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Yandex speaks out from front line of Western sanctions against Russia

Commercial life in Putin Land not exactly a bed of roses, warns Russia's Google

Yandex, Russia's Google, has withdrawn its financial guidance for 2022 due to uncertainty over what this year will yield for the corporation.

The Moscow-headquartered business provides a search engine that has a commanding share of the local search market, as well as tools including e-commerce, mobile applications, an email service, transportation, and online advertising.

The majority of its operations are located in Russia, the pariah state shunned by much of the world for its continuing invasion of Ukraine, and the company is feeling the squeeze of sanctions imposed by the West – even if Russian dictator Vladimir Putin is shrugging them off as a minor irritant.

In a filing to update investors [PDF], Yandex said: "Current geopolitical tensions, their impact on the Russian and global economy, and the related stresses in broader social and business environment, have created exceptional challenges for our business."

Neither Yandex, any of its group companies, nor directors are specific targets of the sanctions. "Nevertheless, we are indirectly impacted by the designation of numerous parties in Russia and the restrictions that this places on international businesses in Russia."

In addition, it noted strict controls on the export of technology – including both hardware and software – to Russia, and the decision by multiple companies to suspend shipments or in some cases withdraw entirely from the country.

Companies including Apple, Dell, HP, Intel, SAP, Microsoft, Nokia, Ericsson, and many more have decided to take action to varying degrees. Some are relatively late to the party, including Toshiba, which today joined the list.

"These developments have adversely impacted the macroeconomic climate in Russia, resulting in significant volatility of the ruble, currency controls, materially increased interest rates and inflation and a potential contraction in consumer spending, as well as the withdrawal of foreign businesses from the Russian market," Yandex said.

The businesses run by Yandex are "market leaders and remain broadly stable," it added, yet in the near-term it expects a toll to be taken.

"We expect our advertising business to be affected by the withdrawal of multinational advertisers from the market and tighter advertising budgets for domestic businesses.

"Our ride-hailing business remains stable, but we are unable to predict the impact of broader macroeconomic trends and changing competitive and supply and demand dynamics.

"In our e-commerce businesses, we anticipate a reduction of discretionary spending by consumers, although we currently have limited visibility in this regard. In addition, we understand that many suppliers have announced intentions to suspend the sale of consumer goods to Russia, and several major shipping companies have ceased shipments to Russia; such actions, if prolonged, would result in a reduction of the number and selection of goods we are able to offer."

As such, under the current circumstances Yandex decided to withdraw financial guidance for the current year as "our visibility over the short- and medium-term is extremely limited."

Trading of Yandex's Class A shares remains suspended on Nasdaq and the company is unable to say when that will change. Trading of its shares on the Moscow Exchange resumed on March 29. ®

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