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Roshen to axe 700 jobs at Russian plant

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By Oliver Nieburg+

23-Jan-2017
Last updated on 23-Jan-2017 at 13:11 GMT2017-01-23T13:11:38Z

Roshen to cease production at Liptesk plant after failed sale. Photo: Roshen
Roshen to cease production at Liptesk plant after failed sale. Photo: Roshen

Ukrainian confectioner Roshen is to stop producing at its factory in Liptesk, Russia, indefinitely, in a move set to impact 700 jobs.

The company said in a release that an investigation by Russian authorities – related to trademark disputes with part state-owned competitor United Confectioners – “made it impossible” to sell the factory.

‘Active discrediting’

Roshen - owned by pro-West Ukrainian president Petro Poroshenko - said production at the Liptesk plant had dropped dramatically due to decreased purchasing power in Russia and “active discrediting” of its factories in Russia and Ukraine.

Russian authorities froze Roshen assets in Russian banks and seized the firm’s Lipetsk factory in 2014 amid a trademark lawsuit between Roshen and Russian part state-owned competitor United Confectioners.

Roshen has one existing factory in Lipetsk and was due to open a second in the region in 2014 under a RUB 9 billion ($249m) investment.

But the company will stop all Liptesk operations indefinitely from April this year leading to mass layoffs.

Banned imports

Russia’s federal service for health and consumer rights (Rospotrebnadzor)  has banned Roshen imports from Ukraine since 2013, after allegedly finding unacceptable levels of the carcinogen Benzo[a]pyrene (BaP) in its chocolate.

Roshen has deined these claims and last week called the ban “unjustified”.

Later, Russian authorities banned all Ukrainian confectionery imports to Russia from September 2014 after allegedly finding “inconsistent product labeling” in brands owned by Ukrainian firms Konti and ABK.

Ukraine had earlier banned imports  from United Confectioners in April 2014 after alleged violations of domestic laws on food safety and labelling.

Ukraine’s president

Pro-EU Ukrainian president Poroshenko said he would sell the company if elected president, but a sale has not yet materialized in spite of rumors of interest from Orkla.

Roshen announced in 2015 it was to close its Mariupol factory in Southeastern Ukraine, which suspended operations in February 2014 due to unrest in the region.

Roshen is headquartered in Kiev, Ukraine. It operates three other Ukrainian factories –one each in Kiev, Vinnitsa and Kremenchug, as well as facilities in Lithuania and Hungary.

The Liptesk operation represents Roshen’s only production activity in Russia.

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