Mondelez CFO eyes Ukraine-Russia tensions, potential impact on economy

Brooke DiPalma · Senior Reporter
2 min read

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Major international businesses like Mondelez International (MDLZ) could find their operations exposed as Russia prepares for a potential invasion of Ukraine, the latest geopolitical flare-up that poses risks to the global economy.

"We have local operations. We have local plans. We have very capable teams," Mondelez International CFO Luca Zaramella told Yahoo Finance in a recent interview. He was reminded of the 2014 Crimean crisis, when Moscow invaded and eventually annexed the peninsula.

"The first time around when there was the Crimea crisis, I have to say the business model went through the crisis quite well. I cannot say this won't be painful because it always is," Zaramella said.

Most of all, the executive expressed concern about the company's workforce in Eastern Europe who keep the business going. "We are worried about, first and foremost, our people...their safety."

VLADIMIR REGION, RUSSIA - DECEMBER 8, 2021: A truck stands outside the Bolshevik confectionery factory in Sobinka, 37km southwest of Vladimir. A subsidiary of Mondelez International, the enterprise has recently launched a new fully-automated production facility, thus creating new jobs and increasing the volumes of its output. Among other novelties, it boasts an unmanned mini-loader easily handling pallets with finished products as well as autonomously putting them into storage. Vladimir Smirnov/TASS (Photo by Vladimir Smirnov\TASS via Getty Images) · (Vladimir Smirnov via Getty Images)

In a recent note, Michael Lavery, Senior Research Analyst at Piper Sandler & Co., estimated that Russia could account for 10 to 11 percent of Mondelez International's European Union (EU) segment, and approximately 3 percent of its total sales in 2022.

Zaramella noted if this crisis does escalate, "there are ramifications in Europe in terms of what happens to exchange rates, devaluations...gas that goes from Russia into Europe," impacting not only Mondelez, but global business overall.

Last week, Secretary-General jens Stoltenberg said NATO will "take all necessary measures to protect and defend all allies," and is exploring potential sanctions to hit Russia financially if President Vladimir Putin does decide to invade. Options include sanctions and blockades on U.S. dollar use and natural gas pipelines, among others.

Zaramella, however, hopes "there is no such a crisis coming up and I truly hope they can find a solution to this."

Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at [email protected].

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