Information Agency Credinform presents a review of trends in residential and non-residential construction in the Northwestern Federal District of Russia.
The enterprises of the sector within the Northwestern Federal District with the highest volume of annual revenue (TOP-10 and TOP-5000) have been selected for the ranking, according to the data from the Statistical Register for the latest available accounting periods (2015 and 2016). The analysis was based on the data from the Information and Analytical system Globas.
Legal forms and unreliable data
Limited liability company is the prevailing legal form among companies of the sector within the Northwestern Federal District. Non-public joint stock companies’ fraction is significant too (Picture 1).
As a result of investigations of the Federal Tax Service of Russia, almost 4% of the companies of the sector within the Northwestern Federal District have faced entries concerning unreliability of data in the Unified State Register of Legal Entities (Picture 2).
In 2016, sales revenue of 10 industry leaders within the Northwestern Federal District amounted to 18% of total revenue of TOP-5000 companies. This points to a high degree of business competition within the industry. LSR. REAL ESTATE-NORTHWEST LLC is the largest company by revenue in 2016 (Picture 3).
2011 witnessed the best revenue results in the decade for the industry in general. Crisis periods in economy of 2009-2010, 2012-2013 and 2015 resulted in decrease in industry average values. In general, revenue demonstrates relative stability (Picture 4).
Profit and loss
In 2016 profit of 10 industry leaders within the Northwestern Federal District amounted to 45% of total profit of TOP-5000 companies. LSR. REAL ESTATE-NORTHWEST LLC is also the leading company by profit in 2016 (Picture 5).
Average profit values of the companies of the sector are not stable within the decade. There were negative values in 2014 – 2015 against the backdrop of economic downturn. 2016 witnessed some increase in profit, but in general profit tends to decline. The industry has performed its best in 2008 (Picture 6).
There were 724 loss-making enterprises among TOP-5000 companies in 2015. In 2016 the number decreased to 678, or by 6%. Moreover, their average loss increased by 36%. Average profit of other TOP-5000 companies has increased by 6% for the same period (Picture 7).
Key financial ratios
During 9 years within the decade industry average values of liquidity coverage ratio were lower than the recommended value – from 1,0 to 2,0 (highlighted yellow in Picture 8>).
Liquidity coverage ratio (a ratio of current assets to current liabilities) reveals the sufficiency of a company’s funds for meeting its short-term liabilities.
Solvency ratio (a ratio of shareholders’ equity to total assets) shows the dependence of the company on external loans. Its recommended value: >0,5. A value less than a minimum one is indicative of a strong dependence on external sources of funds.
A calculation of practical values of financial ratios, which might be considered as normal for a certain industry, has been developed and implemented in the Information and Analytical system Globas by the experts of Information Agency Credinform, having taken into account the current situation in the economy as a whole and in the industries. The practical value of solvency ratio for residential and non-residential construction companies in 2016 is from 0,01 to 0,85.
During 9 years within the decade industry average values were below the recommended value and above the practical value (Picture 8).
In general, the ratios under consideration demonstrate diverse trends.
The return on investment ratio was not stable during the decade. Ratio values became negative during economic downturn in 2014 – 2015 (Picture 9). It is a ratio of net profit to shareholders’ equity and noncurrent liabilities, and it demonstrates benefit from shareholders’ equity engaged in business activity and long-term raised funds of the company.
There is a more stable trend in cost to revenue ratio (Picture 9). The ratio is calculated as a ratio of sales profit to operation costs. In general, it reflects production efficiency.
In general, both ratios tend to decrease.
Assets turnover ratio is a ratio of sales revenue to average total assets for the period, and measures resource efficiency regardless of the sources. The ratio indicates the number of profit-bearing complete production and distribution cycles per annum.
Shareholders’ equity turnover ratio is a ratio of revenue to annual average shareholders’ equity, and indicates total assets usage rate.
During the decade, assets turnover ratio tended to decrease slightly, and shareholders’ equity ratio showed a considerable increasing trend (Picture 10).
Business activity trends
There is a diversity in distribution of registered TOP-5000 companies within the Northwestern Federal District by the year of their foundation within a 25-year period. The most of the companies were founded in 2015. In general, there is a trend of increase in the amount of companies being registered (Picture 11).
Private sector has shown the strongest interest in residential and non-residential construction after 2010 (Picture 12).
Key home regions
The companies of the sector are unevenly distributed throughout the Northwestern Federal District. Most of them are registered in Saint Petersburg that is the region with the largest population size and extensive financial and transportation infrastructure (Picture 13).
2,5% of TOP-5000 companies of the Northwestern Federal District have branches and representative offices.
Participation in arbitration proceedings
Most companies of the sector within the Northwestern Federal District either do not participate in arbitration proceedings, or participate in a small number of cases (Picture 14).
The risk of meeting a fly-by-night company or an unreliable company is extremely low for the most companies of the sector within the Northwestern Federal District (Picture 15).
Financial position score
Assessment of financial state of the sector’s companies within the Northwestern Federal District indicates that over a half of the companies have an average or unstable financial standing (Picture 16).
There is a maximum or above average risk of bankruptcy in the short term for over a fifth of companies of the sector within the Northwestern Federal District (Picture 17).
Solvency index Globas
The most companies of the sector out of the largest 5000 ones within the Northwestern Federal District have got a superior, high, strong and medium Solvency index Globas (Picture 18).
Therefore, a comprehensive assessment of residential and non-residential construction companies of the Northwestern Federal District that considers key indexes, financial figures and ratios, is indicative of adverse trends in the sector. However, the circumstances started to stabilize in 2016.
Information agency Credinform prepared a ranking of product profitability of the largest Russian brewers. The Russian companies (Top-10) with the highest volume of revenue were selected for this ranking according to the data from the Statistical Register for the latest available periods (2016 and 2015). The enterprises were ranked by decrease in product profitability (see table 1). The analysis was based on data from the Information and Analytical system Globas.
Product profitability is sales revenue to expenses from ordinary activities. Profitability in general indicates the economic efficiency of production. Analysis of product profitability allows to conclude about an output expediency. There is no standard value for profitability indicators, because they change in accordance with the industry the company operates in.
Taking into account the actual situation both in economy in general and in the sector, the experts of the Information agency Credinform have developed and implemented in the Information and Analytical system Globas the calculation of practical values of financial ratios, which can be recognized as normal for a particular industry. The practical value for companies engaged in brewing in 2016 is from 8,61.
For the most complete and objective view of the financial condition of the enterprise it is necessary to pay attention to the complex indicators and financial ratios of the company.
|Name, INN, region||Revenue, mln RUB||Net profit, mln RUB||Product profitability, %||Solvency index Globas|
|PJSC TOMSKOE PIVO
INN 7018011045 Tomsk region
|4 762,4||5 095,6||1 420,3||1 191,7||32,14||32,44||178 High|
|LLC ZAVOD TREKHSOSNENSKIY
INN 7302023991 Samara region
|2 470,0||6 726,5||-249,7||-1 098,5||1,17||26,25||550 Insufficient|
|Baltika Breweries LLC
INN 7802849641 Saint-Petersburg
|86 608,4||90 525,2||12 030,9||14 308,2||19,70||18,59||183 High|
INN 5321030165 Novgorod region
|3 244,5||4 341,4||113,7||214,8||16,51||14,76||230 Strong|
INN 1901003094 The Republic of Khakassia
|3 288,4||3 547,5||279,5||276,7||9,49||9,43||155 Superior|
|CJSC Moscow beer and alcohol-free plant Ochakovo
NN 7729101200 Moscow
|7 514,1||8 247,7||400,4||215,9||10,14||6,16||163 Superior|
|LLC Heineken United Breweries
INN 7802118578 Saint-Petersburg
|35 017,1||36 852,4||-1 195,5||1 893,7||3,97||3,62||229 Strong|
|CJSC MOSCOW BREWING COMPANY
INN 5029104266 Moscow region
|14 910,9||17 731,1||-771,3||20,0||14,12||2,24||262 Medium|
|CJSC "Moscow-Efes Brewery"
INN 7726260234 Moscow
|35 122,6||38 553,0||-1 366,4||1 994,5||10,97||0,40||235 Strong|
|JSC SUN INBEV
INN 5020037784 Moscow region
|39 329,0||41 662,6||-9 772,3||-1 844,1||-1,89||-3,29||294 Medium|
|Total for TOP-10||232 267,4||253 283,1||889,6||17 173,0|
|Average value for TOP-10 companies||23 226,7||25 328,3||89,0||1 717,3||11,63||11,06|
|Average value for industry||303,0||283,1||6,3||19,0||11,96||8,61|
Average value of product profitability ratio for the TOP-10 in 2016 is above the practical average. Five companies in TOP-10 have values higher than practical in 2016, four companies – lower, and JSC SUN INBEV has negative value (marked with green, orange and red in columns 6 and 7 of Table 1 respectively). Only two companies in the top of the ranking have increased product profitability figures in 2016 compared to the previous period, or have losses (filled with red in columns 3 and 5 of Table 1).
All Top-10 companies have increased revenue figures in 2016 compared to the previous period; five companies have reduced net profit figures or have losses (filled with green and red in columns 3 and 5 of Table 1 respectively).
The average industry indicators of product profitability ratio over the past ten years demonstrate trend to reduction. This may indicates a decrease in economic efficiency in this field (Picture 2).
Nine companies in TOP-10 got high, strong, medium and superior indexes Globas, that indicates their ability to timely and fully fulfill debt liabilities.
LLC ZAVOD TREKHSOSNENSKIY has got insufficient Solvency index Globas, due to the bankruptcy case considered against the company and availability of information on unclosed writs of execution. Indexes development forecast is negative.