Fincredible MacroTalk March 16th: Ukraine Conflict Impact
Comments on the impact of the Russia-Ukraine conflict from $CPB $OTLY $NVGS $HPQ $ORCL $VWAGY $ODC $ADSK $COO $DLO $HPE $KR $CRWD $S $CRM $ETSY
The Russia-Ukraine conflict has negatively impacted the lives of millions of Ukrainian families. We are saddened by the humanitarian crisis and hope there’s a quick and peaceful resolution to this conflict, and that no more lives are harmed.
This conflict will also have far reaching effects on the world economy. In this post, we’ve highlighted quotes from company executives on the impact the war is having on commodities and logistics, the exposure of firms to the Russian economy, the importance of Cybersecurity and more.
All quotes are sourced from Fincredible.
Impact on Commodities and Logisticas
The Russia-Ukraine conflict is impacting an already disrupted supply chain, as both countries are essential for the global supply of energy and raw materials. The repercussions are slowly making their way to our day to day lives.
As Greg Ip wrote, “war has been a reliable precursor to inflation” and, even though the future is uncertain, the only thing for sure is that commodity prices are soaring and supply chains are being impacted.
“We do continue to expect inflation to remain persistent, especially as it relates to logistics. And although we have no direct exposure to Ukraine and Russia, we are monitoring any broader economic impact from the current crisis, especially on commodities.”
Mark Clouse, CEO
“The conflict in Ukraine brings additional uncertainty with energy prices increasing and the broader implications of Ukraine being a large exporter of grains as well as vegetable oils, which could impact global pricing for these items, as well as Russia being a significant exporter of fertilizer.”
Christian Hanke, CFO
“The sudden invasion of Ukraine will have major ramifications not just for the energy market but also for the security and well-being of Europe. Major ramifications in energy, commodity and shipping markets have already started. We all want to know the impact on shipping but without knowing the end game of this invasion and imposed sanctions. We can't estimate the scope and duration of potential disruptions. Creating sanctions to the Russian economy and its companies has impacted trade supply chains already and is increasing commodity prices.Open markets and free trade are about buying from the nearest most competitive source. Geopolitical tensions and sanctions normally increase ton miles because of shifting trade patterns, which require cargo shipping over longer distances. This, of course, supports increased freight rates. Europe will seek to become less dependent from Russian fossil fuels, oil, refine”
Dag von Appen, CEO
Companies Cutting Business Ties with Russia
HP, Oracle, Volskwagen and Oil-Dri are some of the companies that have stopped their business operations in Russia. There has been a great deal of companies suspending, pausing or even terminating their affairs with the country in light of the recent events and U.S. sanctions.
“In compliance with administration's recently approved sanctions, we have suspended shipments to Russia. The difficult situation in Ukraine is the latest in a series of global challenges we have faced. Time and again, our team has shown remarkable agility and determination, and I have great confidence in their ability to manage these situations.”
Enrique Lores, CEO
“We are working incredibly hard to help our Ukrainian employees and support our customers and partners. We have suspended all Oracle operations in Russia, and we did so well over a week ago.”
Safra Catz, CEO
“Volkswagen had to stop production in Russia and exports to Russia for the time being. We are continuing to pay our employees in Russia 80% of their salaries. We're also continuing to supply our Russian customers with spare parts. And we're supporting our suppliers of riding harnesses in the Ukraine, which are keeping up operations to the extent they can.”
Herbert Diess, CEO
Volkswagen AG 2021 Earnings Call
“I forgot to mention at the start, and I wanted to, that our support of the boycott of Russia. So I just want to let you know that, yes, we have suspended all shipments to Russia. I'll let you know it's not material in our grand scheme of things. We've never done that much business, but we did and as a show of unity and trying to help with the horrific situation in the Ukraine, we will be supporting that boycott.”
Daniel S. Jaffee, CEO
Business Exposure to Russia
While Russia is one of the largest economies on the planet, not all companies have a significant direct exposure to this economy. Some, like Autodesk, have a very small exposure (<2%), while others like Mayr Melnhof Karton derive up to 7% of their EBITDA from Russia, Belarus and Ukraine.
“Russia and the Ukraine, they represented a bit less than 2 percentage points of our total revenue in fiscal '22. And we have similar assumptions in our fiscal '23 roll up. Obviously, events are unfolding live. It's a very fluid situation. It's a coincidence that our earnings call is today. So we haven't baked anything, any potential risk that might occur there into our guidance. We're going to be watching things closely because at this point, we don't know if there's any impact at all. We don't know if there is impact, if it would be localized to Russia and the Ukraine specifically or whether or not it becomes a broader impact across Europe and beyond. It's just too early for us to tell.”
Deborah L. Clifford, CFO
“Prior to the Russian invasion of Ukraine, this would have meant the midpoint for EPS would have been roughly $14.35, but currency has moved significantly against us over the past week. We're increasing prices to offset the negative impact, and hopefully, the currency moves are temporary, but we're taking a conservative approach and fully incorporating negative currency into our guidance, noting that the scope, degree and duration of the crisis on the global economy is an evolving risk.”
Brian Andrews, Executive Vice President, CFO & Treasurer
“We have fewer exposure today to Ukraine and Russia businesses. We've explained, we don't process payments in any of those 2 countries, and we don't have a merchant base either in Russia.”
Sebastian Kanovich, CEO & Director at DLocal Limited
“So our overall exposure to Russia, Belarus and Ukraine in terms of EBITDA is 7%, so it is rather important. We have stopped cartonboard deliveries last week to Russia. In terms of the operations, our 2 plants in Russia are producing. We cannot foresee really over the next weeks and months how this will develop because it's a question do we get the input material cartonboard inks, et cetera, so this is unclear. With one plant in Ukraine, which we have stopped because that was the order in Ukraine when the war broke out on the 24th of February, we have started up the infrastructure and plan to have production by today or tomorrow. However, it's very unclear if we -- if logistics will work out. Obviously, some of our local customers are in war zones and we cannot deliver any more to them. And we will reorientate most of the production to be delivered to Western Europe. It's a real tragedy and it's quite unclear at the moment what will happen.”
Peter Josef Oswald, CEO
Mayr Melnhof Karton AG 2021 Earnings Call
Donations and Support
As the world saw the Ukrainian people suffer the consequences of war, some companies decided to offer support, assistance and donations to the country while also helping their employees deal with the current situation.
“Our first priority in the region is the safety of our team members, our contingent workers and their immediate families. We are conducting regular proactive outreach to our workforce in Ukraine to offer emergency assistance, making our security team available 24/7 to help.
The HP Foundation has established a special giving campaign for our team members to support humanitarian efforts in Ukraine which has already raised $150,000 in just over 24 hours. And we are expanding the time off we offer team members to volunteer, so those in the regions can care for their families and participate in humanitarian relief activities.
From a business perspective, we have suspended all shipments into Russia at this time, and we'll continue to adhere through all relevant sanctions and export controls.”
Antonio Neri, CEO
“Kroger is taking action to show our support and solidarity with Ukraine. Today, we are sending emergency food assistance to support refugees through a grant from the Kroger Coke Zero Hunger | Zero Waste Foundation to the UN World Food Program in Ukraine Emergency Fund. We will match all gifts made by our associates and customers up to $250,000.”
William Southern - CEO
“And so I just need to start by acknowledging the events that are happening in the Ukraine today. The invasion of the Ukraine obviously weighs heavily on all of us. So we're reporting our results as usual, but today is certainly anything but a usual day and wanted to acknowledge our hearts go out to our buyers and sellers and community in Ukraine and Eastern Europe as well as our global community that's impacted by these events. Thank you.”
Debra Wasser, VP, Investor Relations & ESG Engagement
“I'm sure many of you know that my great grandfather actually immigrated from Kiev. But my great grandfather,Isaac Benioff, came to the United States from Kiev. And my grandfather was born here in the United States and then came to San Francisco and met my grandmother who was the second generation San Franciscan. And that's why I'm here now. I'm a fourth generation San Franciscan. But looking back and looking at my family now and the Ukraine, my heart is really breaking for them. And the senseless pain, the suffering, it's just unbelievably difficult to see what is going on in the world.
And while we really don't have employees or do business in the Ukraine or Russia of any consequence, I would say that we do have employees and families like mine. And with loved ones there, with deep connections to the region in this part of the world, and our heart is continuing to break. And we've provided ways that we provide humanitarian care.”
Marc R. Benioff, CEO
Cybersecurity
As the geopolitical conflict grows, the importance of cybersecurity for governments and enterprises grows. This type of conflict is one of the many reasons why governments and companies are investing more every year towards improving their cybersecurity.
“As the nation's state events of the past few weeks have demonstrated, cyberspace is center stage joining land, air, sea and space as the fifth dimension of warfare. There are no borders in cyberspace and the cyber blast radius has no bounds, putting every organization and government at risk as attacks can extend far beyond their intended targets as we saw with NotPetya.”
George Kurtz, CEO
“We recently named and published research on Hermetic Wiper related to the escalating cyber attacks surrounding the Russia-Ukraine conflict. This was a real-time discovery on the eve of Russia's ground invasion. It helped bring awareness to cyberattacks accompanying modern warfare. Our publication was followed by an alert notice from cybersecurity and infrastructure agency, highlighting the significance and relevance of SentinelLabs' research.”
Tomer Weingarten, CEO
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