednesday as pressure mounts from consumers in the West to take a stand against the invasion of Ukraine.

The world’s biggest packaged food group fell into line with rivals Procter & Gamble (PG.N) and Unilever (ULVR.L) in halting investment in Russia, while cigarette maker Philip Morris said it would scale down manufacturing and Imperial went further and suspended it.

The moves came after Coca-Cola (KO.N) and McDonald’s (MCD.N) halted sales in Russia, where a senior member of the ruling party has warned that foreign firms which close down could see their operations nationalised. read more

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McDonald’s said the temporary closure of its 847 stores in the country would cost it $50 million a month. read more

Sportswear firm Adidas (ADSGn.DE)also quantified the cost of scaling back its operations, saying it would take a hit to sales of up to 250 million euros. read more

PepsiCo (PEP.O) and Starbucks (SBUX.O) have also joined the dozens of global companies closing stores, factories or exiting investments to comply with sanctions or due to supply disruptions. read more

Those supply hurdles include the world’s top three shipping giants suspending container routes.

Yum Brands Inc (YUM.N), parent of fried chicken giant KFC, said it was pausing investments in Russia, a market that helped it achieve record development last year. read more

‘LAWS OF WAR’

In response to the exodus, Andrei Turchak, secretary of the ruling United Russia party’s general council, warned that Moscow might nationalise idled foreign assets.

“United Russia proposes nationalising production plants of the companies that announce their exit and the closure of production in Russia during the special operation in Ukraine,” Turchak wrote in a statement published on the party’s website on Monday evening. read more

The statement named Finnish privately owned food companies Fazer, Valio and Paulig as the latest to announce closures.

“We will take tough retaliatory measures, acting in accordance with the laws of war,” Turchak said.

SANCTIONS

Moscow, which calls its invasion of Ukraine a “special military operation”, has been hit by sweeping Western sanctions that have choked trade, led to the collapse of the rouble and further isolated the country.

Banks and billionaires have also been targeted, with the European Commission preparing new sanctions targeting additional Russian oligarchs and politicians and three Belarusian banks, Reuters reported. read more

While the war in Ukraine and the sanctions have bolstered prices for commodities which Russia exports such as oil, natural gas and titanium, those sanctions have largely barred Moscow from taking advantage of the high prices.

On Tuesday the United States banned Russian oil imports. read more

U.S. oilfield services company Schlumberger (SLB.N), which derives about 5% of its revenue from Russia, said the ongoing conflict would likely hurt its results this quarter. read more

Global commodities trader Trafigura Group raised a $1.2 billion revolving credit facility from banks to help address soaring energy and commodity prices. read more

Norway’s Yara (YAR.OL), a top fertiliser maker, said on Wednesday it would curtail ammonia and urea output in Italy and France due to surging gas prices.

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Reporting by Reuters bureaux; writing by Sayantani Ghosh and Paul Sandle; editing by Jason Neely and Jane Merriman

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Business

Uniqlo owner stays put in Russia as Levi, AMEX and others sever ties

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  • Uniqlo’s Russian stores to stay open
  • Danone suspends investments in country
  • KPMG, PwC, EY, Deloitte all cut ties with local units
  • American Express calls Ukraine attack ‘unjustified’

March 7 (Reuters) – Uniqlo owner Fast Retailing (9983.T) will keep its stores in Russia open, joining a small group of international firms that are staying put even as dozens of big brands temporarily shutter operations or exit the country over its invasion of Ukraine.

Political pressure is building on companies to halt business in Russia, while operations have also been complicated by sweeping sanctions affecting everything from global payments systems to a range of high-tech products.

Large shippers have suspended container routes to and from Russia and many Western companies from Nike Inc and home furnishings giant Ikea to energy majors BP and Shell (SHEL.L) have closed shop or announced plans to exit the country.

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“Clothing is a necessity of life. The people of Russia have the same right to live as we do,” said Fast Retailing CEO Tadashi Yanai in remarks first reported by Nikkei, adding that every country should oppose war.

A spokesperson told Reuters the company had seen no noticeable impact on its supply chain or logistics in Russia, where Uniqlo has 49 stores.

In contrast, Levi Strauss & Co (LEVI.N) suspended its Russian operations, including any new investments.

The Big Four accounting firms KPMG, PwC, EY and Deloitte moved one by one to cut their ties with Russia, as did credit card company American Express (AXP.N).

Dairy cooperative Arla Foods, French yoghurt maker Danone (DANO.PA) and Belgian chemicals group Solvay (SOLB.BR) also suspended operations or investment in the country, while the RIA Novosti news agency cited carmaker Nissan as saying it would halt production at its factory in St Petersburg. read more

Nissan said last week it was suspending vehicle exports to Russia, joining peers like General Motors Co (GM.N) and Sweden’s Volvo Cars (VOLCARb.ST).

The sun sets behind the skyscrapers of the Moscow International Business Centre, also known as “Moskva-City”, in Moscow, Russia April 23, 2018. REUTERS/Anton Vaganov

Among companies continuing to operate in Russia were McDonald’s Corp (MCD.N) and PepsiCo Inc (PEP.O), prompting New York state’s pension fund – a shareholder in the pair – to urge them and others to consider pausing their operations there. read more

Russia announced new “humanitarian corridors” on Monday to transport Ukrainians trapped under its bombardment – to Russia itself and its ally Belarus, a move immediately denounced by Kyiv as an immoral stunt. read more

Russia calls the campaign it launched on Feb. 24 a “special military operation”. It denies attacking civilian areas and says it has no plans to occupy Ukraine.

After Russian President Vladimir Putin signed a new media law on Friday, Chinese-owned video app TikTok said it would suspend live-streaming and the uploading of videos to its platform in Russia. read more

“We have no choice but to suspend livestreaming and new content to our video service while we review the safety implications of this law,” it said in a series of Twitter posts on Sunday.

‘UNJUSTIFIED ATTACK’

Many companies have strongly condemned Russia’s actions as they suspended services in the country.

“In light of Russia’s ongoing, unjustified attack on the people of Ukraine, American Express is suspending all operations in Russia,” AMEX said on its website. read more

Netflix , which had already temporarily stopped future projects and acquisitions in Russia, suspended its service “given the situation on the ground”, a spokesperson said. read more

KPMG, PwC, EY and Deloitte all said they would sever links with their Russian operations, affecting thousands of staff. read more

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Reporting by Akriti Sharma in Bengaluru, Chris Gallagher in Washington, DC, Rocky Swift in Tokyo; Writing by Anna Driver and Sayantani Ghosh; editing by Diane Craft, Kirsten Donovan, Bernadette Baum and Susan Fenton

Our Standards: The Thomson Reuters Trust Principles.

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