Information agency Credinform has prepared a review of activity trends of the largest engineering companies of Northwest Russia.

The largest companies (ТОP-1000) in terms of annual revenue were selected according to the data from the Statistical Register for the latest available periods (2013 - 2018). The analysis was based on data of the Information and Analytical system Globas.

Net assets is a ratio reflecting the real value of company's property. It is calculated annually as the difference between assets on the enterprise balance and its debt obligations. The ratio is considered negative (insufficiency of property), if company’s debt exceeds the value of its property.

The largest company in terms of net assets is JSC UNITED SHIPBUILDING CORPORATION, INN 7838395215. In 2018 net assets of the company amounted to almost 250 billion RUB.

The smallest size of net assets in TOP-1000 had LLC Onezhsky Tractor Plant, INN 1001189079, which is in process of being wound up since 19.12.2017. The lack of property of the company in 2018 was expressed in negative terms -54,2 billion RUB.

For the last five years, the average values of TOP-1000 net assets showed the growing tendency (Picture 1).

Picture 1. Change in average net assets value of ТОP-1000 companies in 2014 – 2018

For the last five years, the share of ТОP-1000 enterprises with lack of property is growing (Picture 2).

Picture 2. The share of enterprises with negative net assets value in ТОP-1000

Sales revenue
In 2018, the total revenue of 10 largest companies amounted to almost 58% from ТОP-1000 total revenue (Picture 3). This fact testifies the high level of industrial concentration in North-Western region.

Picture 3. Shares of TOP-10 in TOP-1000 total revenue for 2018

In general, the growing trend in sales revenue is observed (Picture 4).

Picture 4. Change in average revenue of TOP-1000 in 2014 – 2018

Profit and loss
The largest company in terms of net profit is JSC PO Sevmash, INN 2902059091. In 2018 the company’s profit amounted to 6,6 billion RUB.

For the last five years, the average profit values of TOP-1000 show the decreasing tendency (Picture 5).

Picture 5. Change in average profit of TOP-1000 in 2014 – 2018

Over a five-year period, the average net profit values of ТОP-1000 show the growing tendency, along with this the average net loss is growing too (Picture 6).

Picture 6. Change in average net profit/loss of ТОP-1000 companies in 2014 – 2018

Main financial ratios
For the last five years, the average values of the current liquidity ratio were higher than the recommended values - from 1,0 to 2,0, with downward trend (Picture 7).

The current liquidity ratio (ratio of total working capital to short-term liabilities) shows the sufficiency of company’s assets to meet short-term obligations.

Picture 7. Change in average values of current liquidity ratio of TOP-1000 companies in 2014 – 2018

For the last five years, the high level of the average values of ROI ratio with downward trend is observed (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.

Picture 8. Change in average values of ROI ratio in 2014 – 2018

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

For the last five years, this business activity ratio demonstrated the downward trend (Picture 9).

Picture 9. Change in average values of assets turnover ratio of TOP-1000 companies in 2014 – 2018

Small businesses
74% of ТОP-1000 companies are registered in the Unified register of small and medium-sized enterprises of the Russian Federal Tax Service. Herein, their share in TOP-1000 total revenue amounted to 7%, which is significantly lower than national average value (Picture 10).

Picture 10. Shares of small and medium-sized enterprises in ТОP-1000

Main regions of activity
ТОP-1000 companies are unequally located across the country and registered in 10 regions of Russia. Almost 89% of the largest enterprises in terms of revenue are located in Saint Petersburg, Kaliningrad and Leningrad regions (Picture 11).

Picture 11. Distribution of TOP-1000 revenue by regions of Northwest Russia

Financial position score
An assessment of the financial position of TOP-1000 companies shows that the largest part have average financial position (Picture 12).

Picture 12. Distribution of TOP-1000 companies by financial position score

Solvency index Globas
Most of TOP-1000 companies got superior/high or strong/medium Solvency index Globas, this fact shows the ability of the companies to meet their obligations in time and fully (Picture 13).

Picture 13. Distribution of TOP-1000 companies by Solvency index Globas

Industrial production index
According to the Federal Service of State Statistics, the stability of industrial production index is observed in the North-West region during 12 months of 2018 – 2019 (Picture 14). Herewith the average index from month to month amounted to 105,2%.

Picture 14. Industrial production index in North-West region in 2018-2019, month by month (%)

Conclusion
A complex assessment of the largest engineering companies of Northwest Russia, taking into account the main indexes, financial ratios and indicators, demonstrates the presence of positive trends (Table 1).

Table 1. Favorable and unfavorable trends, assessment factors

Trends and assessment factors	Relative share, %
Growth/drawdown rate of average net assets value	10
Increase / decrease in the share of enterprises with negative net assets	-10
The level of competition / monopolization	-10
Growth/drawdown rate of average revenue	10
Growth/drawdown rate of average net profit (loss)	-10
Increase / decrease in average net profit of companies	10
Increase / decrease in average net loss of companies	-10
Increase / decrease in average values of current liquidity ratio	-10
Increase / decrease in average values of ROI ratio	-5
Increase / decrease in average values of assets turnover ratio, times	-10
Share of small and medium-sized businesses by revenue more than 22%	-10
Regional concentration	-10
Financial position (the largest share)	5
Solvency index Globas (the largest share)	10
Industrial production index	10
Average value of factors	-2,0

favorable trend (factor), unfavorable trend (factor).

The Federal Law № 59-FL as of 15.04.2019, that made amendments to the Article 17 of the Housing Code of the RF, has come into force since October 1, 2019.

Therefore, according to the amendments, activities of hostels on providing hotel services in residential houses are forbidden. Prohibition does not concern hostels located in non-residential buildings and on the first floors with private entrance.

Further provision of services by hostels will be possible only if the following obligatory conditions are met:

• soundproofing of apartments;
• rooms equipped with fire protection and security alarm systems;
• rooms equipped with safes for holding documents and valuable objects;
• rooms equipped with cleaning and sanitary disposal tools.

Besides, it is not forbidden to place hostels in the apartment complexes that are not residential.

According to the Housing Code of the RF, an owner is assigned with the right to use residential premise for professional and business activities on an individual basis. However, these activities should not violate rights and legitimate interests of other citizens, fire safety requirements, ecological, sanitary and epidemiology standards. Now the Housing Code of the RF directly prohibits using residential premises for industrial production, missionary activities and hotel services.

For information According to the data from the Information and Analytical system Globas currently in Russia there are more than 33 thousand enterprises, providing part-time residence services. Full Information is available for the subscribers of the Globas system.