War complicates Philip Morris' logistics – CEO Barabash
Russia's invasion of Ukraine has had a strong impact on the operations of PrJSC Philip Morris Ukraine, according to the company's general director, who said the tobacco company had the most difficulties with logistics, since its factory and the largest warehouses of products are located in Kharkiv and Kyiv regions, where active battles are now being fought with Russian invaders.
"You can imagine the difficulty we faced when it comes to logistics and delivery of the product. It took us two weeks to resume deliveries in 12 regions and the product is still quickly disappearing from the shelves. Some of our partners stop paying on contracts, so we have to cover this at the expense of our reserves," Philip Morris CEO Maksym Barabash said in an exclusive blitz interview with the Interfax-Ukraine agency on Wednesday.
Philip Morris was able to reopen ten branded Iqos smoke-free food stores across the country in the past week, he said, and plans to open two more this week.
Barabash stressed that during the war with the Russian Federation, the company focuses on the safety of its employees.
"Those who work in stores and warehouses have an air raid shelter nearby. The rest of the teams work remotely, helping both in commercial and volunteer projects, for example, our colleagues with evacuation and delivery of humanitarian aid," he said.
Barbash said Philip Morris International Inc. (PMI) in March took concrete steps to wind down the work of its branch in the aggressor country Russia: it stopped the planned investments and withdrew the current ones, namely the installation of a new line for the production of tobacco sticks for Iqos Iluma worth $150 million. In addition, the company canceled the launch of new commercial projects in 2022 and removed a number of cigarette brands from sales in Russia
"Currently, the company is working on options for a proper exit from the Russian market," Barabash said about the corporation's plans in the Russian Federation.
Philip Morris International, which includes Philip Morris Ukraine, is one of the world's largest manufacturers of tobacco products. It produces cigarettes in more than 50 factories and sells them in 180 countries.
The company has been operating in Ukraine for more than 20 years, owns a factory in Kharkiv region. More than 1,300 people work at the company's enterprises.
Philip Morris Ukraine in 2020 increased its net profit by 5% compared to 2019 - up to UAH 2.73 billion, assets increased by 18% over the year - up to UAH 11.51 billion, and retained earnings - by 55,5%, up to UAH 7.79 billion.