Inchcape has belatedly joined the string of companies pulling out of Russia, days after the chancellor warned British businesses to “think very carefully”.
The car dealer will take a 10 per cent hit to its sales after saying that its Russian retail business was “no longer tenable” in light of the conflict in Ukraine. Its Russian business contributed £750 million of sales last year and over the past five years about 5 per cent of the group’s operating profit.
News of the withdrawal sent shares in Inchcape down by 14½p, or 2.1 per cent, to 688p, valuing the business at about £2.6 billion.
Inchcape sells new and second-hand cars and operates in 36 markets in Europe, Africa, Asia, the Americas and Australasia. It is named after Baron Inchcape of Strathnaver, one of its original senior partners, and was once part of a conglomerate listed in London in 1862 as the British India Steam Navigation Company. The business employs about 5,500 staff in Britain with more than 100 dealerships.
Last month it revealed that its annual sales had risen by 12 per cent to £7.6 billion, that profits had recovered to pre-pandemic levels and a £100 million share buyback programme. It off- loaded part of its Russian businesses in St Petersburg last year, for which it suffered a £108 million foreign exchange loss.
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Inchcape said that with its exit from Russia it “shares the hopes of the world for a peaceful resolution” to the war in Ukraine. It said that it was helping to transport refugees from borders and was pledging a donation to United Nations’ refugee appeal.
Western companies have come under pressure from consumers and politicians to pull back from Russia. Rishi Sunak escalated efforts to urge companies to sever links with the country at the weekend, with the chancellor saying: “We must collectively go further in our mission to inflict maximum economic pain — and to stop further bloodshed.”
BP was one of the first to draw a line and has pledged to offload its stake in Rosneft, the Russian oil major, taking a $25 billion hit, while Shell is exiting joint ventures with Gazprom, the gas company. Adidas, Gucci, Moncler, Chanel, Louis Vuitton, Burberry and Alexander McQueen have pulled out and closed their fashion stores after initially continuing to serve wealthy Russian customers.
However, Mondelez, Kraft, Reckitt Benckiser, Nestlé, Danone and Unilever, the multinational consumer goods groups, have said that they are remaining in Russia to meet the needs of citizens. Only Unilever, the London-listed owner of Hellmann’s mayonnaise and Ben & Jerry’s ice cream, has publicly committed to not profit from Russian revenues.
GlaxoSmithKline and AstraZeneca, the FTSE 100 drugs companies, are also staying in the country. HSBC said that it was not accepting new business or customers in Russia but continued to have business there. Rival banks including Goldman Sachs and JP Morgan have withdrawn.
