Since Russia's invasion of Ukraine, Western corporations operating in Russia have amassed substantial profits, with contributions from "unfriendly" nations totaling $18 billion out of $20 billion in reported profits and $199 billion out of $217 billion in total revenue for 2022, according to data from the Kyiv School of Economics (KSE).
However, most international businesses in Russia disclose local results only annually, making it difficult to determine the exact figures.
Companies like BP and Citigroup have been unable to access their earnings due to a dividend payout ban imposed on businesses from “unfriendly” countries, including the US, UK, and EU members. While exceptions are possible, very few permits have been issued, leaving significant funds trapped in Russia.
Numerous foreign enterprises have tried to divest their Russian subsidiaries, but Moscow’s approval is required, often leading to substantial price reductions. British American Tobacco and Volvo recently announced agreements to transfer their Russian assets to local owners.
Austrian bank Raiffeisen reported the highest earnings among “unfriendly” origin companies in 2022 at $2 billion, while US-based companies Philip Morris and PepsiCo earned $775 million and $718 million, respectively. Swedish truckmaker Scania, which has since withdrawn from Russia, reported a $621 million profit.
The highest total profit contributors were US-based businesses ($4.9 billion), followed by German, Austrian, and Swiss companies with $2.4 billion, $1.9 billion, and $1 billion, respectively, according to KSE figures.
These inaccessible funds compound the financial burdens of international businesses impacted by Russia’s aggression against Ukraine, with European companies reporting losses of at least €100 billion from their Russian operations.
While some companies found ways to bypass restrictions, many are left with no clear strategy for recovering dividends. Russia’s Ministry of Finance eased dividend rules but established distinctions between “good” and “naughty” companies. Some are considering using frozen assets as leverage in negotiations with Western authorities.
Overall, Western corporations continue to face challenges in accessing their profits from Russia, both from “unfriendly” and “friendly” countries, leading to significant financial uncertainties.