Apple’s decision to leave the Russian market may have just a little financial effect, but one expert thinks it might harm relationships with suppliers.
Over Russia’s invasion of Ukraine, Apple Pay was one of the first services to be suspended. So Apple stopped selling anything in the area from its online stores.
Analyst and hedge fund manager Daniel Martins of The Street believes that Russia is now at risk of an economic disaster. A large worldwide consumer goods and services provider like Apple should be affected, he says.
Apple’s direct sales will have an influence, as would the effect of a possible restriction on collaborating with Russian technology suppliers.
However, according to Martins, Russia’s economy is merely 2% of the world’s total. The company’s sales in the area is expected to reach $2.5 billion in 2020, according to prior predictions.
According to Martins, “although this would sound like a significant amount to other firms, it represented less than 1% of Apple’s entire revenue that year.”
Apple’s earnings per share (EPS) may be calculated using a “simple back-of-the-envelope calculation,” as he puts it, using the company’s blended op margin, the profit margin that is derived from many divisions or products.
If Apple has a combined operating margin of 24% in 2020, and a tax rate of 14.4%, Martins goes on to say. Compared to Apple’s fiscal 2020 sales of $3.27, Russia’s $2.4 billion revenue represents less than 3 cents in earnings per share (EPS).
There is little to no risk for Apple if it decides to stop selling in Russia. There is just the possibility of difficulty in dealing with regional vendors.
The supply chain might be severely disrupted if Russia becomes increasingly economically isolated from the rest of the globe,” he says. Even if this worries some firms, Apple is in a better position than others to deal with it.
This Cupertino firm does not have a supplier in Russia (or Ukraine, for that matter),” argues Martins based on data he gathered in 2020. China, Japan, Taiwan, South Korea, and Vietnam make up more than 80% of the world’s population.”
Other more pressing concerns
Martins does not address other concerns, such as the recent opening of Apple’s first real offices in Russia. Large IT firms with a presence in the nation are now obligated to do so by law if they do business in the country.
New Russian legislation, on the other hand, doesn’t seem to need much more than a symbolic presence.
However, according to AppleInsider, Apple does utilise 10 Russian smelters and refiners. Because the nation is a major producer of raw resources, including titanium and palladium, it makes use of them.
Russia is not the only source of titanium, since the metal is also produced in the United States and China. In spite of this, Palladium, which is often used in electrodes and other components, is the leading producer in the world.
There are now two big energy producers: Russia and the Ukraine. Prices are already soaring due to a lack of supplies and the ongoing war. source