Page 35 - RusRPTJune18

4.3.2 Corporate profits dynamics
Corporate profits are somewhat off last year’s highs, but still relatively strong . Companies have been more active in raising money from bond markets, while corporate demand for bank credit has remained modest. Even with fairly high interest rates and Western sanctions limiting access to international lenders, the biggest factors depressing investment demand are the uncertain economic outlook and difficult business environment.
Russia’s corporate sector net profit was down 8.5% in 2017 y/y , according to Rosstat. The trend runs counter to GDP growth, which hit 1.5% last year after contracting by 0.2% in 2016.
In nominal terms, net profit reached RUB10.3 trillion ($180bn): some 34.8 thousand organizations brought in profits of RUB12.3 trillion, while another 12.4 thousand faced losses of RUB1.96 trillion. This data does not include small businesses, insurance companies, state institutions, or banks.
On a sectoral level, extractive industries led the pack , where net profit was up 17.9%, and a staggering 40% for hydrocarbons. Agriculture, meanwhile, saw worse performance despite overall sector growth, with net profit down 22.3% largely due to decreasing grain prices
Business increasingly faces fraud in its companies, PwC found , interviewing the leaders of major Russian companies. In 2018, every fifth Russian company became a victim of such crimes: 22% of respondents suffered damage of more than $ 1mn, 22% - up to $ 100,000, and 41% - less than $ 100,000. Growth in the number of economic crimes within companies - a worldwide trend: from 2016. the number of victims of fraud increased from 36% to 49% in 2018, but in Russia it is much higher - from 48 to 66%, follows from the PwC survey.
35 RUSSIA Country Report June 2018 www.intellinews.com