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Barloworld, Mondi share prices fall after updates on their Russian investments

Barloworld’s share price slid 4.6 percent yesterday even though it said that it did not use banks in Russia that had been barred from the SWIFT global payment system, and that the group did not have excess cash in that country. There were sufficient funding facilities to run the Russian operations, the group said. Photo: Supplied

Barloworld’s share price slid 4.6 percent yesterday even though it said that it did not use banks in Russia that had been barred from the SWIFT global payment system, and that the group did not have excess cash in that country. There were sufficient funding facilities to run the Russian operations, the group said. Photo: Supplied

Published Mar 2, 2022

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THE SHARE prices of Barloworld and Mondi have taken a beating after they both alerted the market to the potential impact of the Ukraine war crisis on their substantial operations in Russia.

Barloworld’s share price slid 4.6 percent yesterday even though it said that it did not use banks in Russia that had been barred from the SWIFT global payment system, and that the group did not have excess cash in that country. There were sufficient funding facilities to run the Russian operations, the group said.

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The share price traded at R117.20 late yesterday afternoon.

Barloworld’s Equipment Eurasia represents the group’s combined UK, Russian and Mongolian operations and the Russian business Vostochnaya Technica (VT LLC), is present in Western and Eastern Siberia, Yakutia, as well as part of the Russian Far East.

Equipment Eurasia’s revenue was R10.7 billion ($718 million) in the year to September 30, 2021, with Russia contributing 78 percent of that revenue, and 20 percent of group revenue from continuing operations.

In addition, most of VT LCC’s customer contracts were executed with reference to US dollars, and settled in rouble equivalent.

“The sanctions communicated through the news feeds, once legislated, will enable Barloworld to estimate the impact and adjust its response plans accordingly,” the group said.

Barloworld said it would draw on it’s experience from the historic events that created financial uncertainty in Russia in 2014 and in Angola, and adapt to the current environment.

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Mondi’s share price fell 4.3 percent yesterday to R313.85 after updating the market on its operations in Russia on Tuesday, while its share price has slumped considerably from R398.04 two weeks ago.

Mondi said it was closely monitoring the situation in Ukraine, the response of international governments, and any potential impact on the group.

Mondi has operations in Russia, representing around 12 percent of the group's revenue by location of production, including a high margin, cost-competitive, integrated pulp, packaging paper and uncoated fine paper mill located in Syktyvkar (Komi Republic).

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These businesses primarily served the domestic market and all were currently operational.

In Ukraine Mondi had one paper bag plant located in Lviv, west of the country, employing about 100 people. Production is currently suspended.

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