Firms close operations in Ukraine, assess impact of sanctions on Russia

  • Backers of Nord Stream 2 gas pipeline from Russia hit
  • Wizz Air is working to evacuate crews
  • Britain’s Lloyds Bank on the lookout for cyberattacks
  • Jet engine manufacturers have increased their titanium supplies

Feb 25 (Reuters) – Brewer Carlsberg (CARLb.CO), Japan Tobacco (2914.T) and a Coca-Cola bottler were among companies that closed factories in Ukraine on Thursday after the Russian invasion, while UPS (UPS.N) and FedEx Corp (FDX.N) suspended services in and out of the country.

Ukraine closed its airspace when Russian forces attacked in the early hours, leaving low-cost carrier Wizz Air (WIZZ.L) to try to evacuate its Ukraine-based crew, their families and four planes stranded in Kiev and Lviv. Read more

Many companies exposed to Russia are waiting for more clarity on Western sanctions and are assessing the impact of those already announced.

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Washington on Thursday announced a wave of measures that hamper Russia’s ability to do business in major currencies, as well as sanctions against banks and state-owned companies. He imposed sanctions on the company behind the Nord Stream 2 gas pipeline while European Commission chief Ursula von der Leyen said Brussels would block Russia’s access to key technologies and markets. Read more

Denmark’s Carlsberg, which holds 31% of Ukraine’s beer market, suspended production at its three breweries in the country, while Coca-Cola HBC (CCH.L) said it had triggered contingency plans, including shutting down from its bottling plant.

Japan Tobacco has closed a cigarette factory in Kremenchuk, central Ukraine.

Japanese automotive supplier Sumitomo Electric Industries, which employs some 6,000 people in Ukraine to manufacture wire harnesses, said it suspended operations at its factories from Friday. A spokesman told Reuters the company was talking to customers about the possibility of replacing supplies from other locations.

Global shipping giant Maersk halted port calls in Ukraine until the end of February and closed its main office in Odessa on the Black Sea coast while Danish freight forwarder DSV (DSV.CO) announced that it had closed its operations in the country.

Europe’s aviation regulator has expanded a safety warning triggered by the attack, advising airlines to ‘exercise caution’ when flying over parts of Russian airspace controlled by regional hubs in Moscow and Rostov.

TITANIUM AND NEON

Shares of German utility Uniper (UN01.DE), which has significant interests in Russia and $1 billion exposure to the recently suspended Nord Stream 2 project, plunged on Thursday and its majority shareholder, Finland’s Fortum (FORTUM. HE), also took a strike. Read more

Fortum said the two companies together own 12 power plants in Russia and employ 7,000 people there, but since power generation has not been sanctioned, their operations have not been directly affected.

Another of Nord Stream 2’s backers, Wintershall Dea, said the fact the project was suspended for political reasons meant its operator could seek compensation.

Shares in German chemicals company BASF (BASFn.DE), which co-owns Wintershall with Russian billionaire Mikhail Fridman’s LetterOne investor group, and other backers of Nord Stream 2, OMV (OMVV.VI) and Engie , were also affected.

Britain’s biggest national bank, Lloyds, has warned it is on heightened alert for cyberattacks from Russia while some businesses have said supplies of key raw materials could suffer.

Jet engine makers Rolls-Royce (RR.L) and Safran (SAF.PA) said on Thursday they had increased their titanium supplies. The use of titanium, supplied largely by Russia, has exploded in recent years as aircraft manufacturers attempt to lighten jets. Read more

“We have been observing this situation for several weeks and have decided since the beginning of the year to increase our titanium stocks, in particular via distributors in Germany,” Safran CEO Olivier Andries told the press.

The French company is also looking to diversify its sources of metal, as is Britain’s Rolls-Royce, which said 20% of its titanium comes from Russia.

Major chip companies have said they expect limited supply chain disruption for now due to the dispute thanks to stockpiling and diversified sourcing, but some industry sources said that there could be a longer term impact. Read more

Ukraine supplies more than 90% of America’s semiconductor-grade neon, essential for lasers used in chip manufacturing.

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Reporting by Guy Faulconbridge, Jacob Gronholt-Pedersen, Tim Hepher, Kate Holton, Stine Jacobsen, Amna Karimi, Richa Naidu, Giulio Piovaccari, Anna Ringstrom, Paul Sandle, Christoph Steitz, Yadarisa Shabong, Patricia Weiss, Essi Lehto, Iain Withers, Ritsuko Shimizu and Chang-Ran Kim; Written by David Clarke; Editing by Edmund Blair, Nick Macfie and Edwina Gibbs

Our standards: The Thomson Reuters Trust Principles.

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