Page 35 - RusRPTAug19

4.3.2 Corporate profits dynamics
Corporate profits in May (last available data) were up by RUB1,288bn,
which was about average for the year to date, but Russian corpates are on track for their most profitable year in the last four years.
Cumulative profits for the first five months of this year were RUB6,743bn, up by 38% on the pervious year.
In general while profits were growing slowly over the last three years, in 2019 the cumulative profits growth is well ahead of all three previous years and a sustainable recovery in corporate profits is underway as is evident in the improving corporate confidence survey (see above).
This recovery started in the second quarter of last year but this year it clearly gathering some momentum as in every month this year corporate profits have been at least 20% higher than in the previous year.
M&A targeting Russia so far this year has hit EUR 10.2bn across 67 deals, dropping 37.9% by value with 14 fewer deals compared to the same period last year (EUR 16.4bn, 81 deals). This comes despite the value in Q2 almost doubling to EUR 6.7bn across 32 deals, compared to the previous quarter which saw EUR 3.5bn with 35 deals. The two largest deals, both valued at EUR 2.6bn, were the exit of retail chain OOO Lenta in April and the sale of 10% stake of OOO Arctic LNG to Japan Arctic LNG in late June. The deals together account for more than half of the year’s total value so far. Foreign investment has reached EUR 4.5bn across 22 deals, ten more deals than in 1H18 despite a 42.7% fall by value. The first half represents the highest YTD deal count since 2012. On the other hand, domestic M&A fell to 45 deals in 1H19, the lowest YTD figure since 2003.
35 RUSSIA Country Report August 2019 www.intellinews.com