The tensions between Russia and Ukraine are flaring up after Russian President Vladimir Putin recognized the independence of two separatist regions in eastern Ukraine and positioned Russian troops in these regions.
Following the development, Western nations are contemplating sanctions. Germany announced earlier on Tuesday that it has stopped certification of the Nord Stream 2 gas pipeline, which serves as a conduit for moving natural gas from Russia to Germany through the Baltic Sea. Ukraine is planning to sever ties with Russia.
Given the globalization that has occurred over the years, the geopolitical tension in eastern Europe is bound to have ramifications for multinational global corporations.
How Big Is Ukraine's Impact? Out of the S&P 500 companies that have reported earnings between Dec. 15 and Feb. 17, as many as 18 have mentioned Ukraine on their earnings call, FactSet reported. The five-year average for Ukraine mentions is four.
About 72% have referred to inflation on their earnings call, the financial data company said.
The relatively smaller number of S&P 500 companies mentioning Ukraine may have to do with limited revenue exposure of these companies to Russia and Ukraine, FactSet said. The firm estimates the combined revenue exposure of S&P 500 companies to Russia and Ukraine to be about only 1%.
Related Link: Ukraine Crisis Boosts Gold Names: A Gold Name Hits Our System's Top Ten For The First Time Since 2020
Companies With Russia, Ukraine Exposure: The following S&P 500 companies, according to FactSet, have the highest revenue exposure to Russia and Ukraine:
- Philip Morris International Inc. (NYSE:PM)
- PepsiCo, Inc. (NASDAQ:PEP)
- Mohawk Industries, Inc. (NYSE:MHK)
- McDonald's Corporation (NYSE:MCD)
- EPAM Systems, Inc. (NYSE:EPAM)
- Carnival Corporation & plc (NYSE:CCL)
- PVH Corp. (NYSE:PVH)
- Westinghouse Air Brake Technologies Corporation (NYSE:WAB)
- Mondelez International, Inc. (NASDAQ:MDLZ)
- Deere & Company (NYSE:DE)
Philip Morris derives about 8% of its revenue from these two countries, FactSet said. The geopolitical uncertainty is likely to increase the risks around the multinational cigarette and tobacco company's operations in the region, Seeking Alpha reported, citing Morgan Stanley analyst Pamela Kaufman.
This region, according to the analyst, has been a key growth driver for IQOS, the company's portfolio of heated tobacco and e-vapor products.
Beverage giant Pepsi derives about 4.4% revenues from Russia-Ukraine combined. Mohawk, McDonald's and EPAM Systems all have revenue exposure of over 4% each.
