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French companies gradually withdraw from Russia

Published on June 17, 2022 - 3 mins reading time
SMALL BUSINESSES Companies

Almost 4 months after the start of the war in Ukraine, French companies are still gradually leaving Russia. However, not all of them have yet ceased their activities in this country, which for many is an important market.

35 CAC 40 groups in Russia

Before the start of the war in Ukraine, nearly 700 French companies had a presence in Russia. These included 35 CAC 40 groups, for whom Russia represents a colossal market.

In Russia, the Auchan group has 311 stores and 41,000 employees, while Leroy Melin has 112 stores and 36,000 employees.

The Renault group, which sold its Russian assets to the Russian state a month ago, has 45,000 employees in the country. After Europe, Russia is the carmaker's second-largest market, where it plans to sell 500,000 vehicles by 2021.

Since 1997, the St. Petersburg International Economic Forum, nicknamed Russia's Davos, has welcomed a number of CAC 40 companies. For Vladimir Putin, it's an opportunity to attract Western investors, who this time have made way for numerous Asian and African investors.

A complex situation for SMEs

However, the absence of French CAC 40 groups from the St Petersburg International Economic Forum does not mean that all French companies have left the country. Auchan and Leroy Merlin are still present in Russia, while Société Générale has sold its Russian subsidiary.

Décathlon, which is owned by the Mulliez group along with Auchan and Leroy Merlin, is to close its 60 Russian stores as it is unable to obtain supplies without exposing itself to US sanctions.

TotalEnergies began to pull back, announcing that it had booked a $4.1 billion provision in its accounts, due to the risks hanging over the Arctic LNG 2 liquefied natural gas project. Competitors Shell, BP and ExxonMobil quickly withdrew from Russia.

The Russian market is the 6th most important for TotalEnergies. It accounts for 5% of TotalEnergies' cash flow and 24% of its proven hydrocarbon reserves - reserves with a greater than 90% probability of being produced.

As for French SMEs, the majority prefer not to comment on a possible departure from Russia. Putting an end to their activities in the country could, for many, have serious consequences for their financial health.