We can, however, try to determine which companies generate a non-negligible share of their activity in a territory. Starting with national companies. In the case that interests us, we can estimate without too much risk that Russian companies operating on their domestic or export markets will be heavily impacted by a salvo of international sanctions against Russia. It is therefore not a surprise to see that the shares of the banks Sberbank or VTB Bank or of the gas giant PJSC Gazprom lost 40% today on the Moscow Stock Exchange. No surprise either for the Russian metallurgy groups exiled in London like Polymetal or Severstal collapsed by 25%.
An impact difficult to quantify
For Western companies, the bill is more difficult to estimate. Take the case of France: France is a major investor in Russia, notably via TotalEnergies, which pumps around 15% of its production in the country. Bercy estimated the number of workers employed in Russia by French companies or their subsidiaries at 160,000, i.e. the first contingent in the country (the reverse flows are, on the other hand, quite low… even taking into account Courchevel and its surroundings). Staying with the French example, exports to Russia essentially consist of transport equipment, chemicals, pharmaceuticals and cosmetics and, to a lesser extent, technological equipment and luxury goods & spirits. Bernstein considers, for example, that the rich Russian and Ukrainian clientele represent 4 to 5% of the luxury market. There are also direct exposures like that of Renault, which is a major local manufacturer, or Société Générale, which owns Rosbank, the 9and Russian retail bank. A major economic brake imposed on Russia would weigh on local subsidiaries.
Barclays bank produces a basket of securities exposed to Russia. In a study published last week, that is to say before the Russian invasion of Ukraine, it pointed out that the market had already started to sanction the players concerned several weeks ago, as shown in the graph which follows. It compares the MSCI Europe symbolized by the scale on the right to the said basket, in particular to its version excluding energy which underperforms the index (energy is the exception which proves the rule, because of the rise in prices in the sector ):
Basket of Russian stocks vs European market (Source Barclays)
We have reproduced below the list of European companies monitored by Barclays which have a fairly significant exposure to Russia. It is important to note that four of these companies generate profits that are significantly higher than their contribution to turnover from Russia. It is
- Raiffeisen: 20% of revenue but 35% of pre-tax profit
- Metro: 10% of revenues but 17% of Ebitda
- Fortum: 3.3% of revenue but 25% of operating profit
- Uniper: 1.8% of revenues but 30% of operating profit
Among French companies, TotalEnergies is largely exposed at the level of its production as we have seen, while Technip Energies (which is not in the Barclays basket) derives 27% of its revenues from the Russia & CIS region. The list below is therefore not exhaustive.
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