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Western sanctions against Russia bite...U.S. companies?

Lauren Lyster
Daily Ticker

U.S. Secretary of State John Kerry said Thursday the U.S. and Europe will move to impose heavier economic sanctions against Russia if the country disrupts Ukraine’s May 25 presidential elections.

Related: Fmr. NATO Allied Commander: U.S. stock investors should not be concerned about Russia/Ukraine

But two rounds of economic sanctions against Russia (which target individuals, companies and banks) could be backfiring in one sense: U.S. companies such as Deere (DE) and Visa (V) are warning that their profits are suffering because of Western efforts to contain Russia's involvement in Ukraine. In the accompanying video, Yahoo Finance senior columnist Michael Santoli explains which companies are being impacted and why.

Related: Jim Rogers: Forget U.S. markets, I’m buying Chinese and Russian stocks

Farm equipment maker Deere cut its full-year outlook, citing credit restrictions for customers in Russia, Ukraine and other other ex-Soviet republics. The company said sales would fall significantly in these regions.

Visa said U.S. sanctions against Russia were hurting its card transaction volumes and that revenue growth will slow further this quarter, after the company stopped providing services to two Russian banks along with rival Mastercard (MA). Meanwhile, House Speaker John Boehner said in a recent interview on Fox that he thinks U.S. sanctions should go further in targeting Russian banks. 

The tensions are also impacting consumer companies operating in the region, regardless of the sanctions. Santoli says Pepsico (PEP) has "huge market share" in Russia, where the company does $5 billion in sales and became popular well before Coca-Cola (KO). Pepsi is vulnerable to the conflict given its sales base in the region. McDonald's (MCD) has also been impacted, having to close some stores in Ukraine early due to the unrest there and having to temporarily shutter three restaurants in Crimea.

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