LTV's De Facto looks at businesses continuing exports to Russia

Despite sanctions and other risks related to business with Russia, many Latvian companies still export to this country. Recently, the Central Statistical Bureau (CSB) published a list of businesses continuing exports to Russia after the war began, and Latvian Television's De Facto attempted to take a closer look at it on August 28.

The CSB list (available here) includes 169 businesses exporting to Russia and 94 to Belarus. Some also show their market share in Russia and Belarus; for some, 2022 data are not available.

From the turnover standpoint, the biggest company on the list is the pharma giant Grindeks exporting to Belarus, whereas its subsidiary Kalceks exports to Russia. Grindeks' turnover in 2022 was EUR 258 million, of which EUR 70.6 in Russia. The company did not reply to LTV's request to comment on its attitude toward exports to Russia.

The other Latvian pharmaceuticals giant Olainfarm is also on the list, whose turnover data for 2022 are not available. Olainfarm sent LTV a plan to enter new markets while emphasizing that it's allowed to export medicines to Russia. 

"International human rights determine that all patients must have access to healthcare and medicines. So medicines and medicinal products are not included in the European Union or other western sanctions and no limitations are planned for these product groups at this time," Olainfarm wrote.

Several medium-sized pharma companies are also on the list – Elpis, LV System Service, and Medibridge.

Among companies with the biggest turnover is the alcohol company Penord Ricard's Latvian company Penord Ricard Eastern Europe Operations Ltd. The business distributes many popular alcoholic beverages such as Absolut, Havana Club, Jameson. The latest yearly report is on mid-2021 to mid-2022, during which its turnover was EUR 145 million of which 84 million in Russia and 6.8 million in Belarus. The company announced in April this year that it is stopping operations in Russia but the list shows that it is still operating in Belarus. The company did not respond to De Facto's questions.

Another noteworthy company is Green Trace Ltd, which exports technology from the Electrolux, Zanussi and other brands through Latvia. In 2021 the company had an EUR 107 million turnover in Russia, which is around 90% of its total turnover of EUR 116.8 million. This company, too, did not respond to LTV.

Altogether, Latvian Television asked some 40 exporters with a turnover exceeding EUR 10 million to comment on trade with Russia and Belarus. Fourteen replied, mostly those who are phasing out cooperation with Russia.

iCotton is a producer of hygiene products, which earned EUR 13.6 million from a total turnover of EUR 21.7 million on the Russian market in 2021. The company said it was outraged to be on the list as it is rapidly trying to refocus.

“iCotton', like other LV companies, is very “happy” and “grateful” to the Central Statistical Bureau for published lists and the publication of various “Excel” tables, where neither volumes nor time nor anything else is stated. […] Since the Russian invasion of Ukraine, the company has completely changed the proportions of the sales markets by stopping the supplies of Belarus and finishing its cooperation with some remaining Russian customers […].

“From once 60+%, the remaining proportion of Russia amounted to around 5% and no new supplies will take place from October,” Sergejs Binkovskis, chairman of the company's board of directors, wrote in a response.

Several other companies also indicated that they had decided to leave the Russian and Belarusian markets at the beginning of the Russian invasion, but that various commitments had remained. For example, Juris Keris, representative of the laboratory equipment trader Biosan Ltd, replied: “All strategic decisions are taken with the partners of England and we were scheduled to leave the Russian and Belarusian market as soon as possible in early 2022. Given the terms of the agreements previously concluded and the fact that there are product groups that are not subject to sanctions, trade with Russia will continue to be significantly reduced.”

The printing engineering trader, StarLett, replied: “As part of the mutual agreement, StarLett” carried out one delivery in 2023 to a BelstarLett item that had already been paid for before the imposition of bank sanctions against payments from Belarus. At the moment, all mutual contracts have been terminated.”

“Bosch” branded product distributor Robert Bosch Ltd replied that all exports to Belarus and Russia had already stopped in mid-June.

Some companies also indicated that the list of exporters was not due to the sale of goods in Russia or Belarus, but for formal reasons, like the return of items taking place, such as Energokomplekss Ltd or Pulsar Optics Ltd.

There are also companies that do not promise to break up their cooperation with eastern neighbors or stress that it is difficult.

For example, Valentīns Kiļdjaškins, a member of the Board of stationery products exporter Centrum Europa, said: “Centrum Europa exports its products to more than 50 countries of the world, including Russia, Belarus, and Ukraine. We don't buy anything in Russia, just sell goods for schools and children. We are constantly participating in international exhibitions looking for new customers in a variety of countries around the world (Europe, Asia, Africa, Latin America). At the same time, it should be noted that refocusing business on other markets requires a lot of time and costs. Unfortunately, countries like Germany, France, and the U.S. don't buy our products.”

The board member of Puratos Latvia, which makes jams and other products of the “Pure” brand, said: “We are working on the new export markets in Latvia to replace existing sales. It's not an easy and quick process. It would be great if the Latvian State could provide additional support that does not exist at this time. And thanks for the advice given that you need to refocus and sell elsewhere. It's very easy to say, but hard to do.”

The chemical plant Biolars replied that Russia and Belarus were not important partners. Together, exports to the two countries accounted for around 10% of the total company's exports in 2023, but the company did not say in its reply that cooperation would be about to cease.

“Trialto”, “Neoten” and “Ultraplast EU”, said that they comply with sanctions and are working openly, but did not mention the planned abandonment of the Russian or Belarusian market.

In some cases, the listed companies also see a large increase in turnover in exactly 2022. For example, the logistics company Sonora Ekspedīcija has grown its turnover twice, from 34 million to 67.6 million. The annual report shows that the bulk of the increase is due to a direct turnover in Russia, which has climbed from €19 million in 2021 to €44.8 million in 2022. The company explains the increase in turnover by making transport more expensive, also stressing that they are not exporting goods themselves:

“Before the Russian invasion of Ukraine, we had large balances of customer goods, both in warehouses and in transit, so we had to end the supply procedure. Therefore, for example, when sending a product from our warehouses to Russia on behalf of a European customer, the “Sonora Ekspedīcija” is mentioned in the export declaration as a consignor, although we are neither the seller nor the buyer,” wrote the company's representative Lāsma Gladeviča.

The first list published by the CSB also included all exporting companies to Russia and Belarus in 2022, including those who ceased post-war cooperation. Compared to the renewed 2023 list, there are also companies that aren't listed on the first list for 2022. This shows that these companies have only started exporting to Russia this year, so after Russia invaded Ukraine. There are 23 such companies on the list of exporters to Russia, and 15 to Belarus. In terms of turnover, the largest is the wholesaler of beverages, tobacco and other products, Stream Distribution, with a turnover of 15 million in 2022. The company didn't respond to any questions sent.

Among the representatives of the companies mentioned in the list, LTV also spotted one elected official – Rīga City Council deputy and the recently appointed vice-president of Riga Free Port Authority Edgars Štelmahers. He is co-owner and CEO of New Rosme Ltd., which makes underwear. According to the list, “New Rosme” is also an exporter to Belarus. However, Štelmahrer points out that there is no trade in the goods in Belarus, but a plant is located there.

"Our employees [in Belarus] are also very many members of the opposition, including people who have been repressed from existing power. Our position is that, in fact, we provide these 50 women with livelihoods, provide them with work, pay their wages. The company is maintained at such a level that he does not make a profit so we do not pay taxes to the Belarusian dictator. We believe it is a social function," said Štelmahers.

He also pointed out that, in the early days of the war, the shareholders of New Rosme had decided not to export the goods to Russia and Belarus.

Latvian Economics Minister Ilze Indriksone (National Alliance), when asked about the volume of exports to the aggressor states, replied – the government has long called on companies to stop trade with Russia and Belarus. At the same time, the main issue is to ensure that sanctions are respected.

Stricter regulation to limit trading, in her opinion, should not be introduced.

“We have also debated the physical closing of the border, preventing land-bound transport, but if [border is closed by] not all countries bordering Russia and Belarus, but only us, it will not bring any results. All this will happen in the same way. So there must be a common position. We have always stressed this and have also expressed, in cooperation with our neighboring countries, that these sanctions, conditions, and requirements must be uniform,” the Minister for Economic Affairs said.


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