Return on sales of chocolate and sugar confectionery manufacturers

Information agency Credinform prepared a ranking of return on sales of chocolate and sugar confectionery manufacturers in the RF. The companies with highest turnover in this branch were selected for this research according to data from the Statistical Register for the latest available period (for the year 2012). Then, the first 10 enterprises selected by turnover were ranked by decrease in return on sales value.

Return on sales presents the share of operating income in sales volume of a company and is calculated as the ratio of profit on sales to sales revenue. There is no recommended and specified value prescribed for profitability ratios, because they vary strongly depending on industry characteristics and other operational aspects of an enterprise. Therefore, a company should be assessed first of all relying on industry-average indicators. At the same time return on sales shows if the enterprise activity is profitable or loss-making, but doesn’t give any decisive answer to the question how much is a company attractive for investments and business cooperation.

 Return on sales of chocolate and sugar confectionery manufacturers, TOP-10

In spite of an active promotion of healthy lifestyle and healthy eating, popular majority is unable to go back on chocolate, candies and other confectionery delicacies. According to experts, the production volume of chocolate and sugar confectionery went up by 4,75% for the first half of the year 2013.

The top three companies in the raking list are represented by following enterprises: Confectionary Concern Babaevskiy JSC, Rigli LLC (TM Orbit, Juicy Fruit, Hubba Bubba etc.) and Mars LLC (TM Milky Way, Bounty, Mars, Twix, Snickers etc.). The return on sales value of all top three companies is more than 20%, therefore, more than 20% of sales revenue is accounted for by profit on sales of the mentioned enterprises, that may be considered as a good result. Mars LLC is also the second company with highest turnover in the branch at year-end 2012. Moreover all companies got high and the highest solvency index GLOBAS-i®, which characterizes them as financially stable.

The leading company with highest turnover in the branch Nestle Rossiya LLC (TM NESQUIK, Rodnye Prostory, Savinov, Rossiya etc.) is located only on the 7th place of the ranking with the return on sales 6,79%, that could be related to high production cost, as well as to high selling and administrative costs. Although, the company got high solvency index GLOBAS-i®, that characterizes it as financially stable and attractive for business cooperation.

The company Orkla Brands Russia JSC (TM SladKo, Fluide, Pekar, Factory named after N.K. Krupskaya) closes the ranking with the return on sales (-0,49)%, that is less than 0. Similar result can be explained by negative value of sales profit. However, the company got high solvency index GLOBAS-i®, which characterizes it as financially stable with low risk of insolvency in the nearest 12 months. Similar conclusion confirms once again the rule that for overall assessment of a company it is necessary to take comprehensive approach with using of various financial and non-financial indicators.