Putin’s Russia took over the four Russian factories of the Danish building materials manufacturer Rockwool from scratch, so the company no longer controls their operation. Rockwool calls the measure “coercive supervision” type state control, and stated that it does not consider it likely that the decision will be revoked. According to Rockwool, the Russian operation accounted for EUR 469 million in equity last year, which must now be written down, reports the World economy.
Photo: AFP
The move had an immediate impact on market sentiment, with Rockwool shares plunging 8% the day after Bloomberg first reported the corporate seizure.
Why is Putin’s decision a big deal for Rockwool?
Putin’s Russia rarely seizes multiple factories at once from foreign-owned companies, and Rockwool’s case is particularly notable because:
- Rockwool is an internationally recognized manufacturer of building materials,
- the company is present in more than 39 countries,
- and its factory also operates in Hungary, in Tapolca.
This means that Putin’s decision will not only cause a market shock in Russia, but may also indirectly affect Hungarian supply chains and the domestic construction industry.
How does Putin’s decision affect Hungary?
Rockwool has been operating in Hungary for several decades: Rockwool Hungary Kft. produces rock wool insulation material in Tapolca, roughly half of which goes to the domestic market, and the other half mainly to Romania, Bulgaria and Italy. And this means that:
- Putin’s Russian economic policy move may bring uncertainty to the supply chain,
- the fall in Rockwool’s stock market may also affect international investor sentiment,
- and the company’s European strategy may change, in which Hungary is also an affected player.
Although Rockwool emphasized in its statement that it protects its investment rights by legal means, it was not very optimistic about Russia restoring the previous situation.
