Shares of Nestlé fell 1.5% on Friday after trading opened, dropping to 77.17 Swiss francs — their lowest level in three and a half months — after Russian authorities placed two Nestlé subsidiaries under temporary state administration.
President Vladimir Putin ordered the emergency management of Nestlé Russia and Nestlé Kuban on Thursday evening. Shares held by Nestlé's Swiss and German entities are now managed entirely by L.E.V. Management, a Russian firm. Nestlé remains the legal owner but has lost the ability to direct operations of the stakes for now, the foodmaker said on Friday, adding it would take all necessary measures to protect its rights and ensure continued operations in the interests of employees.
Nestlé's Russian revenue accounts for an estimated 1% to 2% of total sales. The value of its Russia business is believed to be between 1.5 billion and 1.7 billion Swiss francs.
Analysts at JPMorgan flagged the risk earlier this month, saying a forced sale with little proceeds could shave roughly 3% to 4% from earnings per share. Vontobel echoed the outlook, noting only a marginal hit to overall revenue but warning that the prospect of asset write-downs or an unfavourable divestment was weighing on sentiment.
Nestlé had chosen not to fully exit Russia after the 2022 invasion of Ukraine, saying the food company wanted to keep supplying staple foods to the population even in conflict zones. That decision appeared to offer little protection now: Russia has used foreign administration repeatedly since 2023 to take control of Western companies' Russian operations.
Danone was forced to sell its Russian business in 2024 for around 180 million euros after regulators placed it under temporary state management, ultimately recording a total loss of 1.2 billion euros. Carlsberg concluded its Russian withdrawal at the end of 2024 through a management buyout valued at 320 million dollars, while Heineken offloaded its Russian subsidiary for a symbolic one euro and booked a 300-million-euro impairment.
