Belgian companies stick to their Russian factories

Belgian-Brazilian beer giant AB InBev will indirectly produce Leffe beer, one of its flagship products, in seven Russian breweries. Other Belgian companies have not closed or sold their factories in Russia, even though they have cut their ties as much as possible, De Standaard newspaper reported on Thursday.

It has now been six months since the Russian invasion of Ukraine, but Belgian companies, unlike some multinationals, have not sold or closed their operations in Russia. AB InBev, the largest Belgian multinational, will even brew its well-known Leffe beer in the country, through its joint venture with the Turkish Efes. Other large Belgian companies such as Bekaert, Beaulieu, Deceuninck, Unilin (Quick-Step), Solvay and Soudal, all have factories in Russia and are still active there, but have cut their ties as much as possible. Their factories work with local people, local raw materials and sell their products on the local market, De Standaard reports.

AB InBev, Belgium's largest multinational, recently made the news because of a joint venture with Turkish beer company Efes. Through this joint venture the company will be brewing Leffe in Russia, on of its most popular beers internationally. AB InBev sates that this was a decision made by its Turkish partner. AB InBev owns almost a quarter of Efes' shares, however, in addition to half of the joint venture. The company has a market share in Russia of almost 30 percent.

AB InBev claims Efes is driving the joint venture, De Standaard writes, and says it has been trying for months to sell the joint venture to the Turkish partner. But both groups have yet to agree on the terms.

"Is it better for the employees if the factory ends up in the hands of an oligarch?", asks Deceuninck CEO Bruno Humblet.

For the floor coverings producer Beaulieu International, the Russian market accounts for almost a fifth of its activity. The company employs almost 800 people in the country. The factory works purely for the local Russian market and is run by Russians, Beaulieu says. The same goes for Unilin, known for its Quickstep brand, which has 550 employees in Russia. Belgian multinational chemical company Solvay has a major joint venture in Russia, called RusVinyl, which operates the largest PVC plant in Russia. Solvay's partner is Sibur, Russia's largest petrochemical company. Solvay is holding on to the plant, but dividend flows from Russia have been put on hold. West Flemish steel cord and wire manufacturer Bekaert has a plant in Russia that makes steel cord for car tyres. Bekaert also has a trading arm, but this has been wound down. The plant also took a step back and now produces 'local for local', as do other Belgian companies in Russia.

This approach means that companies officially respect international sanctions, but simultaneously stick to their local production centres. Bekaert, however, told De Standaard it would not rule out selling the plant if the situation continues for too long. "We have different scenarios depending on the situation", says head of communications Katelijn Bohez. "Selling the factory could be an option in the future. We are constantly looking at the situation and evaluating what it means for our employees and the employees of our customers."

"We are still the owner, but the factory is run entirely by local staff. I have no contact."

Deceuninck, which generates less than 3 percent of its group turnover in Russia, has set the value of its plant at zero "because we don't think we can make much money there in the future", says spokesman Bert Castel. Selling the factory is not an option, according to CEO Bruno Humblet. "The price would be too low. And is it better for the employees if the factory ends up in the hands of an oligarch?" At Soudal, which has a factory making polyurethane foam, ceo Dirk Coorevits says the factory has been "privatised". "We are still the owner, but the factory is run entirely by local staff. I have no contact."

Diaper manufacturer Drylock and bread producer La Lorraine are also still active in Russia.




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