PMI Has Exited the Russian Market
The Wall Street Journal reported that PMI’s exit from Russia has been quite complicated. Following Russia’s special military operation in Ukraine in March, the company has had to navigate constantly changing regulations while also trying to avoid risks th
According to The Wall Street Journal, PMI's exit from Russia is quite a headache. Following Russia's special military operation against Ukraine in March, it had to deal with the constantly changing regulations from various countries while trying to avoid risks that could lead to confiscation by the Russian government.
Russia has triggered Western sanctions, with hundreds of companies, including tobacco firms, committing to exit or reduce their operations in Russia. In early March, PMI announced it would suspend investments and reduce its manufacturing operations in Russia. By the end of the month, the company announced it would suspend the launch of the new IQOS ILUMA device in Russia, and subsequently, it announced a complete exit from the Russian market.
PMI is attempting to sell its Russian business and has been negotiating with interested buyers. It remains unclear whether Russian authorities will approve the transaction. The Wall Street Journal quoted PMI CEO Jacek Olczak as saying, "This is really a headache."
Russia is an important market for Philip Morris. In 2021, it accounted for nearly 10% of PMI's global cigarette and heated tobacco shipments, contributing about 6% to its $31.4 billion net revenue. At the beginning of this year, PMI had over 3,200 employees in the country.
The company entered the Soviet Union in 1977, signing a licensing agreement with state-owned industries to manufacture Marlboro. It now has a factory in St. Petersburg and sales offices in about 100 cities.
The company's CFO Emmanuel Babeau stated in a May meeting that due to the exit from Russia, the company would achieve its global sales target for smoke-free products a year later than expected.
