Anti-crisis measures in 2016

Preliminary results on a set of macroeconomic indicators for 2015 are appearing in mass media. In general, speaking about economic development, the leading experts suppose the past year to have been quite difficult. The country was under unrelenting external political and economic pressure. According to preliminary results of 2015, the GDP has reduced by 3,9% and inflation has reached 12,9%. Net capital outflow amounted to 57 bln USD. Industrial manufacture in January-November 2015 decreased by 3,3% in accordance with the relevant period of the previous year; retail trade turnover reduced by 9,3%.  

In order to reduce negative trends in economy, the government of Russia has implemented the plan of high priority measures in 2015 aimed at the economy stable development and social stability; the plan was also considered as anti-crisis. Summing up the results, the following were implemented:   

  • efforts were concentrated on supporting the economy’s most critical areas,
  • activities on implementation of import-substituting projects has started,
  • companies continue financial investment in innovative developments,
  • increase of banks’ authorized capital was supported,
  • ;the agriculture, provided 3% growth in the sector, received financial support,
  • funding a set of subsectors, as well as lending promotion, confirmed the effectiveness of these measures.

According to 2015 expected results, food, coke, oil and chemical industries have shown the positive dynamics. Achievements of other manufacture sectors reported by the Federal State Statistics Service (Rosstat) are presented in the table below.  

Table 1. Indexes of production for main types of industrial manufacture  

 November 2015 in % toJanuary-November 2015 in % to January-November 2014
Manufacturing1) 94,7 100,2 94,7
manufacture of food products, beverages and tobacco 102,4 96,0 101,9
textile and clothing industry 96,2 95,3 88,0
manufacture of leather, leather products and footwear 95,3 89,7 87,8
wood working and production of wood products 94,9 93,5 96,6
pulp and paper industry; publishing and printing 97,0 96,6 93,3
manufacture of coke and petroleum products 98,2 105,2 100,1
chemical manufacturing 105,7 96,9 106,8
manufacture of rubber and plastic products 94,6 90,8 96,4
manufacture of other non-metallic mineral products 88,0 84,4 92,6
metallurgical manufacturing and manufacture of finished metal products 93,5 93,7 94,1
machinery and equipment manufacturing 94,2 102,3 88,8
manufacture of electrical, electronic and optical equipment 98,4 111,9 92,1
manufacture of transport vehicles and equipment 91,9 117,0 88,3
other manufacturing 100,2 97,6 92,9

Opinion leaders of the government economic bloc suppose auto industry, transport machine building, light industry and housing construction to have high potential. That is why it is planned in 2016 to update the relevant development programs, finalize the funding issue in order to give these sectors a special priority.    

The beginning of 2016 has sprung new surprises: world oil price has dropped below 30 USD per barrel; stock markets of the world have daily crashed on the background of panic moods; official exchange rate of ruble against the American currency has increased to 80 rubles per 1 USD. 

According to the analysts, world oil price will after all get out of speculators and panic moods’ hands, and may reach 50 USD per barrel to the midyear. However, the government economic bloc has already started to develop estimated figures taking into account the average oil price of 40, 30 and 20 USD. Thus, the recommendation “on improving the efficiency of business” emerges even fuller blown.

Coverage ratio of the largest car manufacturers in Russia

Information agency Credinform has prepared a ranking of the largest Russian car manufacturers.  

The TOP-10 list of enterprises was drawn up for the ranking in terms of revenue, according to the data from the Statistical Register for the latest available period (for the year 2014). Revenue trend data relative to previous period and coverage ratio are also represented (see table 1).

Coverage ratio (х) is the proportion of the company`s current assets to short-term liabilities. It shows funds adequacy of enterprise for repayment of short-term liabilities. 

Recommended value: from 2,0 to 3,0. If index is less than 1, that demonstrates that short-term liabilities excess current assets. 

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 the average figures in the industry, but also to all presented combination of financial indicators and company’s ratios.

Table 1. Turnover, annual turnover growth, coverage ratio and solvency index of GLOBAS-i® of the largest car manufacturers in Russia (Top-10)
NameRegionTurnover, mlnRUB, 2014Turnovergrowthto 2013, %Coverage ratio, (х)Solvency  index of GLOBAS-i®   
1 LLC Volkswagen Group Rus
INN 5042059767
Kaluga Oblast 230 583 -4,4 0,7 282 high
INN 6320002223
Samara Oblast 189 370 8,1 0,6 295 high
3 LLC Nissan Manufacturing Rus
INN 7842337791
Saint-Petersburg 152 033 21,8 1,2 269 high
4 CJC Renault Russia
INN 7709259743
Moscow 110 592 4,4 1,0 223 high
INN 1650032058
 Republic of Tatarstan 104 389 -2,6 1,3 252 high
6 LLC Ellada Intertrade
INN 3906072056
Kaliningrad Oblast 91 640 15,8 1,0 228 high
7 LLC Hyundai Motor Manufacturing Rus
INN 7801463902
Saint-Petersburg 85 392 7,1 2,0 219 high
8 LLC Automobile Plant Gaz
INN 5250018433
Nizhny Novgorod Oblast 59 278 -13,9 0,8 302 satisfying
9 LLC Ford Sollers Holding
INN 1646021952
Republic of Tatarstan 54 888 -34,7 0,8 327 satisfying
10 CJC Autotor
INN 3905011678
Kaliningrad Oblast 40 967 -4,4 0,8 290 high
Coverage ratio index for all market leaders, excluding LLC Hyundai Motor Manufacturing Rus, does not correspond to recommended low border of acceptable interval (<2,0) that shows high proportion of short-term liabilities. 
Several companies have coverage ratio lower than 1 - short-term liabilities exceed current assets that significantly raise financial instability risks.

turnover and coverage ratio of the largest car manufacturers in Russia

Picture 1. Turnover and coverage ratio of the largest car manufacturers in Russia (Top-10)
Annual turnover of companies from Top-10 list at year-end 2014 was 1119 bln RUB that is «just» 0,9% higher than total index of the same automobile manufacturers for the previous period. Regarding grown inflation the industry shows negative dynamics. 
Turnover of some companies completely reduced:  LLC Ford Sollers Holding (-34,4%); LLC Automobile Plant Gaz (-13,9%); LLC Volkswagen Group Rus (-4,4%); CJC Autotor (-4,4%); PAO KamAZ (-2,6%).
Sales of new light vehicles (without commercial low-tonnage autos) at year-end 2015 will amount 1,5 mln items, that is 37% lower than results of 2014 (according to «Autostat»).
Market of commercial autos at year-end will reduce much more: in light commercial vehicles (LCV) segment in 2015 about 105 thousand vehicles will be sold that is 31% less than result of 2014. 
Market of used light vehicles at year-end 2015 will reduce to 5 mln items that is 18% lower than results of 2014. It is possible that part of new light vehicles consumers will chose used light vehicles. Volume of used light vehicles market in 2016 will be about 4,8-5,5 mln items.
Average price for automobile for 9 months of 2015 was about 1169 th RUB that is 18% higher than the same index for the previous year.
Significant support for industry gave state programs, providing, according to the Ministry of Industry and Trade of the Russian Federation, about 38% of sales. Following the results of 2015 volume of sales as part of programs of demand motivation – fleet renewal programs, privileged/beneficiary automobile leasing – made 453,6 thousand automobiles.
Even under the best circumstances sales of new light vehicles in 2016 do not exceed 1,6 mln items, in the worst case scenario reduction of sales to 1,3 mln can be expected. Government realizes the importance of automobile industry for economic development and will not stand off:  «Russian government made a decision to increase support of car industry», - said on January 15, 2016 the prime minister of the RF Dmitry Medvedev.