27 Apr 2022 19:12

Sweden's AAK leaving Russia

MOSCOW. April 27 (Interfax) - Sweden's AAK, which specializes in supplying vegetable oils and industrial fats to the food industry, has decided to leave the Russian market.

The company suspended supplies and sales in Russia in March.

"Since then, a careful evaluation has been carried out, resulting in a decision to permanently wind up the business in the country. 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 in a statement published on its website.

This decision concerns the company's 75% stake in a joint venture in Russia. AAK aims to return this share to the partner from which it was originally acquired. The joint venture accounts for around half of AAK's volumes in Russia, or 1.5% of the company's global production.

"The remaining half of the Russian volumes are imported to and sold via AAK's Russian sales company, which will be closed," it said.

The company assesses its expenses connected to leaving Russia at 300-350 million Swedish kronor, from around $30.5 million to $35.6 million at the current exchange rate, and the impact on operating profit this year at 75-100 million kronor.

According to the SPARK-Interfax analytical system, AAK operates in Russia through AAK LLC, an industrial oils and fats wholesaler. AAK Denmark A/S fully owns AAK LLC.

AAK also owns 75% of AAK Margaron LLC through AAK Baltic Holding. AAK Margaron LLC produces margarines and fats for the baking and confectionary industries. The remaining 25% is owned by Evgeny Manoshkin. AAk became a co-owner in the company in 2020.

According to SPARK-Interfax, AAK LLC's revenue rose 51% to 5.59 billion rubles in 2021, while it had a net profit of 128.15 million rubles compared to 181.38 million rubles in 2020.

AAK Margaron LLC saw revenue grow 1.7-fold in 2021 to 3.36 billion rubles. Its net profit rose more than fivefold to 169.86 million rubles.