Kremlin seizes Nestlé’s Russian assets in new crackdown
Nestlé said it is assessing its options after Vladimir Putin ordered the seizure of its Russian business.
The KitKat maker suggested it would take action to protect its rights after the Kremlin announced a presidential decree taking control of the Swiss company's assets on Thursday.
It told shareholders: "The company is assessing the situation and its options.
"Nestlé is committed to taking all necessary steps to protect its rights and ensure continuity of business operations in the interests of all stakeholders, particularly its employees."
Russia has tightened control over foreign-owned assets since the start of the Ukraine war in 2022.
A 2023 decree signed by Putin gives Moscow the power to place assets from countries it deems "unfriendly" under temporary administration.
The mechanism has been used to take control of the Russian subsidiaries of Danone and Carlsberg.
Nestlé shares fell 1.7pc on Friday in the wake of the Kremlin's order, which also put the Russian business of French supermarket group Auchan into a temporary administration.
The decree also covers the Russian subsidiaries of French logistics group FM Logistic and the former Leroy Merlin DIY chain, now known as Lemana Pro.
Each company's assets have been transferred to a company called LEV Management.
Nestlé has six factories in Russia producing coffee, pet care and infant formula.
It generated sales of about 2bn Swiss francs (£1.8bn) in Russia in 2021, the last year it released figures, and has about 7,000 employees there.
Warren Ackerman, an analyst at Barclays, said the Kremlin's order means the "risk of Nestlé losing the business looks materially higher".
However, Jean-Philippe Bertschy of the Swiss investment bank Vontobel said he expected the financial impact to Nestlé would be small "given Russia's limited contribution to group sales".
He said Russia now accounted for just over 1pc of the group's sales, down from around 2pc before the Ukraine war.
Moscow took control of French dairy company Danone's Russian business and beer company Carlsberg's stake in a local brewer in 2023.
Danone was removed from the list of assets under temporary Russian state management in March 2024 amid reports that a Russian businessman known for his pro-war credentials planned to buy the business at a steep discount.
In December 2024, Carlsberg sold its shares in Baltika Breweries in a management buyout.
Jon Cox, a Kepler Cheuvreux analyst, said such experiences did not bode well for Nestlé.
He said: "Ultimately, Nestlé may end up losing those assets, around 2pc of its sales and cash tied up in Russia, for the foreseeable future and any compensation is unlikely to be an offset."
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