The largest companies of Russia: not by oil alone

newsletter 12/01/2018

As a rule, prosperity of the country's economy is judged by the largest enterprises. However, sometimes the results of famous domestic brands’ activity do not demonstrate all complexity of inland economic processes. The economy of Germany, for instance, is firmly associated with BMW and Mercedes, Volkswagen and others, but its GDP is mainly formed by small and medium business. At the same time, it is possible to judge the general level of the country's technological development and its main specialization in the international market by leading enterprises.

The main engines of the Russian economy, both by revenue and net profit, are enterprises of fuel and energy complex (FEC). Exporting oil and gas to Europe and Asia, domestic oil holdings are crucial for world cooperation that still gears economic growth of Russia to resources supply and global prices dynamics.

That is why it is pleasant that not only mineral companies are included in the list of the largest enterprises promoting the growth of the country’s economy.

Largest companies of Russia by annual revenue

Following the analyses of the largest companies of Russia by turnover, the share of FEC enterprises in total revenue of Top-100 reduced from 54% in 2015 to 44% in 2016 (see picture 1). However, the sector still dominates in the economy of the country. Nowadays the companies of the following business begin to make substantial contribution to the GDP: retailers increased their share from 14,1% in 2015 to 17% in 2016, electric power – from 4,1% to 9% and transport – from 5,6% to 7%. Reduction of total share of oil and gas enterprises in the rating indicates the positive trend of national economy diversification. At the current dynamics, the significant reduction of dependence of Russia on FEC should be expected. According to the Ministry of Finance, revenue from oil and gas sales in 2016 amounted to 36% of budget receipts. In 2014, the share of oil and gas revenue was 51%.

Picture 1. Distribution of revenue of Top-100 companies of Russia by the sectors of economy Picture 1. Distribution of revenue of Top-100 companies of Russia by the sectors of economy

GAZPROM, ROSNEFT and RZD remain the largest businesses in Russia (see table 1). However, the highest revenue increase rate for Top-10 companies was demonstrated by TRADE HOUSE PEREKRESTOK: its turnover during the year increased by 16,8%, up to 848,3 bln RUB, and the company rose from 9 to 8 position in the rating.

Table 1. Top-10 of the Russian companies with the highest revenue

Rating Sector Company Turnover 2016, bln RUB
1 - FEC GAZPROM 3934,5
2 - FEC OC ROSNEFT 3930,1
3 - Transport RZD 1577,5
4 - FEC GAZPROM NEFT 1233,8
5 - Trade TANDER (Magnit) 1175,2
6 - FEC SURGUTNEFTEGAZ 992,5
7 - FEC GAZPROM MEZHREGIONGAZ 884,8
8 Some Image+1 Trade TRADE HOUSE PEREKRESTOK 848,3
9 Some Image-1 FEC TRANSNEFT 803,1
10 Some Image+1 Trade TRADE COMPANY MEGAPOLIS 624,1

Table 2 contains companies with the highest revenue increase rate in 2016. Among them are ALROSA, GAZPROMNEFT-TSENTR and AGROTORG. ORENBURGNEFT, VERKHNECHONSKNEFTEGAZ and URALKALI had the highest rate of reduction of turnover for 2016. Significant decrease in revenue is due to downgrade of demand-supply situation in the commodity markets of petrochemical products.

Table 2. Russian companies with the highest rate of increase and decrease in revenue

Rating Sector Sector Turnover 2016, bln RUB
14 Some Image+33 Trade AGROTORG 481,7
32 Some Image+48 FEC GAZPROMNEFT-TSENTR 288,1
47 Some Image+16 Gems Gems 249,5
76 Some Image-27 FEC FEC 199,3
121 Some Image-48 Chemical industry URALKALI 131,3
127 Some Image-67 FEC VERKHNECHONSKNEFTEGAZ 128,5

Companies with the highest net profit

Another indicator for company size assessment and leaders identification is net profit.

Today the bulk of net profit is still with FEC companies. At the same time, growth in number of companies of other sectors is observed. For example, metallurgy enterprises have almost double increased net profit share in Top-100 compared to 2015 (see picture 2).

Picture 2. Distribution of net profit of Top-100 companies of Russia by the sectors of economy Picture 2. Distribution of net profit of Top-100 companies of Russia by the sectors of economy

Rating of the most profitable business of Russia has changed significantly in comparison with 2015 (see table 3). GAZPROM with net profit of 411,4 bln RUB heads the list.

The second profitable company is LUKOIL with 182,5 bln RUB.

Then follows POLYUS KRASNOYARSK, gold mining company with comprehensive financial result of 150,8 bln RUB. At the year-end, the company had three-fold increase in net profit and implemented new investment-attractive “Natalka deposit” project.

Through revaluation of exchange rate difference and devaluation of rouble to foreign currency, diamond-mining company ALROSA demonstrated the growth of figure in seven times and became fourth in the rating.

By means of military and industrial products sales, ROSTEC corporation with net profit of 124,7 bln RUB is the 6th. It should be noted that Russia is the second to the USA in term of armament export in the global market. According to the data for 2016, the country’s share is 23% of total world arms exports.

GAZPROM NEFT rose on 58 positions and demonstrated the highest net profit growth rate in almost 8 times for 2016. This result is mainly connected with the opening of the “Prirazlomnaya” oil production platform in the Barents Sea.

GAZPROM NEFT rose on 58 positions and demonstrated the highest net profit growth rate in almost 8 times for 2016. This result is mainly connected with the opening of the “Prirazlomnaya” oil production platform in the Barents Sea.

Table 3. Top-10 of the Russian companies with the highest net profit

Rating Sector Company Company
1 Some Image+1 FEC GAZPROM 411,4
2 Some Image+1 FEC LUKOIL 182,5
3 Some Image+28 Gold mining POLYUS KRASNOYARSK 150,8
4 Some Image+50 Gems ALROSA 148,6
5 Some Image+4 FEC NOVATEK 147,9
6 Some Image+12 Research and development ROSTEC 124,7
7 Some Image-3 Metallurgy MMC NORILSK NICKEL 122,7
8 Some Image+58 FEC GAZPROM NEFT 122,4
9 Some Image+54 Electric power FGC UES 106,0
10 Some Image-2 FEC TATNEFT 104,8

SURGUTNEFTEGAZ, used to be the first in the rating in 2015, deserves special mention. The company is no longer among the most profitable enterprises due to losses of 104,8 bln RUB in 2016. This was caused by loss in exchange rate difference: the company hold foreign currency for the account and sustained significant financial losses in 2016 on the background of the rouble strengthening.

Planned decrease of FEC share in the Russian economy is taking place: companies of IT (Yandex), telecommunications industry (MTS), pharmacy (R-Pharm) and other sectors appear in the lead.

At the current trend, dependence on oil and gas income and falling oil prices will not so critically influence all sectors; economy will continue to diversify and processing industry, construction and trade will become new drivers of growth.