Update on our exit from Russia

In early March 2022, we announced that HEINEKEN would stop new investments and exports to Russia, ended the production, sale and advertising of the Heineken® brand, and announced that we will not accept any net financial benefits or profit (ring-fencing) from our business in Russia. 

At the end of March 2022, we made the decision to leave Russia. We were the first global brewer to do so. At the time, we were clear that the process of leaving would need to be handled very carefully with the ongoing safety and wellbeing of our employees at the front of our minds. We also faced – and continue to do so today – the very real risk that if we were to stop our operations or become insolvent, the Russian Government would take action against employees or decide to nationalise our business. 

Why the concern about nationalisation?

Shortly after we announced our decision to remove the Heineken® brand from the market, local operations in Russia received official warnings from Russian prosecutors that if this decision led to the suspension or closure of our business, it would be deemed to be an ’intentional bankruptcy’, which continues to be a criminal offence in Russia to this day.

At the same time, the Russian Government was drafting legislation that would make ‘intentional bankruptcy’ a trigger for nationalisation. While that legislation hasn’t yet been passed, the local laws still allow the government to appoint external management in the case of an ‘intentional bankruptcy.’ Insolvency is also a form of bankruptcy and would likely lead to the same outcome. We continue to interpret this risk to our people and business as significant.

Will the sale lead to a financial benefit to HEINEKEN?

No. First, HEINEKEN will not receive any royalties in the future related to the Russia business. Regarding the anticipated negative financial impact related to the sale of the business, on 28^th March 2022, HEINEKEN expected an impairment and other non-cash exceptional charges of approximately EUR 0.4 billion in total. The final loss will be determined at the moment we transfer our business to a new owner. The amount will also partially depend on the Rouble vs. € exchange rate at the time of transfer. As stated in our 2022 Full Year Results press release (page 14), an impairment of €88 million was recorded for the period ended 31 December 2022. At the moment of disposal, the cumulative foreign exchange losses relating to Russia currently recorded in equity (€0.2 billion as per 31 December 2022) will be recognised in the income statement. The €88 million in addition to the €0.2 billion adds up to our current best estimate of circa €300 million of negative financial impact.

Will you return to Russia some day?

Our main focus right now is exiting Russia responsibly. We never comment on the details of ongoing negotiations. We have been clear from the outset that we will not profit from any sale or transfer of ownership of our business nor do we profit from the ongoing operations while we seek a buyer.

Humanitarian support for Ukraine

We thank all of our employees for the ongoing efforts to support the Ukrainian people. From opening their homes to refugees, raising funds and arranging donations, we are very proud of the response of our colleagues.  HEINEKEN has already donated over 1 million Euro via the company and employees to Habitat for Humanity to support humanitarian assistance for refugees. In addition, 700,000 Euro was granted via five local operating companies bordering Ukraine, who identified over 25 local NGOs that could provide immediate relief efforts. 

Next steps

As we move forward, we continue to prioritize care for our people during this transition while finding a suitable buyer in line with our values and in full compliance with international and local laws. Throughout, we have sought to balance our responsibilities in three areas: to protect our employees; to respect the law; and to find the best possible buyer that can give employees the best chance of secure future employment.

It is challenging to close a transaction in Russia at the moment as rules continue to shift. We aren’t dragging our feet and do wish things would move more quickly. With that said, all things remaining the same, we aim to reach an agreement in the first half of this year.