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"Young and Old have Suffered": Russian Business has Experienced the Strongest Drop in Profits
August 12, 2020 14:55


Large and medium-sized Russian businesses this year faced the strongest fall in profit in spring for the last 16 years. The record holder in terms of losses was the Moscow business that lost 85 billion rubles, while the Altai business showed the highest profit growth, where the indicator grew almost six times.

The aggregate profit of large and medium-sized Russian enterprises in March-May 2020 collapsed compared to the same period last year by 67%, the international audit and consulting network FinExpertiza reported in a study. This is the deepest fall in the spring months in at least 16 years, the report says. The study was conducted without taking into account small businesses.

For three months of spring, the business made a profit of 1.4 trillion rubles, FinExpertiza notes. Profitable enterprises, which share was about 64%, made a profit of 3.05 trillion rubles. And 36% of unprofitable businesses generated 1.65 trillion rubles in losses. The financial performance of business in 58 regions has worsened, and in 27 subjects have improved.

In most Russian regions, businesses managed to finish the spring with a profit. The loss, which total volume amounted to 199 billion rubles, was received by enterprises of only 16 regions, with 43% of this amount accounted for by Moscow. The list of regions with the largest losses is as follows:

Moscow - 85 billion rubles;
Yamalo-Nenets Autonomous District - 51.2 billion rubles;
Komi - 19 billion rubles;
Amur Region - 13.5 billion rubles;
Nenets Autonomous Okrug - 7.7 billion rubles.

In terms of the dynamics of the fall in financial indicators, the business of Ingushetia became the absolute record holder - here the financial result of enterprises for the coronavirus spring deteriorated by 3262%, the study says. Next comes Chechnya, where a drop of 984% was recorded. This is followed by the Nenets Autonomous Okrug (-324%), the Amur Region (-323%) and Crimea (-315%).

The largest profit growth was shown by the business of Altai (+ 574%), which benefited "from the beginning of the influx of tourists against the background of closed borders,"  FinExpertiza notes. Belgorod region (+ 237%), Mordovia (+ 108%) and Murmansk region (+ 100%) follow it in the list of record holders.

The main generator of losses for March-May 2020 was the wholesale trade in natural gas, the study says. Due to falling gas prices and falling demand from Europe, the loss in this sector amounted to 231 billion rubles.

“The coronavirus crisis affected both large companies from the oil and gas sector and heavy industry, as well as small and large enterprises   from industries oriented to mass demand,”  Elena Trubnikova, President of FinExpertiza says. She stressed that "the restart of the largest economies may be significantly delayed and will be very heterogeneous." “The recovery of domestic consumer demand from the Russian population against the background of collapsed income will also be extremely slow,” Trubnikova added. This  means that "the Russian economy, business and population will have to overcome the consequences of the coronavirus for a long time."

Author: Anna Dorozhkina

Tags: coronavirus economic crisis Russian economy Russian business  

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