New Delhi: After more than 30 year in the country, McDonald’s announced Monday that it would exit Russia altogether and sell its business to a local proprietor.
Soon after Russia’s invasion of Ukraine, McDonald’s on 8 March had temporarily closed outlets and paused operations.
But a company release said Monday: “The humanitarian crisis caused by the war in Ukraine, and the precipitating unpredictable operating environment, have led McDonald’s to conclude that continued ownership of the business in Russia is no longer tenable, nor is it consistent with McDonald’s values.”
McDonald’s will ensure employees continue to be paid until the close of any sale transaction and that employees have future employment with the potential buyer.
McDonald’s President and Chief Executive Officer, Chris Kempczinski, said, “We have a long history of establishing deep, local roots wherever the Arches shine. We’re exceptionally proud of the 62,000 employees who work in our restaurants, along with the hundreds of Russian suppliers who support our business, and our local franchisees. Their dedication and loyalty to McDonald’s make today’s announcement extremely difficult. However, we have a commitment to our global community and must remain steadfast in our values. And our commitment to our values means that we can no longer keep the Arches shining there.”
The company release also said it is paying full salary to staff in Ukraine though its restaurants are closed in the country.
As a result of its exit from Russia, “the company expects to record a charge, which is primarily non-cash, of approximately $1.2-1.4 billion to write off its net investment in the market and recognize significant foreign currency translation losses previously recorded in shareholders’ equity,” the release said.
French carmaker Renault also announced Monday that it had sold its assets to the Russian government.
Renault controlled 68 per cent of AvtoVAZ, the largest carmaker in Russia. It was, however, under pressure to leave the country since its military intervention in Ukraine.
Under the agreement Renault will retain a six-year option to buy back the stake in AvtoVAZ.
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