The profit of the Russian structures of Bosch, LG and Samsung almost halved in a year

The profit of Russian structures of foreign manufacturers of household appliances and electronics Bosch, LG and Samsung almost halved over the year, and some companies had a net loss for the first time. Market participants believe that the main reason was the decline in demand for the products of these brands by 60-80% per year, as well as the freezing or reduction of production in Russia. However, despite the losses, producers prefer not to sell capacity and are counting on the lifting of sanctions, experts believe.

Russian legal entities of foreign manufacturers of household appliances and electronics have published financial statements for 2022. It follows from this that the financial results of the companies have deteriorated sharply.

Thus, according to SPARK-Interfax, the revenue of a South Korean Samsung subsidiary, Samsung Electronics Rus Kaluga LLC, which owns a plant for the production of brand products in Kaluga (produced TVs, monitors and washing machines), in 2022 amounted to 27. 4 billion rubles with a net loss of 6.9 billion rubles. A year earlier, its revenue was 69.5 billion rubles. with a net profit of 4.6 billion rubles.

Revenues of another South Korean brand – LG (LG Electronics Rus LLC) – with production in Dorohovo (Moscow region; produced TVs, refrigerators and washing machines) fell from 119.7 billion rubles. in 2021 to 55.4 billion rubles. in 2022, net profit – from 7.1 billion to 376 million rubles.

BSH Household Appliances LLC (Bosch brand; plant in St. Petersburg, produced refrigerators, washing machines, built-in kitchen appliances) reduced profit from 49.7 billion to 19.5 billion rubles, but the company’s net loss decreased from 2.7 billion to RUB 1.2 billion

The revenue of foreign companies began to fall due to a reduction or complete halt in the production and sales of equipment from factories in the Russian Federation, explains the interlocutor of Kommersant among manufacturers of household appliances. Some of the enterprises, he specifies, still export products to the CIS countries. However, a number of manufacturers have alternative enterprises in neighboring countries, for example, Samsung in Uzbekistan (Tashkent). A separate problem is created by the numerous lawsuits of consumers who cannot exchange defective equipment: retailers do not want to assume obligations under guarantees with the manufacturer, the Kommersant source adds.

All of the mentioned brands have formally ceased operations in Russia or suspended production to some extent, hence the negative financial performance, says Alexey Pogudalov, commercial director of Holodilnik.ru. “Now retailers do not purchase equipment directly from the factories of foreign companies that are located in the country. All products of LG, Samsung and Bosch are supplied only through parallel imports,” he notes. According to Mr. Pogudalov, the drop in sales of household appliances of the three brands in 2022 was 60–80%, depending on the type of product.

Chinese, Turkish and Russian competitors were actively interested in buying or leasing the capacities of these enterprises, among which Kuppersberg and Schaub Lorenz were mentioned. The possible localization of production was discussed with the Ministry of Industry and Trade (see Kommersant of February 1). However, nothing is known about the results of the negotiations on the sale. Bosch, LG and Samsung did not respond to Kommersant’s requests.

One of the participants in the household appliances market believes that Samsung, Bosch and LG “are in no hurry to sell capacities in the Russian Federation, since the losses from downtime will be less than fixing the loss from the sale of the factory at half price.” In addition, the representative of the F + tech | Marvel”, “a significant part of the profits of LG, Samsung and Bosch are not shown in the financial statements due to parallel imports.” In such a situation, Mr. Pogudalov believes, the bankruptcy of Russian assets of companies is unlikely. “Vendors are waiting for the lifting of sanctions, they also expect that enterprises will increase in price for sale. But, of course, if an agreement is reached on the price with Chinese, Turkish or Russian companies, the capacity may change hands, as happened with the Whirlpool Group,” he says.

Timofey Kornev