Coca-Cola, PepsiCo earnings to take a hit from disruption of operations in Ukraine, Russia 

UKRAINE – World’s largest soft beverage makers Coca-Cola and PepsiCo expect a major hit on their finances following disruptions of their operations in Ukraine and Russia. 

Coca-Cola HBC, the world’s third-largest Coca-Cola anchor bottler, temporarily stopped production at its plant in Kyiv and evacuated employees following Russia’s invasion of Ukraine. 

The London-listed company, which has seen shares plunge in recent weeks due to its exposure to Russia and Ukraine, added that it has scrapped its forecasts for the current year due to the conflict. 

Coca-Cola HBC generated roughly 20% of its sales volumes and profits in 2021 from Russia and Ukraine. 

The company said it is “still too early” to quantify the impact of the crisis and the developing reactions of international governments on its operations. 

As the war drags on with no clear end in sight, the Switzerland headquartered company noted that it was no longer prudent to provide financial guidance for the current year. 

The bottler said it was prepared to use actions to drive revenue growth, including price increases, to offset currency depreciation and rising input costs due to the conflict. 

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It is also ready to move marketing funds and capital expenditure investment to other markets, it said. 

PepsiCo’s exposure to Russia makes investors jittery 

Coca-Cola rival PepsiCo is also treading on dangerous paths as Russia which has been hit by a barrage of sanctions is its second-largest international market after Mexico. 

Investors are already concerned about the impact of the crisis on the company’s business and it is showing in the stock markets where shares plunged 2.8%.  

PepsiCo generated US$3.4 billion of revenue in Russia in 2021, or 4% of its total sales of US$79 billion and has US$3.7 billion of assets in the country. 

If it decides to remain put in Russia, Cowen analyst Vivien Azer is of the opinion that the recent plunge in the ruble will be a drag on PepsiCo’s earnings in dollar terms. 

She however noted that “the supply chain in Russia and Ukraine is local, which should insulate local currency results.” 

McDonald’s, Mondelez also highly exposed 

Apart from the beverage giants, scores of other multinational food companies have a considerable presence in Russia and may suffer from the string of sanctions that the US and European countries are imposing on the federation. 

Top on the list is American multinational fast food corporation McDonald’s and Chicago-based beverage and snack food company Mondelez. 

McDonald’s operations in Russia and Ukraine contributed about 9% of its revenue last year, according to a company filing.  

The company says 84% of the 847 locations in Russia are company-owned, along with all of the 108 McDonald’s in Ukraine.   

Mondelez International, on the other hand, gets 3.5% of its sales from Russia and Ukraine and has been the leading chocolate maker in Russia since 2018 where it gets 3% of its revenue. 

The maker of Chips Ahoy, Oreo and other snack brands, has since paused operations in Ukraine and is supporting employees by advancing pay, according to a spokesperson.  

As many food manufacturers mark time and “closely follow the developments”, New-Zealand based dairy cooperative has pronounced itself on the matter choosing to cut its exports to the Russian Federation.  

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