Moscow momentarily nationalizes metal packaging giant’s assets
Date
7/15/2024 7:49:27 AM
(MENAFN) In a significant move, the Russian government has temporarily nationalized the assets of Silgan Holdings Austria, a prominent metal packaging manufacturer. This decision comes as part of a presidential decree signed by Vladimir Putin on Thursday, transferring control of the company's Russian operations to state supervision.
Under the decree, all shares of two plants owned by Silgan's Austrian division—Silgan Metal Packaging Stupino in the Moscow Region and Silgan Metal Packaging NM in Adygea—have been handed over to the Russian federal Property Management Agency. This action reflects the ongoing tensions and economic challenges faced by foreign businesses operating in Russia.
Silgan Holdings, headquartered in Connecticut, is a major manufacturer of consumer goods packaging, boasting over 100 manufacturing facilities across North and South America, Europe, and Asia. The company's annual net sales were projected at approximatelyUSD6 billion in 2023. However, its operations in Russia have faced significant setbacks in recent years.
Both of Silgan's Russian plants experienced a sharp decline in business activity, with total revenue dropping from 4.3 billion rubles (aroundUSD49 million) in 2021 to 3.6 billion rubles (USD41 million) in 2022. By last year, these plants, which have a combined production capacity of 350 million containers annually, were nearly inactive. Financial records indicate that overall income plummeted to just 15 million rubles (USD171,000), while the company incurred a net loss of 312 million rubles (USD3.5 million).
Silgan's market share in the Russian metal packaging sector also dwindled, falling from 15 percent in 2021 to 10 percent in 2022, with manufacturing operations ceasing entirely in the last year. This trend underscores the challenging environment for foreign companies in Russia, particularly as the geopolitical landscape continues to shift.
The nationalization of Silgan's assets is rooted in a broader decree signed by President Putin in April, which permits the temporary takeover of foreign assets considered vital for national security and interests. As a result of this transfer, the state agency will assume the role of shareholder and make key management decisions regarding the operations of Silgan's Russian facilities.
This action illustrates the ongoing complexities and risks that foreign businesses face in the Russian market, reflecting a growing trend toward state control amid increasing economic and political pressures.
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