(BFM Bourse) – Like Societe Generale or Renault, many listed French companies have relatively high exposure to Russia.
Rising tensions between Russia and Western countries have continued to rise, as Vladimir Putin recognized the independence of the Donetsk and Lugansk People’s Republics on Monday. That ultimately means sending troops into the pro-Russian separatist areas in question by Moscow. A situation that is again putting pressure on the world stock markets, with the fear that the situation will degenerate into an armed conflict at the gates of Europe.
The current crisis actually dates back to the Ukrainian revolution of February 2014, which resulted in the resignation of pro-Russian President Yanukovych (convicted in absentia and now exiled to Russia). The overthrow was followed by Russia’s annexation of Crimea and then Russia’s intervention in Ukraine’s Donbass — not without significant collateral damage with the destruction of a Malaysia Airlines flight from Amsterdam, which killed nearly 300 people. In response, not only the United States, but also the European Union and other countries imposed a series of economic sanctions on Russia, which were extended in subsequent years.
The relationship between Russia and the West has for years been characterized by recurring tensions, alternating with phases of appeasement. And despite the attitude and pressure from both sides, economic exchanges continue to this day, and economic relations even claim to be particularly dynamic with France, which benefits from a long-standing and strategic economic position in Russia. As a recent note from the Directorate General of the Treasury reminds us, France is Russia’s sixth largest supplier and (apart from “attractive tax zones”…), the second largest provider of investment flows directly in the country, in especially through TotalEnergies. France essentially buys hydrocarbons and in return sells many transportation equipment, chemicals and cosmetics, machine tools, medicines and electronic products. Under the auspices of the very active Franco-Russian Chamber of Commerce and Industry (CCI France-Russia), many strategic partnerships are continued between companies in the two countries, especially in industry 4.0, digital, financial green, supporting the ecological transition, tourism, health, smart cities and transport.
In addition, with more than 500 French subsidiaries located in various fields – including 35 CAC 40 companies – France is the largest foreign employer in Russia with a total of nearly 160,000 employees.
In fact, according to information from the Russian agency RIA Novosti, quoted by Russia Beyond (a showcase site), France is the only country among Russia’s top ten European partners with which trade volumes soared last year. , higher than in 2013, before the imposition of sanctions in 2014. Trade reportedly recovered 46.7% from its 2020 low to $22 billion last year, notably with a somewhat favorable balance for France – unlike the others. European countries that export much less to Russia than they buy raw materials.
France’s significant commitment to the Russian economy therefore translates into significant exposure for a number of French listed flagships.
TotalEnergies : The hydrocarbon producer is the operator of the Termokarstovoye oil field (58.89%) and has a 20% stake in the Kharyaga field. TotalEnergies is also an 18.9% shareholder in PAO Novatek, the main independent natural gas producer behind the public powerhouse Gazprom. The group owns, directly and through its stake in Novatek, a total economic interest of 29.73% in the Yamal LNG liquefied natural gas project that is already in operation and 21.64% in the Arctic LNG 2 project, which will be in commercial operation next year. service should be taken. Russia already accounts for the bulk of its natural gas production, but TotalEnergies is so geographically diverse that Russia’s entire production (gas and liquids, all translated into millions of barrels of oil equivalent) barely exceeds 10% of the total.
Renault : The manufacturer is one of the largest foreign companies in Russia (after cigarette manufacturers Phillip Morris and Japan Tobacco and… Leroy Merlin, but far ahead of Apple, Samsung or Ikea). Taking into account its subsidiary Avtovaz (owner of Lada), the group is number 1 in the Russian market with a significant share of 30% of new registrations. With 482,264 vehicles sold, Russia thus represents the car manufacturer’s second largest global market (after France, where sales reached 521,710 units, but well ahead of Germany, where the French manufacturer sold only 177,795 vehicles).
Societe Generale : The red-black bank occupies a leading position in Russia through its subsidiary Rosbank, which accounts for about 9% of the group’s total net banking income (GNP). At the end of 2020, outstanding loans amounted to EUR 8.7 billion and outstanding deposits amounted to EUR 10.1 billion.
Alstom : The development of the Russian rail transport market, together with Germany and Italy, is currently one of the main growth drivers in the European market (which accounts for half of the group’s turnover). Alstom invests directly in the country through its subsidiary Transmashholding (TMH).
Outside the flagship index, exposure is significant for bonduelle which has several industrial production sites in Russia, but also two large agricultural production sites (Novotitarovskaya and Timashevsk) to support the food transition, ie the increase in the share of vegetables in the daily diet, which is only just beginning in eastern Europe.
Due to a special cultural need for vinyl floors in Eastern Europe, the floor manufacturer Tarkett is historically very well established in Russia (as well as in Serbia, Ukraine and Kazakhstan). According to the group, Russia as a whole alone accounts for 10% of its turnover, resulting in a non-negligible exposure to ruble fluctuations, even if production is largely local.
Guillaume Bayre – ©2022 BFM Bourse