Profitability of sales of the largest paints and varnishes manufacturers in Russia

Information Agency Credinform has prepared the ranking of the largest Russian paints and varnishes manufacturers.

Top-10 enterprises in terms of annual revenue were selected according to the data from the Statistical Register for the latest available period (for the year 2014). The enterprises were ranked by decrease in profitability of sales. Besides, profit dynamics relative previous financial period and solvency index GLOBAS-i® are also represented (see table 1).

Profitability of sales (%) is the share of operating profit in the sales volume of the company.

The ratio characterizes the most important aspect of company’s activity - the efficiency of the industrial and commercial activity and shows the company’s funds, which are remained after covering the cost of production, interest and tax payments.

Profitability of sales is an indicator of the company’s price policy and shows its ability to control the expenses. Differences in competitive strategies and product lines cause a substantial range of ratio values. Therefore it should be taken into account, that at equal values of revenue, operational expenses and profit before tax, the profitability of sales ratio of two companies can be significantly different, due to the influence of interest payments on net profit.

Table 1. Revenue, revenue growth for the year, profitability of sales and solvency index GLOBAS-i®   of the largest paints and varnishes manufacturers (Top-10)
NameRegionRevenue,mln RUB, 2014Revenue growth, %Profitability of sales, %Solvency index GLOBAS-i®
1 LLC Akzo Nobel Lakokraska
INN 5034019048
Moscow region 1 662 28,7 21,3 200 high
INN 7602003918
Yaroslavl region 2 193 13,7 13,4 183 the highest
3 Gesellschaft mit beschraenkter Haftung BASF Wostok
INN 7710317252
Moscow region 3 127 -0,5 12,8 193 the highest
4 CJSC Akzo Nobel Dekor
INN 5001027607
Moscow region 3 418 10,4 12,2 193 the highest
INN 7816424590
Saint-Petersburg 9 775 3,0 12,1 221 high
INN 5041024497
Moscow region 1 711 17,3 10,0 304 satisfactory
INN 6167008343
Rostov region 2 315 -2,8 9,9 253 high
INN 3618003426
Voronezh region 1 692 12,4 9,7 223 high
INN 7605015012
Yaroslavl region 2 628 1,0 7,3 209 high
INN 7702177932
Moscow region 2 891 7,6 6,9 199 the highest

According to 2014 financial results, the average value of profitability of sales ratio of Top-10 enterprises is 11,5%; the highest value is 21,3 % (LLC Akzo Nobel Lakokraska), the lowest value is 6,9% (LLC LAKRA SINTEZ).

The ratio of the industry leader LLC TIKKURILA is above average (12,1%).

Tikkurila concern started its activity in Russia in the 1980-ies, the company exported industrial coatings. In 1990-ies Tikkurila became the first western company, which presented the paint tinting system in Russia. In 1995 Tikkurila opened first European paint plant in Russia.

Today LLC Tikkurila is represented by four industrial areas, which are located in Saint-Petersburg and Stary Oskol: three plants produce decorative paints and varnishes under Tikkurila, Fincolor, TEKS trademarks and one plant produces paints and varnish materials for industrial purposes.

revenue and profitability of sales of the largest paints and varnishes manufacturers in Russia

Picture 1. Revenue and profitability of sales of the largest paints and varnishes manufacturers in Russia (Top-10)

According to 2014 results, the annual revenue of Top-10 enterprises amounted to 31,4 bln RUB; total turnover of Top-10 enterprises increased by 6,2% in the reporting period.

According to 2015 results, 811 ths tons of paints and varnishes based on polymers were produced in Russia (-6% to 2014 level); 420 ths tons of paints and varnishes (+4,5%) and 28,7 ths tons of synthetic organic dyes and colored varnishes (+15,1%).

All enterprises (except LLC MEFFERT POLILUX with net loss in the reporting period) demonstrated high and the highest solvency index GLOBAS-i®, that is a sign of good company’s solvency to investor or partner.

Responsibility for non-filing of primary statistical data is strengthened

In the end of December, 2015 the Federal law as of 30.12.2015 №442-FZ “On introduction of an Amendment to Article 13.19 of Administrative Offences Code of the Russian Federation” came into force. 

The introduced amendments strengthen companies’ administrative responsibility for non-filing, untimely filing or filing of unreliable primary statistical data to the government statistics agency. Fines for the corresponding offenses are imposed on officials at a rate from 10 to 20 th RUB and on legal entities - from 20 to 70 th RUB. Earlier fines for the corresponding offenses were imposed at a rate from 3 to 5 th RUB. For the repeat violations the amounts of fine increase to 30 – 50 th RUB for officials, and respectively to 100 – 150 th RUB for legal entities.

In order to understand properly what kind of data is being referred to, it is useful to dwell on the terminology. All the terms are subject to the Federal law as of 29.11.2007 №282-FZ (23.07.2013 revised) “On official statistical accounting and state statistics system in the Russian Federation”.

Primary statistical data – documented information in the forms of the Federal statistical monitoring, received from business subjects or information being directly documented during the course of the Federal statistical monitoring.

Federal statistical monitoring – collection of primary statistical and administrative data.

In its turn the collection of primary statistical data is operated upon forms of the Federal statistical monitoring which represents record sheets, i.e. samples of statistical documents containing questions of monitoring program, places for answers as well as signature requisites of the official. The record sheets make it possible to unify the gathering and automated processing of the statistical data.  Forms of the Federal statistical monitoring include the documentation containing data on key indicators of company, small business or sole entrepreneur’s activity, their basic funds, performance of research and development, manufacture of products and other important data needed for Rosstat (Federal State Statistics Service) to make monitoring, researching and forecasting. Filled forms of the Federal statistical monitoring are commercial confidentiality; the transmission of data on several companies from these forms is prohibited.

Due to introduction of amendments it is necessary to recollect the initiative of the Rosstat (in April, 2015) to strengthen the administrative responsibility for non-filing, untimely filing and filing of an incomplete compulsory copy of an annual financial account and audit report of the financial account subject to compulsory audit. At that moment fine sanctions at the rate from 100 to 500 th RUB were offered. However the initiative wasn’t endorsed.

Filing of the copy of the financial account is provided by the Article 18 of the Federal law as of 06.12.2011 №402-FL (04.11.2014 revised) “Concerning Accounting”. This article lay under obligation economic entities, excluding government sector companies and the Central Bank of the Russian Federation, to file one at a time compulsory copy of an annual state financial account to the state statistics agency at the place of the state registration. Forms of the financial accounts contained in the Rosstat agencies are not confidential and might be shared with third parties on request.

If the financial account isn’t filed at the stated time, the enterprise might be imposed a fine in accordance with an Article 19.7 of Administrative Offences Code of the Russian Federation  on citizens at the rate from 100 to 300 RUB; on officials – from 300 to 500 RUB; on legal entities – from 3000 to 5000 RUB.

Subscribers of the Information and Analytical system Globas- i® may get acquainted with statutory financial accounts, filed to authority having jurisdiction. Presently the System contains the accounts of more than 3 mln 660 th Russian companies and the total number of balance sheets amounts to 13 mln 200 th with archives for more than 20 years.