Unilever still earning millions in royalties from Russian subsidiary: report

Unilever has received at least 200 million euros from Unilever Russia since early 2022, despite its solemn promise to not profit from the Russian branch after the invasion of Ukraine. A significant part of that money went through the Netherlands, RTL Z reports based on Unilever Russia’s annual accounts.

Shortly after Russia invaded Ukraine in February 2022, Unilever said it couldn’t leave the country because if it were to close down or sell the Russian branch, its assets would end up in the hands of the Russian State. Instead, the company promised that it would not profit from Russia - no more money would flow to or from the Russian branch and it would not import or export from the country.

But to this day, billions of rubles flow from Russia to the Unilever headquarters in London, the Russian subsidiary’s annual accounts for 2023 show. Unilever Russia isn’t paying dividends, but royalties for the use of intellectual properties like brands and recipes.

And those amounts have increased enormously. In 2023, Unilever Russia paid 18 billion rubles (181 million euros) to other companies within the Unilever Group outside Russia. In 2022, it was 5 billion rubles (50 million euros). Since the war broke out and Unilever promised not to benefit from Russia at all, at least 200 million euros went from Unilever Russia to the head office.

The lion’s share of the money was transferred to Unilever Global IP Limited, a British subsidiary responsible for collecting royalties for the use of “all forms of intellectual property,” including patents, trademarks, know-how, and similar rights. That subsidiary received 130 million euros from the continued Russia activities. About 45 million euros reached the Unilever head office through the Netherlands, with payments going to Unilever IP Holdings BV.

Unilever acknowledged to RTL that it was still receiving money from Russia. A spokesperson said that part of the intellectual property linked to Russian Unilever brands like Inmarko and Kalina was transferred to the Russian company last year. The transaction involved a lot of money, but was necessary to set the Russian subsidiary apart, the spokesperson said. They did not say whether this was a permanent transfer.

The spokesperson also would not say whether that transaction would stop payments from Russia completely. Since Unilever Russia also sells well-known global brands like Axe, Dove, and Magnum, it seems unlikely.

Last year, Follow the Money revealed that Unilever Russia had managed to double its profits. It also found that - despite Unilever’s promise not to spend any more on advertising in Russia - the Russian branch increased advertising expenditure significantly.