Huhtamaki severs Russian business ties as Ukraine war cripples long-term outlook

19 Apr 2022 --- Huhtamaki is initiating a complete divestment from all its operations in Russia after almost two months of war in Ukraine. The Finnish packaging giant says it has reached this decision after determining “the long-term outlook in Russia will prevent the realization of its growth strategy and long-term ambitions.”

Most Western packaging companies have already ended their business dealings in Russia, citing humanitarian concerns and opposition to the war. Stora Enso, UPM and forestry standards organizations voiced support for international sanctions, calling the invasion “unacceptable.”

However, other companies – notably Mondi – have taken a different response to the crisis. In an announcement released last week, however, Huhtamaki says the situation in Russia has become untenable with regards to its global ambitions and 2030 Strategy.

“We have been meeting our contractual and regulatory obligations and safeguarding employees and customers. We stopped new investments in Russia following the invasion of Ukraine,” the company says in a statement.

Financial hit
Russia represents approximately 3% of Huhtamaki’s total net sales. In 2021, the company’s annual report shows it made €3.57 billion (US$3.85 billion) in net sales worldwide.

Most Western packaging companies have already ended their business dealings in Russia, citing humanitarian concerns and opposition to the war.“We will maintain our operations during this transitional period as long as the supply chain allows, thereby meeting our contractual and regulatory obligations,” continues the statement.

“The safety and well-being of all our colleagues remain of paramount importance. Huhtamaki has four manufacturing units in Russia, employing approximately 700 people and has successfully supported global and local customers over the last 30 years.”

The public eye
The move to abandon trade in Russia may be a wise public relations move as well.

Some major companies are under increasing pressure to halt their activities in Russia after justifying continued activity in the country as humanitarian through aiding only local people or helping secure global food supplies, which are under critical strain.

Chemicals giant BASF has come under fire from Ukrainian groups for continuing to supply Russian farmers with seeds and fertilizer. Moreover, some consumers have called for a boycott of Mondi following its decision to remain in the country.

However, Mondi released a statement saying that its uncoated fine paper mill located in Syktyvkar, in the Komi Republic, does not receive any direct funding from Mondi and operates an integrated power plant providing a portion of the Komi Republic’s energy demand. It also provides other local community services such as wastewater treatment, says Mondi.

By Louis Gore-Langton

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