Legrand withdraws from the Russian market: A strategic decision

Legrand, the French electrical equipment manufacturer, has sold its activities in Russia, marking a strategic withdrawal from the Russian market.

Share:

Le siege de l'entreprise Legrand a Limoges (87)

Legrand withdraws from the Russian market and sells its activities to a local industrial player. This decision marks a significant turning point in the company’s strategy, and is the result of a series of events and strategic reflections.

Strategic Disengagement

Legrand’s decision to withdraw from the Russian market was first communicated on January 25, 2023. This announcement was followed by a careful examination of the various options available for its corporate strategy. Finally, on October 4, 2023, Legrand’s Russian activities were sold to a local industrial player, thus ending the company’s presence on the Russian market.

The Importance of Business in Russia

To fully understand the impact of this decision, it is essential to consider the importance of Legrand’s activities in Russia. By 2022, Russian operations accounted for around 1.5% of the company’s annual sales. This means that Russia was a key market for Legrand, contributing significantly to its financial results.

Moreover, Legrand’s commitment in Russia was tangible thanks to its four factories on Russian territory, employing around 1,100 people. These plants were the heart of Legrand’s production in Russia, helping to supply the local market with high-quality electrical products.

European Sanctions and Uncertainties

The decision to disengage from Russia was preceded by major geopolitical developments. In February 2022, Russia invaded Ukraine, leading to European sanctions against Russia. These sanctions have had a significant impact on European companies operating in Russia, creating an increasingly difficult business environment.

Initially, Legrand had chosen to maintain its activities in Russia despite the sanctions, but over time the company faced increasing operational difficulties and uncertainties. The rapidly changing geopolitical situation has made long-term planning and management of operations in Russia difficult.

Impairment of Assets and Financial Implications

The decision to withdraw from Russia also had significant financial implications for Legrand. The company booked an asset impairment charge of €150 million as a result of this decision. This reflects the book value of assets related to Russian operations, which had to be adjusted to reflect the company’s imminent exit from the Russian market.

This asset write-down was a necessary accounting choice, but it also highlights the costs and challenges associated with withdrawing from a key market. For Legrand, this is a short-term investment aimed at withdrawing from a market that has become too risky.

Strategic Reflections and the Future of Legrand

The sale of Legrand’s Russian activities represents an important strategic decision for the company. This is a key step in adapting the company’s strategy to an ever-changing geopolitical environment. It also reflects Legrand’s commitment to minimizing operational risks and focusing on markets where the company can achieve positive, sustainable results.

As Legrand withdraws from the Russian market, the company looks to the future by continuing to supply innovative electrical solutions to other international markets. This decision underlines the importance of strategic flexibility and adaptation in the business world, particularly when geopolitical issues are at stake.

Ultimately, the sale of Legrand’s Russian operations marks an important chapter in the company’s history. It shows how companies must constantly reassess their strategy to adapt to new economic and geopolitical realities, while remaining true to their mission of providing quality products and services to their customers worldwide.

The Luxembourg-based group will handle engineering, procurement, commissioning and installation of flexible pipelines and umbilicals to link a new field to Egypt’s existing offshore infrastructure, with offshore work scheduled for 2026.
British firm Octopus Energy is considering a £10 billion spin-off of Kraken Technologies, involving an upcoming minority stake sale, and has initiated preliminary discussions with banks to oversee the strategic operation within the next year.
Investment fund Ardian finalises its takeover of Akuo and appoints former Électricité de France executive Bruno Bensasson to steer the renewable-energy developer’s growth towards five gigawatts of installed capacity by 2030.
TotalEnergies acquires 50% of AES' renewable portfolio in the Dominican Republic following a previous purchase of 30% of similar assets in Puerto Rico, consolidating 1.5 GW of solar, wind, and battery storage capacities in the Caribbean.
TotalEnergies is selling half of a 604 MW Portuguese energy portfolio to the Japanese consortium MM Capital, Daiwa Energy and Mizuho Leasing for €178.5mn, retaining operation and future commercialisation of the assets concerned.
Shell announces amendment of two annual reports after notification by Ernst & Young of non-compliance with SEC auditor partner rotation rules; however, financial statements remain unchanged.
The Financial Superintendency of Colombia approves an amendment to Ecopetrol’s local bonds and commercial paper program, enabling issuance of sustainable, indexed, or in-kind repayable instruments.
ABO Energy is selling its subsidiary ABO Energy Hellas and an energy project portfolio of approximately 1.5 gigawatts to HELLENiQ ENERGY Holdings, thus refocusing its strategic resources towards other markets, notably Germany, without major financial impact anticipated for 2025.
Iberdrola announces a supplementary dividend of €0.409 per share for 2024 under the "Iberdrola Retribución Flexible" programme, bringing the total annual remuneration to €0.645 per share, representing a year-on-year increase of 15.6%.
BHP has signed contracts with COSCO Shipping to charter two ammonia-powered Newcastlemax bulk carriers, primarily for transporting iron ore between Western Australia and Northeast Asia starting from 2028.
CBAK Energy and Anker Innovations jointly launch a battery cell manufacturing facility in Malaysia, with a commercial potential estimated at $357 million, further strengthening their strategic partnership in the lithium-ion battery sector.
ORIX announces the sale of the majority of its stake in Greenko to AM Green Power and commits a new USD 731mn investment in the Luxembourg-based AMG holding, confirming its strategic repositioning in next-generation energy.
Invenergy seals four further contracts with Meta to supply nearly eight hundred megawatts of solar and wind power to the group’s data centres, lifting total cooperation between the two companies to one point eight gigawatts.
Pedro Azagra leaves his role as CEO of Avangrid to become CEO of Iberdrola, while Jose Antonio Miranda and Kimberly Harriman succeed him as CEO and Deputy CEO respectively of the American subsidiary.
The US investment fund Ares Management enters Plenitude's capital by acquiring a 20% stake from Eni, valuing the Italian company at 10 billion euros and reinforcing its integrated energy strategy.
ENGIE secures a contract to reduce Airbus' industrial emissions in France, Germany, and Spain, targeting an 85% decrease by 2030 through various local energy infrastructures.
Alain Rhéaume, Chairman of Boralex’s Board of Directors for eight years, will leave his position by December, following the appointment of his successor by the governance committee of the Canadian energy group.
Norwegian group Statkraft plans an annual cost reduction of NOK2.9bn ($292 million) by 2027, citing possible job cuts amid rising financial burdens and volatility in the European energy market.
EDF merges EDF Renouvelables and its International Division into EDF power solutions, led by Béatrice Buffon, to optimise its global 31 GW low-carbon energy portfolio and strengthen its international positioning.
TotalEnergies announces a strategic partnership with Mistral AI to establish a dedicated innovation laboratory integrating artificial intelligence tools aimed at enhancing industrial efficiency, research, and customer relations.