Accenture Plc (ACN) said the crisis in Ukraine is causing “uncertainty in the marketplace,” joining companies from DuPont Co. to Commercial Metals Co. in bracing for a potential financial fallout from Russia’s confrontation with its neighbor.
“We are carefully monitoring the recent geopolitical developments in eastern Europe,” Accenture Chairman Pierre Nanterme said today on a conference call. The global economic environment “frankly continues to be challenging, especially in the emerging markets,” he said.
Russia’s annexation of Crimea, in Ukrainian territory, has drawn sanctions from the U.S. and Europe. The tensions have sent ripples throughout emerging markets, with bond sales in developing countries falling 23 percent to $247 billion in the first quarter even after the busiest start of a year on record.
Accenture, the world’s second-largest technology-consulting company, has been counting on expansion in emerging markets to help make up for sluggish growth in western Europe and the U.S. The Dublin-based company got 40 percent of its $7.13 billion in sales last quarter from Europe, the Middle East and Africa. A spokesman for Accenture declined to comment on Nanterme’s remarks.
Shares of Accenture dropped 5 percent to $78.80 at the close in New York, the biggest one-day drop since June 28, 2013.
Accenture trails International Business Machines Corp. in the technology-consulting industry. IBM’s fourth-quarter revenue from Europe, the Middle East and Africa fell 2 percent last quarter from a year earlier, led by Russia. The company has had operations in Russia since 1972, according to its website.
James Sciales, a spokesman for IBM, declined to comment on its business in eastern Europe.
DuPont, the largest U.S. chemical maker, said this month disruptions in Ukraine, along with cold weather in North America, will weigh on its first-quarter sales and earnings. Seed deliveries are being harmed by unrest in Ukraine, the world’s third-largest corn exporter, the company said last month.
Steel producer Commercial Metals said today the political situation in Ukraine could have a negative impact on its European operations. General Electric Co. and Boeing Co. have also said they are closely monitoring developments in the area.
Russian President Vladimir Putin’s standoff against the U.S. and its allies over Ukraine, the worst since the Cold War, is threatening to tip his country’s economy into recession after last year facing the slowest growth since 2009.
The disturbance has created renewed risk for Hollywood film studios, which represent about 70 percent of ticket sales in Russian theaters. An effort in Russia’s Duma to impose a 50 percent limit on foreign films playing inside the country has gained new attention.
Crimea’s new status has also made it impossible to distribute films in the territory under existing Ukrainian contracts, Vadim Smirnov, general director of 20th Century Fox CIS, told the Hollywood Reporter. The situation is unclear and changing daily, Chris Petrikin, a spokesman for Fox in Los Angeles, said in an e-mail to Bloomberg News.
U.S.-based companies are the largest source of foreign investment in Russia, primarily in technology and financial services, according to a 2013 report by Ernst & Young. Business interests in the country have been growing after the nation joined the World Trade Organization in 2012, according to the report.
The U.S. Senate and House passed separate bills today imposing additional sanctions on Russian officials for the nation’s annexation of Crimea. The Senate bill, passed on a voice vote, includes about $1 billion in loan guarantees and authorizes $150 million in direct assistance to Ukraine. The House legislation would impose additional asset freezes and visa bans on senior Russian officials and corporations.
To contact the editors responsible for this story: Crayton Harrison at email@example.com Ben Livesey