Return on equity of enterprises, manufacturing bakery products

Information agency Credinform prepared ranking of companies, operating in the market of bakery products.

The companies with the highest volume of revenue were selected and ranked, according to the data from the Statistical Register for the latest available accounting period (for the year 2013).

Return on equity (%) is the ratio of net profit earned by a company to its own capital. It shows how many monetary units of net profit was earned by each unit invested by company owners. It allows assessing the efficiency of use of the capital invested by the owners.

This indicator is used by investors and owners of companies to estimate their investments in it. The higher is the ratio value, the more profitable are investments. But if the return on equity is less than zero, then there is an occasion to reflect over reasonability and effectiveness of investments in this enterprise in the future. As a rule, the ratio value is compared with alternative investments in shares of other companies, bonds and, at least, in a bank.

It is important to note that too high ratio value may have a negative affect on company’s financial stability: more profitability - more risk.

For getting of the most comprehensive and fair picture of the financial standing of an enterprise it is necessary to pay attention not only to average values of profit, but also to all presented combination of financial data. Moreover, the specifics of the analyzed industry should be taken into account, because profitability ratios for organizations, operating in various segments of the economy, have their unique features.

The picture below represents the enterprises of the branch being largest on revenue, also it shows their return on equity.

Picture. Return on equity and turnover of the largest enterprises, operating on the market of bakery products (TOP-10)

Cumulative turnover of the largest companies (TOP-10), operating in the market of bakery products, made 371,1 mln RUB, according to the latest published annual financial statement, that is by 17,7% higher than the indicator of the previous period.  

All participants of the ranking demonstrate positive values of the return on equity, in other words, companies generate net profit to investors (owners). At the same time, the efficiency of work is different by organizations: Chelyabinsk company Pervy khlebokombinal OJSC reached the highest profitability (23,7%), Tver manufacturer of bakery products Volzhsky pekar OJSC – the lowest one (0,5%).

Among the market leaders, three firms are operating in Moscow and Moscow region: Konditersko-bulochny kombinat «Cheremushki» OJSC (0,7%), Bulochno-konditersky kombinat «Kolomensky» CJSC (1,2%) and Shchelkovokhleb CJSC (5,9%), that is caused by a large size of population of metropolitan agglomeration, and it generates the large market volume and the high demand for bread and bread products.

St.Petersburg company Karavay OJSC (5,8%) takes the first place of the TOP-10 list on the volume of annual turnover among all producers of bakery products and is the absolute leader in St. Petersburg market: the holding company already includes 4 factories.

According to the independent estimation of the Information agency Credinform, all TOP-10 enterprises got high and the highest solvency index. This fact testifies to a good level of financial standing and solvency of the analyzed companies, that, in its turn, can give a signal to potential investors for the development of cooperation with them.