Reckitt's Russia Withdrawal
Reckitt to sell Russian Hygiene unit to Arnest, facing £175 million loss amid ongoing exit
Anonymous
Key Points
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Arnest’s owner, Alexey Sagal, nicknamed Russia’s 'Hairspray King', has built a fortune by acquiring assets from Western firms exiting Russia; reports say his deals were backed by about 65 billion roubles in financing from state-backed bank VTB and show close ties to Russia’s industrial establishment and Vladimir Putin.
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This sale would mark Reckitt’s first material withdrawal from Russia, with the company retaining its health business footprint in the country; completion is expected in the second half of 2026, subject to customary conditions including UK regulatory approvals.
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Sanctions-related headwinds remain a drag; Reckitt said the impact from changing international sanctions on the Russia Hygiene business was about 200 basis points on Emerging Markets Like-for-Like Net Revenue in Q1 2026 and is expected to continue at a similar level until the divestment completes.
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The assets of the Russian Hygiene entity are predominantly cash and were previously reported as restricted; Reckitt expects a post-tax loss of around £175 million for 2026, with about £125 million recognized in the six months to 30 June 2026.
Reckitt Benckiser will take a £175 million post-tax loss from selling its Russian Hygiene business to local firm Arnest Management LLC, according to Financial Times. The deal, for an undisclosed sum, marks the company's first material exit from Russia since the Ukraine invasion. Completion is expected in the second half of 2026, subject to regulatory approval.
The Russian Hygiene unit makes up roughly 1% of Reckitt's core net revenue, so the financial hit is limited. Reckitt says the sale will not materially affect its Group Adjusted Operating Profit or Adjusted EPS in 2026. The company will keep its separate Russia Health business running.
Arnest's Owner Built Fortune Buying Western Exits
Arnest is led by Alexey Sagal, known as Russia's 'Hairspray King.' He has built his wealth by buying assets from Western companies leaving Russia. Reports say his deals were backed by about 65 billion roubles in financing from VTB, a state-backed Russian bank. Sagal also has close ties to Russia's industrial establishment and Vladimir Putin.
This pattern is common. Since the Ukraine invasion in 2022, dozens of Western firms have sold Russian assets — often at steep discounts — to local buyers with government connections. Reckitt's deal follows that same playbook, according to Sharecast.
Sanctions Dragged on Reckitt's Emerging Markets Sales
Before the sale closes, Reckitt is still feeling the pain. The company said sanctions tied to the Russia Hygiene business hit its Emerging Markets Like-for-Like Net Revenue by about 200 basis points — that means roughly 2 percentage points — in the first quarter of 2026. That drag is expected to continue at a similar level until the deal completes.
The Hygiene unit's assets are mostly cash, but that cash was previously listed as restricted — meaning Reckitt could not freely use it. That restriction is a key reason the company is booking such a large loss despite the unit being cash-heavy.
£175 Million Loss Spread Across Two Reporting Periods
Reckitt expects to book about £125 million of that £175 million loss in the six months ending June 30, 2026. The rest will follow when the deal formally closes in the second half of the year. The Russian Hygiene business is now classified as 'Held for Sale' on Reckitt's books, according to Sharecast.
Despite the size of the headline loss, Reckitt stressed it will not change adjusted profit or earnings per share in a material way. Exit costs and sanctions-related write-downs account for most of the £175 million figure, not a collapse in the business's underlying value.
Reckitt Keeps Health Business in Russia for Now
Reckitt is not making a full exit from Russia. The company will keep its Russia Health operations running after this sale. That business sells products like cold and flu treatments. Keeping a health-focused footprint gives Reckitt ongoing revenue while avoiding the reputational cost of a complete exit, a strategy it has pursued since 2022.
The decision to split — selling Hygiene while keeping Health — reflects a broader trend among consumer goods companies. Many are trimming riskier or more visible consumer brands in Russia while holding onto healthcare lines that carry more ethical cover, according to Sharecast.
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