Profits of Russian companies fell by 1.8 times in October

The balanced financial result (profit minus losses) of Russian companies in October 2022 decreased by 1.8 times compared to the same period last year, amounting to 1.66 trillion rubles. (in October 2021 it was 3 trillion), follows from Rosstat data. The total profit of profitable organizations reached 1.78 trillion rubles, while the loss of unprofitable organizations amounted to about 128 billion rubles.

The monthly financial result of the corporate sector in Russia began to decline steadily from June 2022, when it fell by 31% year-on-year. In July, there was a decrease by 15%, in August - by 16%, and in September organizations did not receive any profit at all (the total loss of companies exceeded the total profit by 728 billion rubles). In January-February, the net profit of Russian business was 66% higher than the comparative indicator of the previous year.

In October, a negative balance of profits and losses was recorded in several industries, follows from the calculations of RBC. In wholesale trade (except for cars and motorcycles), the loss amounted to 125 billion rubles. (against profit of 489 billion in October 2021), in retail trade, profit in October, on the contrary, grew to 79 billion rubles. (against 13 billion a year earlier). In the field of hotels and catering enterprises, the loss amounted to 2.1 billion rubles.

Companies in the manufacturing sector in October collectively received a profit of 707.6 billion rubles, but it decreased by 14.7% compared to October last year. In agriculture, the balance of profits and losses decreased by 2.2 times - to 51 billion rubles.

“These figures are related to the high base effect of last year. Now, to support business in the context of adapting to new conditions, reorienting transport and logistics chains, the government is implementing a plan of priority actions, and has also identified strategic priorities, ”the Ministry of Economic Development said in response to a request from RBC.

Results of ten months

According to the results of ten months, Rosstat recorded a decrease in the net financial result - by 8.1% in annual terms, to 21.8 trillion rubles. Profits decreased the most among organizations of water supply, collection and disposal of waste (by 22%), as well as companies in the field of fisheries (by 25.6%). Oil and gas companies reduced their profits by 19.4% compared to last year's level - to 2.3 trillion rubles.

Losses were received by firms in the field of transmission of steam and hot water and air conditioning (minus 29.8 billion rubles), postal services and courier activities (minus 27.6 billion). In addition, the results of organizations that specialize in research and development (minus 9.3 billion) went into the negative zone. trillion rubles) turned out to be 2.5 times higher than last year's values, follows from the materials of Rosstat.

The decline in profits in a number of industries, including mining, SberCIB analysts in August associated, among other things, “with the withdrawal of foreign partners from joint projects and sanctions restrictions imposed on high-tech sectors.”

Several industries showed high growth rates of financial results in January-October in annual terms. Among them are construction (an increase of 2.4 times), freight rail transportation (two times), as well as public catering and hotel business (plus 56%). In total, 41.3 thousand organizations received profit, and its total amount reached 26.87 trillion rubles, which is 4.4% higher than the value of the corresponding period of the previous year, indicate in Rosstat.

Methodology of Rosstat

The balance of profits and losses is calculated by Rosstat for a variety of medium and large non-financial enterprises for a comparable range of organizations; state institutions are also not included in the calculation. The figures are given at current prices, that is, not adjusted for inflation.

Rosstat receives operational (monthly) statistical information in the P-3 form based on financial statements. At the end of the year, the data are being specified, but, as a rule, insignificantly, a representative of Rosstat told RBC.

high base effect

Alexander Shirov, director of the Institute for Economic Forecasting of the Russian Academy of Sciences, does not consider the current dynamics of corporate sector profit reduction to be critical, explaining it in part by the effect of last year's high base. At that time, profit growth was determined, on the one hand, by high economic growth rates (Russia's GDP grew by 4.7% last year - ), on the other hand, by favorable changes in price and external conditions for most of the commodity sector, he noted.

“In times of crisis, there is always a transformation of income flows between sectors. As a rule, this is a flow between the financial sector and other sectors of the economy,” says Shirov.

In his opinion, a decrease in profits may be one of the risks for investment activity (but not at all the main one), along with a general weakening of the economic situation, GDP growth rates, and a slowdown in commodity prices.

If it weren't for the state's set of stabilization measures, the financial results of Russian companies would probably have fallen much more, says CSR First Vice President Gleb Pokatovich. “The fact that the decline in ten months was limited to 8% compared to last year (when the profits of enterprises grew multiple times against the backdrop of a rapid recovery from the consequences of the pandemic) is certainly the merit of the measures taken to stabilize the economy,” he says.