French yogurt maker Danone has confirmed plans to resume with the de-consolidation of its Russia subsidiary while reporting its financial result for the first half of the year. The de-consolidation process is scheduled to begin in July.
“Danone has taken note of the decision of the Russian authorities aiming at placing Danone Russia under temporary external administration of the Russian authorities,” a company press release states. “Danone is currently investigating the situation.”
Russia has now assumed responsibility over Danone’s Essential Dairy and Plant-based subsidiary. The transition, announced last November, is going according to schedule.
“Although Danone no longer retains operational control of the subsidiary, the dairy giant said it is still moving forward with deconsolidation as it remains the company’s legal owner,” the Food Dive report states. “It is investigating ‘how to protect its assets and rights as a shareholder, with a first priority to ensure people safety.’”
The deconsolidation will result in an overall writedown of $767 million. Serving as a response to Russia's devalued currency, the changes will not impact the company’s second half earnings.
“Danone is preparing to take all necessary measures to protect its rights as shareholder of Danone Russia, and the continuity of the operations of the business in the interest of all stakeholders, in particular its employees,” the official Danone press release states.
The deconsolidation was announced weeks after Russia President Vladimir Putin signed a decree July 16 “to transfer control of Danone’s local operations to the state property agency,” a Food Dive report states. “Two days later, Russia’s authorities indicated to Danone that the CEO and board of directors had been changed.”
“Danone will continue to investigate the situation to understand the implications of the decisions of the Russian authorities on the ongoing EDP operations of Danone in Russia, as well as on the ongoing sale process,” the company said in its earnings report.
Management modifications were also made at Danish brewer Carlsberg’s Baltika Breweries. Carlsberg said it no longer “retains control of the management or operations,” of Baltika
“When asked about the progress, a spokesperson for the company referred back to comments made in the earnings report,” Food Dive recently reported.