PARIS 

While a large number of multinational companies in various sectors have announced the suspension of their activities in Russia for putting pressure on its economy over its war on Ukraine, a large number of French companies are behaving timidly in stopping its operations.

Some 1,200 French companies are active in Russia, according to the Franco-Russian Chamber of Commerce and Industry, while French companies have 160,000 employees there.

Although they feel the impact of the war, launched on Feb. 24 through weakening ruble and higher interest rates, many French firms are still hesitant to jump out of the boat.

French companies that had suspended their operations in Russia following its war on Ukraine are not numerous.

Among them, there is a French shipowner CMA-CGM, which has decided to no longer serve Russian ports, but "for the sake of security" and not with the aim of exerting any pressure on Moscow.

Air France had also announced on Feb. 27 a temporary suspension of services and overflights of Russia by stating it will no longer operate its connections to Moscow and Saint Petersburg until further notice due to the situation in the region.

Pernod Ricard, the producer and seller of spirits, also announced this week that it had suspended its activities in Russia, a country that represents 2 to 3% of its overall activities.

"We have suspended our sales to our wholesalers in Russia", announced this week, the French company explaining that continuing the activity in the current context would constitute "nonsense".

In the luxury sector, LVMH, which is active in the Russian territory with 124 stores and 3,500 employees, the Hermès group with three stores and Chanel with 17 stores announced last Friday the closure of their stores temporarily.

For its part, the Michelin Guide, which announced the launch of its activities in Russia last October, decided this week to suspend its activities in the country: 69 restaurants recommended by the famous guide will no longer be able to benefit from this promotion.

Companies affected by sanctions

A number of companies active in Russia feel the impact of the economic sanctions imposed on the country.

These sanctions include bans on imports of goods and technologies from the EU in the defense, energy, aeronautics and financial sectors, as well as restrictions from the US in electronics and telecommunications.

Besides the EU and the US, several other countries also implement sanctions, including Japan, the UK and Swiss Confederation.

While the ruble has lost a third of its value, various sectors have been affected by the restrictions imposed on exports to Russia, in particular high technologies and semiconductors.

The reduction of Russia's access to capital markets also increases its borrowing and financing costs for the development of new projects.
The withdrawal from the Russian market of a large number of international companies also have impacts on the trade and supply.

AvtoVAZ, a subsidiary of the French manufacturer Renault producing Ladas, is the leading car manufacturer in Russia. The group announced this week the shutdown of its factories for four days "due to problems with the supply of semiconductors", a consequence of these sanctions.
AvtoVAZ announced a temporary shutdown of its factories in Russia on Saturday, March 5, as well as shutdowns from March 9 to 11. Russia accounts for 18% of Renault's global production with AvtoVAZ's Lada brand.

Many French companies continue their activities in Russia

However, a large number of French companies continue their activities in Russia, in particular the agro-food sector.

These French companies play a relatively important role in the food supply for Russian citizens.

These include Danone, for which Russia represents 5% of its global market, and Bonduelle, which has three production sites in Russia.

Meanwhile, Danone suspended its investments in Russia and closed one of its two factories, but it is continuing to manage resume operations.

The Auchan, Décathlon and Leroy Merlin stores of the Mulliez family are also continuing their activities in Russia.

Leroy Merlin is active in the country, with 36,000 employees operating in 107 hypermarkets in 62 cities, representing approximately one-fifth of the turnover of the parent company of the Leroy Merlin group, Adeo. It is its second market after France.

With 231 stores in Russia and a turnover of €3.2 billion ($3.5 billion) or more than 10% of its total revenue, Auchan is also active in Russia.
No less than 35 CAC 40 companies are active in Russia on a variable scale.

With regard to the financial sector, the five largest French banks are active there, in particular BNP Paribas, Société Générale and Crédit Agricole.

However, only Société Générale has a local subsidiary, which accounts for about 2% of its global activities - Rosbank with its 235 branches and two million customers.

In a press release published this week, Société Générale indicated that it is "fully capable of absorbing the consequences of a possible extreme scenario which would affect the property rights over its banking assets in Russia."

Delivery firm La Poste through its subsidiary GeoPost, the world's second-largest aeronautical equipment manufacturer Safran, the French railway company Alstom, the equipment manufacturers Valeo, Faurecia and Michelin are also active in Russia.

In the energy sector, TotalEnergies has opted to no longer contribute capital to new projects in Russia.

The French industrial energy group, Engie, holding a stake in Nord Stream2, transformed this participation in the suspended project into a loan after having financed 10% of its construction.

160 French companies are also active in Ukraine with approximately 30,000 employees, the leading foreign employer, as in Russia.

The CAC 40, the main index of the Paris stock exchange market, fell 10.23% last week, its worst performance since March 2020.

*Writing by Gokhan Ergocun from Istanbul