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Information agency Credinform represents an overview of food retail trends.
The enterprises with the largest volume of annual revenue (TOP-10 and TOP-30000) were selected for the analysis, according to the data from the Statistical Register for the latest available periods (for 2015 and 2016). The analysis was made on the basis of the data of the Information and Analytical system Globas.
Legal forms
The most spread legal form of companies in food retail is a limited liability company. Consumer society also make a significant part. (Picture 1).
Picture 1. Distribution of TOP-30000 companies by legal formsSales revenue
The revenue of 10 industry leaders made 57% of the total revenue of 30000 the largest companies in 2016. It points to a high level of monopolization in the industry. TANDER JSC became the largest company in terms of revenue in 2016 (Picture 2).
Picture 2. Shares of participation of TOP-10 enterprises in the total revenue of TOP-30000 companies for 2016, % The best results in the industry in terms of revenue for the ten-year period were achieved in 2016. During the crisis periods in the economy (in years 2011 and 2013) there was a decline observed in the industry average indicators. (Picture 3).
Picture 3. Change in the industry average indicators of companies’ revenue in food retail for 2007-2016Profit and losses
The volume of profit of 10 industry leaders made 52% of the total profit of TOP-30000 companies in 2016. The leading position in terms of profit volume in 2016 is taken also by TANDER JSC (Picture 4).
Picture 4. Shares of participation of TOP-10 enterprises in the total volume of profit of TOP-30000 companies for 2016, %Industry values of the profit indicators of companies in food retail for the ten-year period as a whole have a trend to increase. Decrease in indicators was observed in 2008 and in 2014 against the background of crisis phenomena in the economy. The industry showed the best results in 2016. (Picture 5).
Picture 5. Change in the industry average indicators of profit of companies in food retail in 2007 – 2016There were 4840 loss-making enterprises in 2015 among TOP-30000 companies. In 2016 their number increased to 5043 or by 4%. At the same time, the average size of their loss increased by 11%. For the rest of TOP-30000 companies the average profit margin reduced by 11% during the same period (Picture 6).
Picture 6. Amount of loss-making companies, average value of loss and profit of TOP-30000 enterprises in 2015-2016 Key financial ratios
Over the ten-year period the average industry indicators of the total liquidity ratio were within the range of recommended values - from 1,0 to 2,0. (Picture 7).
The total 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.
The solvency ratio (the relation of the amount of own capital to the balance sum) shows the company's dependence on external borrowings. Recommended value is > 0.5. The value of the coefficient below the minimum value means a strong dependence on external sources of funds’ receipt.
The experts of the Information agency Credinform, taking into account the actual situation both in the economy as a whole and in sectors, has developed and implemented in the Information and analytical system Globas the calculation of practical values of financial ratios that can be recognized as normal for a particular industry. For food retail companies the practical value of the solvency ratio was from 0,23 to 0,98 in 2016.
Over the ten-year period the industry average indicators of the ratio were below the recommended value and in the interval of practical values, starting from the year 2009 (Picture 7).
Picture 7. Change in the industry average values of the total liquidity and solvency ratios of food retail companies for 2007 – 2016There has been an instability observed in indicators of the return on investment ratio during ten years. In periods of crisis phenomena in the economy the indicators decreased (Picture 8). The ratio is calculated as the relation of net profit to the sum of own capital and long-term liabilities and demonstrates the return on the equity involved in the commercial activity and the long-term borrowed funds of an organization.
The indicators of the profitability ratio of products (services) were relatively stable with a downtrend in the same period (Picture 8). The indicators were the highest in the period from 2007 to 2010. The ratio is calculated as the relation of profit from sales to expenses for ordinary activity. In general, profitability reflects the economic efficiency of production.
Picture 8. Change in the industry average values of the return on investment and products profitability ratio of food retail companies for 2007 – 2016 Indicators of the activity ratio over a ten-year period demonstrate a trend to decrease (Picture 9).
Asset turnover ratio is calculated as the relation of sales proceeds to the average value of total assets for a period and characterizes the efficiency of use of all available resources, regardless of the sources of their attraction. The coefficient shows how many times a year a complete cycle of production and circulation is made, yielding profit.
Equity turnover ratio is calculated as the relation of revenue to average annual amount of equity and shows the intensity of use of the whole part of assets.
Picture 9. Change in the industry average values of the activity ratios of food retail companies for 2007 – 2016 Structure of retail trade
More than a third of TOP-30000 companies specialize in retail trade mainly with food products, including beverages, and tobacco products in non-specialized stores (Picture 10).
Picture 10. Distribution of TOP-30000 companies by types of retail trade, %Dynamics of business activity
Over the 25-year period the number of registered companies from TOP-30000 list are unequally distributed by the year of foundation. The largest number of enterprises in the field of retail sale of food products was established in 2006 (Picture 11).
Picture 11. Distribution of TOP-30000 companies by years of their foundationBusiness took the greatest interest to retail sale of food products during the period 2005 – 2009, when on average 2443 new companies were registered per annum. (Picture 12).
Picture 12. Average number of TOP-30000 companies registered within the year, by periods of their foundationMain regions of activity
Companies engaged in retail sale of food products are relatively unequally distributed across the country. Their largest number is registered in regions with the largest population - Moscow, Moscow region and the Krasnodar territory (Picture 13). TOP-30000 companies are registered in 85 regions, i.e. in all subjects of the Russian Federation.
Picture 13. Distribution of TOP-30000 companies by regions of RussiaSolvency index Globas
The great majority of companies in the field of retail sale of food products from 30000 the largest enterprises got the highest or high Solvency index Globas(Picture 14).
As a whole, taking into account the main indices, financial indicators and ratios, this may point to relatively favorable trends in this field of activity.
Picture 14. Distribution of TOP-30000 companies by Solvency index GlobasInformation Agency Credinform has prepared the review of trends in the field of extraction and primary stone processing.
The largest enterprises (TOP-10 and TOP-1000) in terms of annual revenue were selected according to the data from the Statistical Register for the latest available periods (2015 and 2016). The analysis was based on data of the Information and Analytical system Globas.
Legal forms
The most popular legal form among companies in the field of extraction and primary stone processing is Limited Liability Company. A significant place also take public and non-public joint stock companies (Picture 1).
Picture 1. Distribution of TOP-1000 companies by legal formsSales revenue
In 2016 total revenue of 10 largest companies amounted to 25% from TOP-1000 total revenue. This fact testifies rather high level of competition within the industry. In 2016, the largest company by total revenue is LLC KNAUF GIPS BAIKAL(Picture 2).
Picture 2. The shares of TOP-10 companies in TOP-1000 total revenue for 2016, %The best results by revenue among the industry for the ten-year period were achieved in 2008. The decrease in average industry indicators was observed within crisis phenomena in the economy in 2009 -2010 and 2012-2014 (Picture 3).
Picture 3. The change of average industry revenue of the companies in the field of extraction and primary stone processing in 2007-2016Profit and loss
In 2016 profit of 10 largest companies amounted to 50% from TOP-1000 total profit. In 2016, the leading position by amount of profit takes NAO PAVLOVSK NERUD (Picture 4).
Picture 4. The shares of TOP-10 companies in TOP-1000 total profit for 2016, %For the ten-year period, the industry revenue values of companies in the field of extraction and primary stone processing are not stable. The decrease in indicators was observed in 2008 - 2009, 2013 - 2014 against the background of crisis phenomena in the economy. Thus, in 2009, 2010 and 2014 the average industry revenue was negative. The best results of the industry were in 2007 (Picture 5).
Picture 5. The change of average industry profit of the companies in the field of extraction and primary stone processing in 2007-2016In 2015, the TOP-1000 list included 360 loss-making companies. In 2016 the number of loss-making companies decreased to 346 or by 4%. Meanwhile, their average loss decreased by 12%. The average profit of other companies from TOP-1000 list increased by 18% for the same period (Picture 6).
Picture 6. The number of loss-making companies, average loss and profit within TOP-1000 companies in 2015 – 2016Main financial indicators
For the ten-year period, the average industry values of current liquidity ratio within 8 years were lower than recommended values - from 1,0 to 2,0. (yellow color on Picture 7).
Current liquidity ratio (ratio of total working capital to short-term liabilities) shows the sufficiency of company’s assets to meet short-term obligations.
Solvency ratio (ratio of equity capital to total balance) shows the company’s dependence from external borrowings. The recommended value of the ratio is >0,5. The ratio value less than minimum limit signifies about strong dependence from external sources of funds.
The calculation of practical values of financial indicators, 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, taking into account the actual situation of the economy as a whole and the industries. In 2016 the practical value of solvency ratio for companies engaged in extraction and primary stone processing is from -0,04 to 0,87.
For the ten-year period, the average industry values of the ratio were lower than recommended values and within practical values (Picture 7).
Picture 7. Changes of average industry values of current liquidity ratio and solvency ratio of companies engaged in extraction and primary stone processing in 2007 – 2016 For the last ten years, the instability of ROI ratio was observed. In the periods of crisis phenomena in the economy (2009, 2010, 2014, 2015) the ratios decreased to negative values (Picture 8). The ROI ratio is calculated as a ratio of net profit to sum of stockholder equity and long-term liabilities and shows the return from equity involved in commercial activities and long-term borrowed funds.
Within the same period, the products profitability ratio was rather stable (Picture 8). The greatest growth of indicators was observed in 2007, 2012 - 2013. Product profitability ratio is a ratio of sales profit to general expenses. In general, the profitability characterizes the production efficiency.
Picture 8. Changes of average industry values of ROI ratio and products (services) profitability ratio of companies engaged in extraction and primary stone processing in 2007 – 2016 For the ten-year period, the values of assets turnover ratio were rather stable with smooth decrease and growth periods (Picture 9).
Assets turnover ratio is the ratio of sales revenue and company’s average total assets for a period. It 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 the corresponding effect in the form of profit.
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.
Within 2013 – 2016, the significant decrease in ratio values was observed (Picture 9).
Picture 9. Changes of average industry values of activity ratios of companies engaged in extraction and primary stone processing in 2007 – 2016 Production structure
More than a half of TOP-1000 companies are engaged in extraction of ornamental and building stone, limestone, gypsum, chalk and shale (Picture 10).
Picture 10. Distribution of TOP-1000 companies by products type, %Dynamics of business activity
Over a 25-year period, the registered companies from TOP-1000 list are unequally distributed by the year of foundation.
Most of the companies engaged in extraction and primary stone processing were founded in 2008 (Picture 11).
Picture 11. Distribution of TOP-1000 companies by the year of foundationThe most outstanding interest of business to extraction and primary stone processing was shown in 2005 – 2009, the average number of registered companies was 67 newly established companies (Picture 12).
Picture 12. Average number of TOP-1000 companies, registered within a year, by year of foundation Main regions of activity
Companies engaged in extraction and primary stone processing are unequally distributed across the country. Most of them are registered in Chelyabinsk region and the Republic of Karelia in locations of the largest deposits of relevant natural resources (Picture 13). TOP-1000 companies are registered in 79 regions of the Russian Federation.
Picture 13. Distribution of TOP-1000 companies by Russian regionsMost of the companies engaged in extraction and primary stone processing are concentrated in Central Federal District (Picture 14).
Picture 14. Distribution of TOP-1000 companies by federal districts of RussiaThe share of companies from TOP-1000 list with branches or representative offices amounted to 2,5%.
Participation in arbitration proceedings
More than a quarter of industry companies don’t participate in arbitration proceedings. Most of the companies participate in arbitration proceedings inactively (Picture 15).
Picture 15. Distribution of TOP-1000 companies by participation in arbitration proceedings, %Reliability index
From the point of flight-by-night features or unreliable companies, the vast majority of industry companies show rather low level of cooperation (Picture 16).
Picture 16. Distribution of TOP-1000 companies by reliability index, %Financial position score
The assessment of company’s financial position shows that the greatest number of companies are in average financial position. However, more than one third of TOP-1000 companies are in unstable financial position (Picture 17).
Picture 17. Distribution of TOP-1000 companies by financial position score, %Liquidity index
Significant part of industry companies (30%) have minimal or insignificant level of bankruptcy risk in the short-term period. However, the share of companies with risk level above average and the highest level amounted to 39% (Picture 18).
Picture 18. Distribution of TOP-1000 companies by liquidity index, %Solvency index Globas
More than a half of TOP-1000 companies engaged in extraction and primary stone processing have adequate solvency index Globas (Picture 19).
In general, taking into account the main indexes, financial indicators and ratios, this may indicate about unfavorable trends in this field of activity.
Picture 19. Distribution of TOP-1000 companies by solvency index Globas