The Ukraine war is already having an impact on the construction and building market sector in Russia. Manufacturers of certain building materials are refusing to ship them en masse. The reason for this is their intention to increase prices by about 30 per cent in March in view of the rising dollar exchange rate. This primarily affects imported building materials, about 40 per cent of which are used in residential construction. Replacing these quickly with domestic building materials is not currently a prospect and will not avert the price increase in the construction industry. To compensate for this, the Russian government had already pledged RUB 126 bn (approx. EUR 887 mio, exchange rate as of 9 March 2022) for the years 2022 to 2024 shortly before the outbreak of the war.
Similar problems are also being reported by Russian construction market operators. Many manufacturers are said to have stopped deliveries in order to wait and recalculate prices. Here, too, increases of around 30 per cent are expected. The plasterboard manufacturer Knauf, for example, admitted that prices could change depending on changes in raw material prices and the exchange rate. Other suppliers are experiencing delays and temporary delivery problems due to the surge in demand and growing logistics problems.
Russian DIY customers are storming the markets to stock up and get ahead of the price increase. DIY store operators are sometimes overloaded because of the rush of customers. Leroy Merlin, for example, has introduced minimum order quantities in some of its regional stores and web shops.
Leading international players such as Ikea, Jysk, Obi and the parent holding company of the mega retail centres where many DIY chains are placed have stopped doing business in Russia because of the war. They face confiscation of their properties and punishment of senior managers.
France is pursuing a different approach. The president of the industrial federation MEDEF, Geoffroy Roux de Bézieux, announced at the beginning of March that the country would not withdraw from Russia and that the big companies like Danone, Auchan, Decathlon and Leroy Merlin would continue to operate there. They have a responsibility for their 160 000 employees across Russia and cannot simply abandon them to their fate.
Meanwhile, Leroy Merlin, the industry leader with 113 stores across Russia, around 36 000 employees and by far the largest turnover, has said it will continue to operate in Russia and is ready to increase its…