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4.3.2 Corporate profits dynamics, M&A
One in three Russian companies lost money over the first four months of this year, according to Rosstat, Vedomosti reported on July 27.
The share of unprofitable organizations in Russia in January - May 2020 amounted to 36%. At the same time, the profit of Russian enterprises fell by more than two times, according to Rosstat data.
In January - May 2020, the balanced financial result (profit minus loss) of organizations (excluding small businesses, banks, insurance organizations and state (municipal) institutions) in current prices fell by 51.6% and amounted to RUB3.246 trillion ($45.2bn) compared to RUB6.702 trillion in January - May 2019, according to the operational data of the statistical department.
34,300 organizations received a total profit of RUB5.873bn, 19,300 organizations recorded a total loss of RUB2.627bn rubles for the first five months.
Mining companies suffered the most: the loss in the field of mining increased by 8.6 times to RUB495.5bn. In processing industries, the situation is slightly better - the loss grew "only" 2.7 times to RUB717.7bn. In wholesale and retail trade - 2.8 times to RUB481.2bn.
In 1H20 the Russian mergers and acquisitions market declined to $40.6bn, its lowest level in nine years, Forbes and the Bell reported on July 23 citing data from Refinitiv.
Notably, as much as $33.9bn of that figure was accounted for the finance ministry buying 50% in Russia's largest bank Sberbank from the Central Bank of Russia (CBR). Apart from that, the M&A activity in 1H20 was at the lowest point since 2004.
In the meantime, share issuance suffered much less, with new equity issued down by only 9% year on year.
Investment bankers saw a 19% y/y drop in the commissions they earned in 1H20, to a total of $144.7mn, with the MMA and share placement commissions down the most. The commissions for bond placements declined less (down 10% to $44mn), but were also dominated by one large deal, Gazprom’s $2bn eurobonds.
The only segment of investment banking activity that posted an increase in commissions was syndicated loans, with a 21% increase to $34.8mn.
35 RUSSIA Country Report August 2020 www.intellinews.com
