The Zurich-based engineering and automation group was one of the first to stop business in Russia. 

“As a result of supply chain disruptions and other logistics, ABB has temporarily paused the intake of new orders and all operational activity affected by shipments in and out of Russia, Ukraine and Belarus.” As of Wednesday 2 March, the Zurich-based group announced via the platform Swiss info that it was pulling out of various markets, becoming one of the first industrial companies to officially act. It has two production sites in Russia, which generate approximately 1% to 2% of its revenue, as well as two branches in Ukraine, in Kiev and Lviv. 

The Geneva ophthalmic device expert continues its activities in Russia.

At the time this article was written, the Geneva-Texan ophthalmic giant Alcon has not officially released a statement on the consequences of the war on its business. The only known fact is that the company has a production site for cataract surgery lenses in Zelenograd, near Moscow, as well as a location in Ukraine. Like the rest of the pharmaceutical industry, Alcon is likely to maintain its activities in these countries, for ethical reasons. 

The global automotive market could fall into the red in 2022 due to repercussions from the war. 

In its annual report published on 2 March, Swiss equipment manufac-turer Autoneum said it was expecting the automotive market to grow 9% in 2022 compared with 2021 and that its revenue would increase as a result. The problem is that these pre-dictions were made in early February, before Russia invaded Ukraine. Do they still hold true? “Subcontractors in the automotive industry are 100% dependent on sales from manufacturers,” says Eleanor Taylor Jolidon, co-head of Swiss and global assets at Union Bancaire Privée (UBP). “The Ukraine crisis could affect sales, which were already low since the start of the year due to the parts shortage.”

For example, Autoneum is a supplier to Renault, which had to leave Russia in March. The French group has three assembly plants In Russia, in which 500,000 cars are produced each year. The Swiss specialist in acoustics and thermal management also has German customers such as Volkswagen and BMW, which have already had to shut down some of their production sites due to cable supply chain issues coming from Ukraine.  According to a note from the firm Standard & Poor’s (S&P) published on 22 March, global vehicle sales are expected to decrease by 2% in 2022, compared to an increase of  4% to 6% predicted before the war.

Furthermore, Autoneum has a  production site in Russia, in Ryazan, 200 km from Moscow, which could be affected by inter-national sanctions. “For the time being, the impact of the Ukraine crisis on our business cannot be estimated,” said Autoneum in its annual report.  

The Basel-based chemistry group faces increased energy prices. 

Clariant, one of the global leaders in chemical products and pigments for textiles, announced on 4 March that it was suspending all activities in Russia, effective immediately. That includes a sales office and a laboratory in Moscow, which generate nearly 2% of the group’s revenue. Clariant also has a catalyst production site in the Ukrainian region of Louhansk, where war is raging, with 146 employees. In addition to its business that is directly affected by the war, the Swiss 
company also faces increased energy prices. The chemical indus-try uses a lot of energy, because it uses oil and gas both as an energy source and as a raw material. As early as December 2021, Clariant had to raise prices by 25% to 35% in EMEA (Europe, Middle East and Africa), in order to incorporate the rising cost of raw materials, energy and transport. 

The elastomer components specialist has halted production at its Ukrainian factory. 

Known for the production of Nespresso capsules, the Uri-based group Dätwyler produces elastomer components for the automotive, food and health industries, such as waterproof systems for pre-filled syringes or closures for vials of medicine. The company has a factory in Malyn, in north-western Ukraine, which produces parts for Dätwyler’s industrial clients. The site, which has approximately 100 employees, has been closed since 24 February. It generates nearly 1% of Dätwyler’s revenue. 

The war in Ukraine has repercussions for the entire agricultural world, with a spike in the price of cereals and fertilisers.

When the annual results were presented in early March, the manage-ment of the agricultural machine manufacturer Bucher Industries wanted to be reassuring, indicating that the conflict in Ukraine is not a direct threat to the financial health of the company. Last year, Bucher generated 70 million Swiss francs in sales in Russia and Ukraine, with a total revenue of 3.2 billion Swiss francs. The company has a production and assembly site in Russia that employs 140 people and a distribution centre in Ukraine with approximately 30 employees.

Nevertheless, while it is not directly affected by the conflict, the Zurich-based company could be subject to the long-term effects of the crisis. The agricultural industry as a whole faces soaring energy and fertilizer prices. “In 2021, Russia was the primary exporter of nitrogen fertilizers and the second-largest supplier of potassium and phosphorus fertilizers,” says the United Nations Food and Agriculture Organization (FAO). With their margins destroyed by price hikes, farmers could delay purchasing farm equipment, which could affect Bucher’s business. 

The compressor specialist benefits from the increased use of liquefied gas in Europe. 

On 14 March, Burckhardt Compression announced that, with immediate effect, it would stop sales in Russia, which generate between 2% and 2.5% of its revenue. However, “the change means opportu-nity for us,” said the CEO of Burckhardt Compression, Marcel Pawlicek, in an interview with Finanz und Wirtschaft. Indeed, since Europe decided to reduce its dependence on Russian natural gas, it has turned to American liquefied natural gas (LNG). And that is where Burckhardt Compression comes in: the company’s piston compressors are used to first liquefy the gas, and then to return it to a gaseous state. After doubling deliveries in recent months, the United States has promised to supply an additional 15 billion cubic meters of LNG to Europe in 2022, which would increase demand for Burckhardt’s piston compressors. Furthermore, the Swiss group also benefits from the rise in green hydrogen, since hydrogen production also requires the use of compressors.    

The global leader in bathroom installations and systems has halted production at its Ukraine factory. 

In a short four-line press release, the plumbing and bathroom accessories specialist Geberit announced on 25 March that it has suspended its activities in Russia, without mention-ing the reasons behind its decision. The company has 70 employees in the country, who will continue to be paid. The group also has a ceramics factory in Ukraine in Slavuta, approximately 300 km to the west of Kiev, with 550 employees. Due to the conflict, production has been stopped since late February. Geberit also employs approximately 40 people in its representative office in Kiev. In total, the company generated around 2% of its sales in Ukraine and Russia in 2021. 

The commodity trading and mining giant is benefiting from soaring prices for raw materials.

Since 24 February, the day that Russia invaded Ukraine, Glencore’s share price has increased by nearly 20%. The world’s largest trading group operates cobalt, nickel and aluminium mines – metals whose price has soared since the start of the war (see infographic on p. 54). This boosts Glencore’s profits, especially given that the Zug-based giant does not have any mines in Russia or Ukraine that could be threatened by the conflict. “Glencore has no operation-al footprint in Russia and our sales exposure is not significant,” said the group in a press release on 1 March.

But there are still a few grey areas: the Swiss company still trades a large amount of aluminium produced by the company Rusal, and it also trades other raw materials from Russia, particularly petrol. Glencore also holds a 10.55% stake in aluminium producer En+ and a 0.57% stake in petrol giant Rosneft – two Russian companies that are affected by international sanctions. “We’re re-examining all our business in Russia, including our holdings in En+ and Rosneft,” said the group. On 28 February, those holdings were worth $645 million for En+ and $183 million for Rosneft. These will now be difficult to sell: since 3 March, trading in the two companies has been suspended on the London Stock Exchange. 

The global leader in cement production must deal with rising energy costs. 

At the end of March, the world's number one cement company finally announced that it was "starting the process of withdrawing from the Russian market", where it operates three cement factories, as well as three quarries, and has more than 1,000 employees. A change of course for the Zug-based giant which gave assurances a few weeks earlier that it wanted to maintain its activities in the largest country in the world where the company has invested more than a billion francs over the past 10 years. While Holcim’s direct exposure to Russia and Ukraine is only 1% of sales, the company does face rising energy and raw materials costs, since producing cement uses a lot of energy. Even as early as 2021, construction materials manufacturers experienced energy inflation between 24% and 35% according to data from Morningstar. Thus far, Holcim has been able to maintain its profit margin, thanks to the implementation of higher prices. In fact, thanks to the construction boom, global demand remains high, allowing cement producers to pass on 100% of inflation costs in their prices. In the long run, the winners will be companies that develop new green cement that uses less energy, such as the concrete EvopactZero, launched by Holcim in 2020 and Futurcem, developed by Italian company Cementir. 

This automotive industry giant benefits indirectly from the closure of Ukrainian factories. 

Last year, €760 million-worth of electric cables destined for the European aeronautics and automotive market were produced in Ukraine, according to the European Association of Automotive Suppliers (CLEPA). This type of part is essential to the industry. For example, a saloon such as the Porsche Panamera contains several kilometres of cable bundles. The problem is that the war has shut down many Ukrainian factories, which were Europe’s main source for cables.

This situation is indirectly profitable for the Lucerne-based company Komax, a global leader in machines that set, cut and test electric cables (the wire processing market). Indeed, cable manufacturers that are primarily based in Ukraine need to quickly find new machines in order to increase production at other sites. A few days before the start of the war, Irish group Aptiv moved its cable production to Poland, Romania and Serbia. “The present situation in Ukraine is resulting in high demand among customers for replacement machines,” confirmed Komax in a press release published on 15 March, saying for that reason, “a quantitative forecast can currently not be made for the 2022 financial year.”

The logistics giant has stopped all goods shipments to and from Russia. 

Empty Russian ports, some ships blocked in the Black Sea, no-fly zones over Russia, soaring fuel prices... There are so many repercussions of the war that are disrupting global goods transport. Active in the logistics sector for air, mari-time, rail and road transport, Swiss giant Kühne+Nagel is very cautious regarding its 2022 outlook after a record year in 2021. “Up until now, the outlooks were favourable,” said Detlef Trefzger, CEO of Kühne+Nagel, during a presentation of the compa-ny’s annual results on 2 March. “But Russia’s acts of war have highlighted the unpredictable nature of geopolitics, and it is too soon to analyse the subsequent effects on economic development.”

Like Danish group Maersk, the global leader in maritime freight, Kühne+Nagel announced it was suspending all operations in Ukraine, as well as transport to and from Russia, except for pharmaceutical, medical and humanitarian products. Kühne+Nagel did not provide exact numbers, but for its French competitor CMA CGM, for example, business in Russia, Ukraine and Belarus accounts for approximately 600,000 20 ft containers per year, or 2% of  its annual revenue.

And the consequences extend far beyond country borders. “The closure of airspace above Russia and Ukraine and the ban on Russian planes over North American and European airspace have led to capacity restrictions and longer delivery delays. Some long-haul flights, particularly in the Eurasian hemisphere, now take three hours longer than usual,” said Kühne+Nagel. The company also had to close reservations for rail transport (Eurasia Express) to and from Europe, as these trains pass through the Russian Federation.

As for maritime transport, the war in Ukraine could create workforce shortages, said the International Chamber of Shipping (ICS) on 11 March. The ICS represents 80% of the global shipping fleet. Indeed, 14.5% of merchant seamen, or 1.89 million people worldwide, are Ukrainian or Russian. Some of these professionals are stuck in their respective countries and can no longer work. This slows the global economy, as 90% of goods are transported by sea. For the time being, however, the crisis has not yet resulted in higher shipping prices. According to the Freightos Baltic index, the average price to transport a 20 ft container on the main maritime routes is now $9,300. That’s six times higher than in 2020, but the same price as in January 2022.  

The Bern-based solar expert is expected to profit from high demand for renewable energies. 

Since the start of the crisis, energy prices have exceeded expectations. The price of a barrel of oil has now settled in for the long term above the symbolic threshold of $100 (with peaks close to $140) and gas has reached exorbitant prices on the market. “The war in Ukraine has highlighted Europe’s significant dependence on Russian oil and gas,” says Hubert Lemoine, director of investments at Schelcher Prince Gestion. “Eurozone countries import 40% of their gas from Russia – a figure that has crept up to nearly 60% for Germany.”

Since the start of the conflict, Europe has tried to rid itself of this cumber-some dependence, and part of the solution will come from renewable energies. Investors made the right choice. “Renewable energies experts were the first to benefit from the cri-sis,” says Lemoine. The share price of Chinese group JinkoSolar, the world’s largest solar panel manufacturer, went from $40 on 23 February – one day before the invasion – to $50 on 28 February, a 25% increase in only five days. Over those same five days, Danish specialist in offshore wind turbines Orsted saw its share price increase 30%.

Even Swiss solar module company Meyer Burger, which had questionable financial results, saw a considerable jump. Its share price soared 25% between 23 and 28 February, even though the Bern-based group, which is restructuring, is still in the red. Last year, the company’s revenue was down 50%, while net losses increased from 64.5 million Swiss francs in 2020 to 100.5 million Swiss francs. But Meyer Burger may be able to get back in the black: “With the Ukrainian crisis, the solar industry is considered a strategic necessity to significantly reduce dependence on fossil fuels. The sector benefits from growing support from the European Union and the United States (...),” wrote the company in its annual report. “As a result, Meyer Burger benefits from a strong tailwind.”

Under pressure from social media, the food giant had to reduce its range of products sold in Russia. 

Like other food giants, including Danone and Burger King, the Vevey-based multinational was first reluctant to react to the invasion of Ukraine, only pulling its adverts and investments in Russia, as well as stopping exports of certain products, such as Nespresso capsules. These actions were not enough for  Volodymyr Zelensky, who had an irate reaction: “Good food. Good life. This is the slogan of Nestlé. Your company that refuses to leave Russia,” said the Ukrainian president on 20 March, in a video addressing Swiss citizens. “Business works in Russia even though our children are dying and our cities are being destroyed.” On social media, the hashtag #boycottnestle spread quickly thanks to hijacked market-ing images, such as the brand logo stained with blood or replaced by the Z symbol used by Russian troops participating in the invasion. 

To calm the chaos, Nestlé broke its silence via a press release published on 23 March, clarifying its position. “As the war rages in Ukraine, our activities in Russia will focus on providing essential food, such as infant food and medical/hospital nutrition – not on making a profit,” said the multinational. “This approach is in line with our purpose and values. It upholds the principle of ensuring the basic right to food.” Nestlé stated that it has stopped sales of other iconic brands, such as KitKat and Nesquik, in Russia.

In total, the Swiss multinational employs more than 7,000 employees in Russia and has six facto-ries there, including one located in Perm (which mainly produces KitKats), another in Samara (processing cocoa beans), and another in Timashevsk (Nescafé). Last year, Nestlé generated 1.7 billion Swiss francs in sales in Russia, or less than 2% of its revenue, which is 87.1 billion Swiss francs. The group also has three locations in Ukraine specialising in producing prepared food, confectionery and drinks, with 5,800 employees.

The drug giant has stopped its investments in Russia, but continues to supply medicine there in order to treat patients. 

“Novartis condemns the war in Ukraine. This unprovoked act of violence harms innocent people.” The Basel-based pharma giant took a clear stance against Russia in a press release on 4 March. While Novartis continues to send medicine to Russia, it has suspended all investments and promotional and advertising activity, as well as the launch of new clinical trials. The company has a production site in Saint Petersburg, which has nearly 2,000 employees.

Furthermore, Novartis has approximately 500 employees in Ukraine. For ethical reasons – patients need their medicine wherever they live in the world – Western sanctions do not cover the pharmaceutical industry, which makes up 52% of Swiss exports to Russia. Like Novartis, global pharma leaders such as Roche and Sanofi continue to ship their products  NOVN to Moscow. 

The Thurgau-based manufacturer of railway rolling stock has begun to move some of its production from its factory in Belarus to Poland and Switzerland. 

On Tuesday 15 March, during the presentation of its annual results, train manufacturer Stadler Rail had a raft of good news for investors: a full order book (17.9 billion Swiss francs, up 11% over one year), excellent revenue (3.6 billion Swiss francs, up 18%) and solid profits (224 million Swiss francs, up 6.2%). But these attractive results were oversha dowed by current events and particularly  by Stadler Rail’s criticised presence  in Belarus – a country allied with Moscow and subject to international sanctions.

The Thurgau-based group has a factory in Fanipol, about 30 km from the capital, Minsk, which has more than 1,000 employees. Opened about a decade ago in a climate of “political rapprochement”, according to the company, the site manufactures trains and trams primarily for former-USSR countries. Fanipol contributes nearly 10% of the group’s total production capacity. Despite international pressure, “Stadler will not abandon  its employees and will maintain its factory,” wrote the company in its annual report.

Nevertheless, the current situation  is forcing the group to adapt, particularly because international sanctions prohibit Stadler from sending electronic components to its factory. The manufacturer came up with a social plan for its Belarus location, and part of production is currently being relocated to its Siedlce factory in Poland and also to Switzerland.

Will this result in delays? “Less than 2% of Stadler Rail orders, which are worth 17.9 billion Swiss francs, are manufactured locally, and this could be reduced even further to ensure that production is not delayed due to relocation,” reassured the company in its annual report.

The company, which has no transactions from Russia or Ukraine in the books, could still be impacted by rising raw materials prices and inflation, both associated with the war. In conclusion, “the financial impact cannot yet be completely evaluated and depends largely on how the situation evolves,” said the group in its annual report. 

The luxury industry had to distance itself from Russia, a market that represents 1% to 2% of its revenue for this industry. 

The Biel/Bienne-based watchmak-er, which owns 17 brands including Breguet and Blancpain, halted all its exports to Russia. While the group – which is discreet by nature – did not publish any figures regarding the impact of this decision on its revenue, UBS Bank estimates that Swatch generates 2%-3% of its sales in Russia. Swatch is not alone: since the start of the war, most luxury brands have left the country of tsars, including Geneva-based group Richemont and French brands LVMH, Kering and Hermès. While Russia could appear to be a country partial to luxury, in reality it is only a small part of the industry’s revenue: barely 1%-2% according to experts. Russia is far behind China, the primary driver of this industry.  

While the insurer does not have much exposure to the Russian market, it could be subject to indirect effects from the war. 

The story could be funny, if it was not associated with the deadly conflict in Ukraine. On Sunday 27 March, Zurich Insurance announced it would temporarily pull its logo off social media – a white Z on a blue back-ground – so as to not be suspected of supporting Moscow. The letter Z, plastered on Russian military vehicles used in the conflict, has become a symbol of support for the Russian Federation army.

Beyond this anecdote, the Swiss insurer does not seem very exposed to the Russian market. In 2014, the company sold part of its business focused on private clients in Russia to OLMA Group, and pulled out of the Nord Stream 2 pipeline project in 2021. The insurer, which maintains corporate clients in Russia, confirms that it is acting “quickly to ensure that it is in total compliance with the current sanctions, regardless of the operational complications and financial implications.” While Zurich Insurance did not disclose exact figures, French insurer Axa and Swiss group SwissLife have said that their exposure to Russian markets is mini-mal, only €200 million and 60 million Swiss francs, respectively. Nevertheless, most insurers could suffer indirect consequences as a result of the conflict, particularly due to their corporate clients in the aviation and marine industries, which were both impacted by international sanctions. For example, Lloyd’s of London, of which only 1% of revenue comes directly from Ukraine and Russia, estimates that the war will have “major” consequences on the insurance industry and it is “difficult to evaluate the total financial impact at this early stage.”