A company’s success depends largely on its annual net profit. A positive result is a sign of a company’s successful operation, but it is just a basis for the company’s future financial stability.
Margin of safety indicates the company’s resistance to changes in business environment, which is absolutely vital for assessment of companies and whole sectors of unstable Russian economy.
Information agency Credinform has prepared a ranking of Russian industrial machine engineering companies by their margin of safety. The companies of ship and machine-building industries from Saint Petersburg that are part of the United Shipbuilding Corporation have been selected for the ranking. A number of design centers, ship-repairing and machine-building enterprises throughout Russia are under this holding company’s management. Margin of safety calculation was based on the data from the Information and Analytical system Globas, and the data was ranked in descending order (Table 1).
|Name, INN, region||Sales revenue, billion RUB||Margin of safety, % of revenue||Solvency index Globas|
INN 7839395419 Saint Petersburg
|Nevskoe Design and construction office
INN 7801074335 Saint Petersburg
|ST. PETERSBURG MARINE DESIGN BUREAU MALACHITE
INN 7810537540 Saint Petersburg
|CENTRAL MARINE DESIGN BUREAU ALMAZ
INN 7810537558 Saint Petersburg
|CENTRAL DESIGN BUREAU FOR MARINE ENGINEERING RUBIN
INN 7838418751 Saint Petersburg
|SEVERNOYE DESIGN BUREAU
INN 7805468860 Saint Petersburg
|CKB OSK - ICEBERG
INN 7801573983 Saint Petersburg
INN 7830001910 Saint Petersburg
INN 7817315385 Saint Petersburg
INN 7811039386 Saint Petersburg
|SHIPBUILDING PLANT SEVERNAYA VERF
INN 7805034277 Saint Petersburg
|Average industry value||10,74||10,79||15,11||12,77|
The enterprises in the Table 1 form the ship industry of Saint Petersburg. The analysis shows that two-thirds of the companies have a margin of safety that is lower than the average industry value, and four companies do not have one at all. Lack of margin of safety for Baltic Shipyard, Sredne-Nevsky Shipyard, Proletarskiy Plant and Shipbuilding Plant Severnaya Verf is caused by their loss as the result for the year. A decrease in revenue of the above-mentioned companies will result in a further growth of net loss.
As a result of margin of safety calculation, specialists of the Information Agency Credinform have pointed out the industry leaders - Admiralty Shipyard, Nevskoe Design and Construction Office, St. Petersburg Marine Design Bureau Malachite. These enterprises have the strongest resistance to changes in economic environment. However, it is necessary to mention that a large margin of safety does not guarantee sustainable development for several years, as in only one year the Admiralty Shipyard had a drop in its margin of safety by over 30%. One of the key factors that influence the margin is decrease in sales revenue caused by drop in the number of orders.
Information agency Credinform has observed trends in the activity of the largest companies of the real sector of economy in Voronezh region
Enterprises with the largest volume of annual revenue (TOP-1000), were selected for the analysis, according to the data from the Statistical Register for the latest available periods (for 2013-2017). The analysis was made on the basis of the data of the Information and Analytical system Globas.
|№ in TOP-1000
Name, INN, main type of activity
|Net assets value, billion RUB||Solvency index Globas|
|1 JSC MINUDOBRENIYA
Manufacture of fertilizers and nitrogen compounds
|2 JSC ILYUSHIN FINANCE Co.
Financial leasing (leasing/subleasing)
|3 JSC Liski-Fitting
Manufacture of tubes, pipes, hollow profiles and related fittings, of steel
|4 JSC Voronezh Synthetic Rubber
Manufacture of synthetic rubber in primary forms
|5 JSC VORONEZH AIRCRAFT
Manufacture of helicopters, aeroplanes and other aircraft
|996 WOODVILLE LIMITED
Manufacture of wooden building constructions and millwork
|997 JSC VIDEOPHONE
Renting and operating of own or leased untenanted real estate
Process of being wound up, 07.08.2017
|998 JSC CHERNOZEM COMMUTER PASSENGER COMPANY
Passenger rail transport, interurban
|999 JSC UZ-DAEWOO AUTO-VORONEZH
Wholesale of motor cars and light motor vehicles
Process of being wound up, 25.05.2017
|1000 KELLOGG RUS LLC
Manufacture of preserved rusks, crackers and other rusk bakery products, pastry, cakes, fancy cakes, pies and biscuits
— growth of the indicator to the previous period, — decline of the indicator to the previous period.
For a five-year period average amount of net assets of TOP-1000 companies has increasing tendency (Picture 1).
Share of companies with insufficiency of property in the TOP-1000 has increasing trend for the last five years (Picture 2).
The revenue volume of 10 leaders of the industry made 21% of the total revenue of TOP-1000 companies in 2017(Picture 3). It demonstrates low level of productive concentration in Voronezh region.
In general, an increasing tendency in revenue volume is observed (Picture 4).
Profit and losses
The profit volume of 10 leading enterprises in 2017 made 35% of the total profit of TOP-1000 companies (Picture 5).
In general, the average values of profit indicators of TOP-1000 companies tend to increase over a five-year period (Picture 6).
Over a five-year period, the average values of net profit indicators of TOP-1000 companies tend to increase. Besides, the average value of net loss decreases (Picture 7).
Key financial ratios
Over the five-year period the average indicators of the current liquidity ratio of TOP-1000 were above the range of recommended values – from 1,0 up to 2,0 with increasing tendency (Picture 8).
Sufficiently high level of average values of the indicators of the return on investment ratio with decreasing tendency has been observed for five years (Picture 9).
This business activity ratio showed a tendency to decrease for a five-year period (Picture 10).
The largest share in the total revenue of TOP-1000 is owned by companies, specializing in wholesale and manufacture of food products (Picture 11).
73% of TOP-1000 companies are registered in the Register of small and medium enterprises of the Federal Tax Service of the RF. Besides, share of the companies in the total revenue of TOP-1000 amounts to 31% that is above the average indicator for the country (Picture 12).
Main regions of activities
TOP -1000 companies are unequally distributed on Voronezh region territory and registered in 34 districts. 70% of the largest companies in terms of revenue volume are concentrated in the center of Voronezh region – Voronezh city (Picture 13).
Financial position score
An assessment of the financial position of TOP-1000 companies shows that the largest number is in stable and an above the average financial position. (Picture 14).
Industrial production index
According to the data from the Federal State Statistics Service, during 12 months of 2018 increasing tendency is observed for the industrial production index of the enterprises of Voronezh region (Picture 16). Besides, the average indicator of index from month to month amounted to 96,5%.
According to the same data, share of the enterprises of Voronezh region in revenue volume from sale of goods, products, works services countrywide for 2018 was 0,62%.
Comprehensive assessment of the activity of largest real economy enterprises of Voronezh region, taking into account the main indexes, financial indicators and ratios, demonstrates the presence of favorable trends (Table 2).
|Trends and assessment factors for TOP-1000||Share of factor, %|
|Rate of increase (decrease) of average amount of net assets||10|
|Increase / decrease of share of companies with negative values of net assets||-10|
|Level of capital concentration||10|
|Increase (decrease) rate of average revenue amount||10|
|Increase (decrease) rate of average net profit (loss) amount||10|
|Increase / decrease of average net profit amount of TOP-1000 companies||10|
|Increase / decrease of average net loss amount of TOP-1000 companies||-10|
|Increase / decrease of average industrial values of the current liquidity ratio||5|
|Increase / decrease of average industrial values of the return on investments ratio||-10|
|Increase / decrease of average industrial values of the assets turnover ratio, times||-10|
|Share of small and medium enterprises in the industry in terms of revenue volume more than 22%||10|
|Financial position (major share)||10|
|Solvency index Globas (major share)||10|
|Industrial production index||5|
|Average value of factors||2,7|
— positive trend (factor), — negative trend (factor).