co-owner of TechnoNIKOL Sergei Kolesnikov on the alienation of foreign assets

Many Russian companies have lost their foreign assets amid sanctions. Among them is the manufacturer of roofing and insulating materials TechnoNIKOL, whose plant in Poland was taken under external control. How the manufacturer assesses its losses and why it intends to continue working abroad, the co-owner and managing partner of Technonikol told Kommersant. Sergei Kolesnikov.

— In July, Poland nationalized your factories on its territory. In what other countries have you encountered similar problems?

— Until February 2022, Technonikol’s assets were located in five countries in addition to Russia – in the UK, Germany, Italy, Lithuania and Poland. In Great Britain we were forced to sell them, and in Poland we faced almost a raider takeover.

By the time the SVO began, Technonikol occupied about 20% of the Polish market for insulating materials. We have been fighting for this market for twenty years and, one might say, have become a significant player. But the local government imposed illegal unilateral sanctions on our assets, personal sanctions against me personally, and forcibly appointed an administrator.

The company was profitable and had a significant amount of money in its accounts, so no external management was required. But our obligation to pay taxes to the Russian budget was presented there as a threat to the territorial integrity of Ukraine.

— Do these actions have legal grounds?

— EU member states are prohibited from introducing unilateral sanctions unless sanctioned by the EU. Thus, Poland violates Article 215 of the Treaty on the Functioning of the European Union. At the same time, the consideration of the case against our enterprise was initiated not by the government, but by the Association of Manufacturers of Insulating Materials.

Relatively speaking, competitors complained about us. This organization has been trying to discredit TechnoNIKOL for many years. Since 2015, they have repeatedly appealed to the government with a request to close the country to Russian companies, including Russian exports. At the same time, members of this association are large international brands that successfully operate in Russia and continue to invest money here and also pay taxes.

In particular, the company Icopal (manufacturer of insulating materials, plant located in Petushki.— “Kommersant”). There is also a company called Soprem – it has a plant in Samara – no one bothers it to work, its performance is growing. Plus, the Polish manufacturer of construction chemicals, the Selena group, is still working with us – it is a member of the association for the Matizol brand. And no sanctions are imposed against them.

These companies continue to invest in Russia after 2022, they have positive financial indicators and, despite the position and situation in foreign policy, they continue to participate in government tenders in Russia, as well as invest, develop their business and pay taxes here. I believe that we need to compete fairly, and not through the closure of enterprises. Therefore, there are double standards.

— Do you plan to challenge the decision of the Polish authorities?

– Necessarily. On behalf of the company, we have already filed a lawsuit in the Polish court. But the external manager is trying to deprive us of this right by revoking the powers of attorney issued on behalf of our Polish enterprises to lawyers. Although the decision to introduce external management stated that he was sent only to sell assets, he does not have the right to revoke powers of attorney.

We will do this at the EU level in Brussels. A claim has already been filed with the ECHR. We are committed to using all available legal remedies to combat these illegal actions directed against me personally and my companies. Although it is impossible to talk about successful judicial experience yet, since there are no similar cases. After all, we are not the only ones. In Poland, all Russian companies were subject to sanctions: NOVATEK, Sportmaster, Acron.

— How long can the trial be?

— Courts in Europe are always slow. I expect that at best it will take two years, but it could take longer. Moreover, Polish courts are under political pressure. And even if you are, relatively speaking, Jesus Christ, the son of God, in any case you will be sentenced to death rather than acquitted. Therefore, even if I am not guilty of anything, waiting for an acquittal in Poland would be surprising. But if the court recognizes that the Polish government is right, it means that it admits that there are and will not be any guarantees for future investors.

— Your enterprises are still operating in other countries, do you see risks for them?

— Our factories in Germany and Lithuania, as well as three enterprises in Italy, operate, all of them are EU legal entities, they pay taxes there, and EU citizens work there.

— After selling the plant in Poland, you still won’t receive money for it?

— If the asset is sold, and it is not yet clear at what price, then the money for it will be blocked and unavailable to me and the shareholders. In addition, the external manager does not sell the asset as a whole, he sells it in parts (equipment, etc.). As a result, we will remain the owners of legal entities, but there will be no fixed assets.

— How much do you estimate your losses?

— The minimum of about €100 million is just the investment that we made in this plant in 2019–2020. And also the profit from it. In 2021 it was about €10 million. If we estimate the losses as a whole, then this is more than €160 million. The biggest problem is that we are losing the entire Polish market. Because the ninth package of sanctions prohibits the export of our products to Europe. This is not fatal for the company; it will be able to work and develop further, but it is painful for us.

— Are you going to sell other foreign assets?

— We look at each country separately. From those countries where very strong anti-Russian sentiments appear, where banks do not want to work with companies that have Russian roots, where management is not very loyal, we are leaving. For example, from Scotland. Germany and Italy are not yet at the forefront of anti-Russian rhetoric. So far we see that they allow us to work there, so we feel more or less confident in Western Europe.

— But you will no longer be able to invest in foreign assets.

— Yes, we have frozen investments in Europe for now. Firstly, this is prohibited by law. We have a currency cordon between Russia and unfriendly countries. And, naturally, it is stupid to invest there, since now the right to property, which was unshakable, has become very ephemeral. The value system has completely changed over the past year and a half. What was considered safe has become dangerous, and vice versa.

— How profitable is the European market in your segment?

— Europe has become, to be honest, a very strange market. Profitability there is very low, and the construction materials markets are now under enormous pressure. This year there will be a strong drop in demand in many countries. In Germany we see a 30% decrease in consumption for roofing materials, in Italy it falls by 8%.

Next year the decline will continue. There is also a decline in construction work in general. In such a difficult situation, the assets we manage in Europe are under pressure, competition is growing, margins are falling, and it is becoming difficult to survive even in these conditions. At the same time, the Russian market, which is surprising for us, is growing.

— Does this mean that you will concentrate on the domestic market?

– In general, yes. Now we are focused on development in Russia and the southeast. At the end of the first or beginning of the second quarter of 2024, we are launching a stone wool production plant near Almaty with a capacity of 90–100 thousand tons. We also plan to open a polystyrene production plant there at the end of this year. The total investment will be about €100 million.

In Russia, we plan to expand production near Rostov. We see very high demand in the south and plan to launch new stone wool production capacities as part of the second phase in 2026.

— Do you expect that demand growth in Russia will be stable?

— Consumption of building materials is always uneven, but in general we expect fairly high, albeit spasmodic, growth. It is clear that the markets are very hot right now. We encountered a certain shortage of workers and certain types of materials. The government is slightly cooling the economy by increasing the refinancing rate and reducing mortgage programs. Therefore, we expect that there will be a slight cooling in the first half of 2024, which does not mean that the market will fall.

But this is just a short pause before the next leap. I look positively at the multi-apartment housing construction market, and also see great potential in the growth of individual construction, which began to be stimulated this year. I think that until 2030 the demand for building materials will grow.

— Are you considering entering friendly countries?

— We now see great opportunities, primarily in the EurAsEC countries, so for us the key markets for development are Russia, Kazakhstan, and Belarus. We have a project to build another polystyrene foam plant with a capacity of about 450 thousand cubic meters by 2025 southeast of Tashkent with an investment of over €15 million.

Non-CIS countries are less interesting for many reasons. It is quite difficult to predict changes in currency legislation on the Russian side. We are considering entering the markets of India or Egypt closer to 2030.

Interview conducted by Olga Mordyushenko