How business media spreads economic nonsense

Buchhaltung unter der Lupe
Funds can’t just disappear from companies’ books. (Image: Tumisu / pixabay)

Russia’s invasion of Ukraine has devalued company assets in one fell swoop. The case of Holcim shows what is happening in concrete terms, and that media are spreading nonsense.

“The Russian business has not been included in Holcim’s books since March 2022,” Swiss media reported Wednesday morning on the sale of the Russian activities of building materials manufacturer Holcim, raising eyebrows.

But … where on earth are the funds supposed to be from one day to the next?

Money not disappeared set out on a search and finally got to the bottom of the matter. After all, an old accounting principle is “no booking without a receipt”. Even with the decision of the company’s management to leave a market, the money cannot immediately disappear from the books.

First of all, the basis of the media report is that the building materials manufacturer Holcim is withdrawing from the Russian market and those activities will be taken over by local management.. This was stated in a communiqué on Wednesday.

Deconsolidation as reason

However, it goes on to say that the business in Russia has been “deconsolidated” since March 2022 with the decision to leave the market. Ahhh, think now all economically-savvy readers.

So the Russian business is still on Holcim’s books, but no longer fully consolidated.

That is a big difference.

Exclusion from key figures

Interested parties can find further information on the Russian business in the half-year financial statement of the cement group. There, as in the current media release, it is stated that activities in Russia accounted for less than one percent of consolidated Group sales in 2021.

From March 1, 2022, however, Russia would be excluded from key figures such as sales, recurring operating profit at Ebit level and free cash flow.

The data will therefore not disappear from Holcim’s books, but will be neatly factored out.

The rolling ruble

However, the operating profit generated by the day-to-day business in Russia since March 1, 2022, is reported under the item “Profits from activities to be discontinued and other non-operating activities”.

On top of that, Holcim lists cash holdings in Russia as “restricted cash” in short-term financial receivables as of June 30, 2022, it stated.

Even the exchange rate used against the Russian ruble is disclosed by the company.

High write-off

At the same time, with the analysis of the overall situation of Holcim, an impairment charge of 88 million Swiss francs has been taken in respect of real estate, factories as well as equipment in the Europe segment, it said.

In other words, from one stroke to the next, Holcim’s assets in Russia were worth practically nothing. However, the businesses did not immediately disappear into the ground without a trace.

Money coming back

What will happen now with the sale of the Russian activities to local management? Holcim will write off the items still on its books as of the transfer of the sale.

However, the proceeds that Holcim will receive for the sale, but does not want to disclose in detail, will still be included in Holcim’s financial statements.

External transparency

Since the world’s largest cement producer is a listed company that will in future have its shares traded exclusively in Switzerland, as also reported by, it will probably at least mention these Russian proceeds in its annual accounts at some point.

Corporations often do this so that no one can accuse them of non-transparency, such as with sensitive Russian activities.

Materiality of importance

Depending on the size of the company, however, these details could simply be lost in the collective pot of figures on mergers, acquisitions and disposals, as well as cash flow, because they are all simply summarized.

However, such information will certainly not simply ‘disappear from the books’ as reported by various Swiss business media.


How business media spreads economic nonsense

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