European distie giant mulls exit from Russian market

The €2bn pan-European distributor is not making deliveries to Russia and is weighing up options to exit the market three years after its $300m acquisition in the country

ELKO Group is considering pulling out of the Russian market amid the country's ongoing war with Ukraine.

The €2bn-revenue company had already stopped deliveries of IT equipment and household appliances to the Russian market since the start of Russia's invasion.

Supplying more detail, the group said in an effort to comply with all sanctions against Russia - including partner, product and transaction-related restrictions - the supply chain and the movement of goods by ELKO to Russia has been suspended.

ELKO Group acquired a Russian $300m-revenue devices and appliances distributor Absolut Trading back in March 2019.

The distributor has shared with our sister publication CPI that it is now seeking financial and legal guidance on options to withdraw from its assets registered in Russia.

ELKO said these discussions are currently ongoing and "any actions taken would be in accordance with the law and would fulfil all obligations to bondholders, financial and other partners".

"This process is legally complicated, and ELKO Group's ability to comment on these activities in detail is limited due to the laws and regulations governing the stock market," the firm said in a statement.

The Latvia-based firm is a sizable player in the eastern European market.

In December 2020 its CEO, Svens Dinsdorfs told CPI that his firm surpassing $2bn in revenues was a strong sign of health for the European tech distribution market more generally.

He said just a few years prior the group was wondering how it would achieve growth "at all".

"The general attitude was that distribution is a dying business. We have found our way out from that and of course it took a lot of time and focus," Dinsdorfs said.