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7 Aug, 2022 08:49

Iconic pencil maker hit by Russian counter-sanctions

One of the world’s oldest writing and art supplies manufacturers says it has to raise prices to alleviate costs on raw materials
Iconic pencil maker hit by Russian counter-sanctions

Russia’s ban on the export of timber has forced Czech pencil manufacturer Koh-I-Noor Hardtmuth to seek new suppliers and raise prices, the company’s owner, Vlastislav Brzhiza, told newspaper Seznam Zpravy.

The wood we used to import from Russia can no longer be imported from the country. We buy it from China, which buys the raw material from Russia, and bring it across the ocean,” Brzhiza said, adding that the situation has forced the company to raise prices on its flagship products by 15-20%.

The raw materials for the manufacture of pencils are byproducts in the production of veneer, which, in turn, is made from plywood billets. Russia stopped supplying Europe with billets as part of countermeasures to the Ukraine-related sanctions the EU placed on Moscow in March.

Prior to that, in 2021, Russian timber exports (including byproducts like birch logs, plywood logs, and fuel chips) to European countries amounted to roughly $504 million, according to the Federal Customs Service of Russia. More than half of the wood and timber exports went to Finland (around $374.5 million worth).

According to Brzhiza, the loss of direct access to Russian raw materials is not the only problem the company faces in connection with the situation in Ukraine. Koh-I-Noor Hardtmuth was also recently forced to shut down part of its production of erasers, as most of the products had previously been sold to the Russian market, and after Moscow launched its military operation in Ukraine, exports to Russia were stopped.

Koh-I-Noor Hardtmuth, founded in 1790, is one of the world’s oldest writing and art supplies manufacturers. The company owns four factories in the Czech Republic and one in Bulgaria, as well as a network of stores with the same name. Its products are exported to 90 countries. The company has an office in Russia, managed by subsidiary Koh-I-Noor Hardtmuth Rus. In 2021, the company’s revenue in Russia amounted to 427.6 million rubles ($7 million), with net profit topping 58 million rubles (roughly $1 million).

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