Nestlé disclosed a SFr1.6bn ($1.95bn) charge to its balance sheet after the Kremlin seized its Russian operations in September. A presidential decree placed the business under temporary external administration, prompting Nestlé to stop consolidation of the unit from end of September. The Swiss food giant remains the legal owner but lost operational control.
This resulted in removal of SFr1.6bn net assets and a SFr1.4bn non-cash charge for accumulated currency translation adjustments. The deconsolidation would adversely affect net debt by about SFr900mn by end of 2026, though the company says impact on underlying results is limited. Russia accounted for approximately 2% of annual sales and 3-4% of operating profit and free cash flow, roughly SFr1.7bn yearly.
The move follows a September decree by President Vladimir Putin transferring control to LEV Management, a Moscow-based company. The decree also targeted French retailer Auchan and other western firms. A Kremlin spokesperson linked seizures to countries considered "unfriendly." Nestlé, operating in Russia since the 1990s, was among western groups that continued post-2022 invasion.
Previously, Danone and Carlsberg had operations placed under administration before steep discount sales. Nestlé reported stronger than expected third-quarter sales, with organic revenues up 4% to SFr22.8bn, ahead of 3.4% expectations, driven by pet food and snacks. Vontobel analyst Jean-Philippe Bertschy called the deconsolidation "welcome clarity" and the overall recovery "gaining credibility.".
Source: Financial Times Companies · Summarized by HeadlinesBriefing