KARLSHAMN, SWEDEN — A little less than two months after temporarily halting deliveries and sales in Russia, AAK has announced it will make a controlled exit from its operations and investments in Russia. The company said the decision to permanently wind up business in Russia comes after “careful evaluation has been carried out.”
“The company has initiated this sensitive and difficult process, focusing on executing it in a controlled manner to ensure both legal compliance and the safety of its employees,” AAK said.
Russia makes up approximately 3% of AAK’s volumes, as measured in tonnes.
As part of its exit from Russia, AAK said it plans to relinquish its interest in a local joint venture in which it holds a 75% stake. AAK said it plans to revert its stake to the partner from which it was originally acquired. The JV makes up for approximately half of AAK’s volumes in the country, or 1.5% of the company’s total volumes, as measured in tonnes — most of which are reported in Food Ingredients.
The remaining half of the Russian volumes are imported to and sold via AAK’s Russian sales company, which will be closed. Most of these volumes are reported in the Chocolate and Confectionery Fats business unit. AAK said it is working to re-route as much as possible of this to customers in other geographies.AAK said its exit from Russia is expected to lead to a cost of approximately $30.45 million to $35.5 million, affecting the income statement in the second quarter. Given an expected gradual transfer of volumes, AAK estimates that the total impact on operating profit will be in the range of $7.6 million to $10.15 million in 2022.