Information agency Credinform observes tendencies in the sphere of shipbuilding.

The companies with the highest volume of revenue (TOP-10 and TOP-300) were selected for the ranking, according to the data from the Statistical Register for the latest available periods (2015 and 2016). Analysis was based on the data from the Information and Analytical system Globas.

Legal forms and unreliable data

The most widespread legal form in the industry is a Limited liability company. Significant shares make non-public and public joint-stock companies. (Picture 1).

Picture 1. Distribution of TOP-300 companies by legal forms

Following the results of the investigations of the Federal Tax Service of the RF, 3,33% of companies in the industry are entered records about unreliable data to the Unified state register of legal entities (EGRUL) (Picture 2).

Picture 2. Shares of TOP-300 companies, with records in the EGRUL about unreliable data

Sales revenue

Revenue of 10 leaders of the industry in 2016 was 82% from the total revenue of the 300 largest companies. This shows high level of monopolization in the industry. The largest company in terms of revenue volume in 2016 was JCS UNITED SHIPBUILDING CORPORATION - the largest shipbuilding holding in Russia, uniting about 40 planning and design offices and specialized scientific and research centers, shipyards, shipbuilding and enterprises. Major part of the national shipbuilding complex was consolidated on the basis of the above mentioned enterprises. (Picture 3).

Picture 3. Shares of TOP-10 companies in the total revenue of 2016 of TOP-300

The best results in the industry in terms of revenue volume for a ten-year period were reached in 2016. During crisis periods in the economy in 2008, 2012 and 2013 average industrial values have significantly decreased. In general, the tendency for increasing of revenue volume is observed. (Picture 4).

Picture 4. Change in average industrial values of revenue in the sphere of shipbuilding companies in 2007 – 2016

Profit and loss

Profit volume of 10 leaders of the industry in 2016 was 92% of the total profit of TOP-300 companies. JSC ADMIRALTY SHIPYARD takes lead in 2016 in terms of profit volume - basic enterprise of the shipbuilding industry that is a part of JCS UNITED SHIPBUILDING CORPORATION and specializes in manufacture of demersal marine equipment, building of submarines, demersal facilities and knowledge intensive high technology ships for military and civilian usage. (Picture 5).

Picture 5. Shares of TOP-10 companies in the total profit volume of TOP-300 companies in 2016

Average industrial values of the companies` profit indicators for ten years are not stable. Negative values of the indicator were observed in 2013 and 2016. In general, profit indicators have decreasing tendency. The best results in the industry were shown in 2015. (Picture 6).

Picture 6. Change of the average industrial indicators of profit for shipbuilding companies in 2007 – 2016

Among the TOP-300 group 72 loss-making companies were observed in 2015. The amount increased to 82 companies or by 14% in 2016. Besides, average amount of loss has 129% increased. For the rest of TOP-300 companies, average amount of profit has 35% decreased for the same period (Picture 7).

Picture 7. Amount of loss-making companies, average values of loss and profit for TOP-300 companies in 2015 – 2016

Key financial ratios

For ten years average indicators of the current liquidity ratio in the industry were in the interval of the recommended values - from 1,0 to 2,0 and higher, except for 2010. In general, indicator of the ratio has increasing tendency.

Current liquidity ratio (the relation of the amount of current assets to short-term liabilities) shows the sufficiency of company’s funds for repayment of its short-term liabilities.

Solvency ratio (equity to balance sheet amount) shows the dependence of the company on external loans. The recommended value: >0,5. A value less than a minimum one indicates high 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. For shipbuilding industry practical value of the solvency ratio is from 0,02 to 0,85 in 2016.

For a ten-year period average indicators of the ratio were lower than recommended values for eight years and in the interval of practical values for the whole period (Picture 8).

In the whole, indicator of the ratio has decreasing tendency.

Picture 8. Change of average industrial values of the current liquidity and solvency ratios for shipbuilding companies in 2007 – 2016

During ten years unstable indicators of the return on investments ratio with decreasing tendency were observed. In 2013 and 2016 indicators decreased to negative values (Picture 9). The ratio is net profit to the total equity and long-term liabilities and demonstrates profit from the equity involved into commercial activities and long-term external funds of the company.

For the same period indicators of the product profitability ratio were also unstable (Picture 9).

The ratio is sales revenue to expenses from ordinary activities. Totally, profitability indicates the economic efficiency of production.

In general, indicator of the ratio demonstrates increasing tendency.

Picture 9. Change of average industrial values of the return on investments and the product profitability ratios for shipbuilding companies in 2007 – 2016

The assets turnover ratio is sales revenue to average total assets for a period and characterizes the effectiveness of using of all available resources, regardless the source of their attraction. The ratio shows how many times per year the full cycle of production and circulation is performed, generating profit.

The equity turnover ratio is calculated as a ratio of revenue to yearly average sum of equity and demonstrates the company’s usage rate of total assets.

For ten years both ratios of business activity demonstrated were instable with decreasing tendency (Picture 10).

Picture 10. Change of average industrial values of the business activity ratios for shipbuilding companies in 2007 – 2016

Production structure

Major part of TOP-300 companies specializes in manufacture of leisure and sports vessels (Picture 11).

Picture 11. Distribution of TOP-300 companies by types of output, %

Dynamics of business activity

Over a 25-year period, the registered companies from TOP-300 list are unequally distributed by the year of foundation. Most of companies in the industry were founded in 2010. In general, increasing tendency for amount of registered companies is observed. (Picture 12).

Picture 12. Distribution of TOP-300 companies by years of foundation

Outstanding interest for shipbuilding industry was paid in 2010 - 2014. (Picture 13).

Picture 13. Average amount of TOP -300 companies, registered per year, in terms of foundation periods

Main regions of activity

Marine fishery companies are distributed unequally on the territory of the country. Most of the companies are registered in Saint-Petersburg – historically developed, the largest center of shipbuilding industry in the country (Picture 14).

TOP-300 companies are registered in 41 regions of Russia.

Picture 14. Distribution of TOP -300 companies throughout regions of Russia

The majority of shipbuilding companies is centered in the Northwestern Federal District of the RF (Picture 15).

Picture 15. Distribution of TOP-300 companies throughout federal districts of Russia

Share of companies from the TOP -300 group, having branches or representative offices, amounts to 6%.

Participation in arbitration proceedings

Overwhelming majority of companies in the industry does not participate in arbitration proceedings or participate inactively (Picture 16).

Picture 16. Distribution of TOP -1000 companies by participation in arbitration proceedings

Reliability indexи

In terms of signs of «fly-by-night» or unreliable companies the majority of companies demonstrate extremely low risk of cooperation (Picture 17).

Picture 17. Distribution of TOP -300 by Reliability index

Financial position score

Assessment of financial state of the sector’s companies indicates that the most of the companies have an average financial standing (Picture 18).

Picture 18. Distribution of TOP-300 companies by Financial position score

Liquidity index

Almost half of the sector`s companies (48%) demonstrate an extremely low or insignificant levels of bankruptcy risk in the short-term period. However, more than 20% of enterprises have the highest level of risk. (Picture 19).

Picture 19. Distribution of TOP-300 companies by Liquidity index

Solvency index Globas

Most of the TOP-300 companies have got from superior to medium Solvency index Globas (Picture 20). Besides, more than a third of companies have got adequate and weak Solvency index Globas

Picture 20. Distribution of TOP -300 by Solvency index Globas

Therefore, complex assessment of shipbuilding companies, taking into accounts key indexes, financial figures and ratios, demonstrate unfavorable trends within the industry. However, the situation has recently begun stabilizing.

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).

Picture 1. TOP-5000 companies of the Northwestern Federal District by legal form

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).

Picture 2. TOP-5000 companies of the Northwestern Federal District by entries concerning unreliability of data in EGRUL

Sales revenue

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).

Picture 3. TOP-10 companies by their share in 2016 total revenue of TOP-5000 companies of the Northwestern Federal District

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).

Picture 4. Change in industry average revenue of residential and non-residential construction companies in 2007-2016

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).

Picture 5. TOP-10 companies by their share in 2016 total profit of TOP-5000 companies of the Northwestern Federal District

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).

Picture 6. Change in industry average profit of residential and non-residential construction companies in 2007 – 2016

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).

Picture 7. Number of loss-making companies, average values of loss and profit of TOP-5000 companies within the Northwestern Federal District in 2015-2016

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.

Picture 8. Change in industry average values of liquidity coverage ratio and solvency ratio of residential and non-residential construction companies in 2007 – 2016

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.

Picture 9. Change in industry average values of return on investment ratio and cost to revenue ratio of residential and non-residential construction companies 2007 – 2016

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).

Picture 10. Change in industry average values of activity ratios of residential and non-residential construction companies 2007 – 2016

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).

Picture 11. ТOP-5000 companies of the Northwestern Federal District by the year of foundation

Private sector has shown the strongest interest in residential and non-residential construction after 2010 (Picture 12).

Picture 12. Average number of TOP-5000 companies of the Northwestern Federal District registered per year, by their foundation periods

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).

Picture 13. TOP-5000 companies of the Northwestern Federal District by region

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).

Picture 14. TOP-5000 companies of the Northwestern Federal District by their participation in arbitration proceedings

Reliability index

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).

Picture 15. TOP-5000 companies of the Northwestern Federal District by Reliability index

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).

Рicture 16. TOP-5000 companies of the Northwestern Federal District by Financial position score

Liquidity index

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).

Picture 17. TOP-5000 companies of the Northwestern Federal District by Liquidity index

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).

Picture 18. TOP-5000 companies of the Northwestern Federal District by Solvency index Globas

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.