Page 26 - RusRPTJun20

2.12 ​Russian business and consumer confidence
The first quarter results for Russia’s blue chip companies are some of the worst in more than a decade​ and most companies’ results are unlikely to recover to where they were at the start of this year for at least a year to 18 months, say analysts.
Oil and gas companies, banks and airlines all saw their earnings slump over the first three months of the year by three quarters or more.
Seven in ten CFOs expect income to fall over the next six months, and more than half believe revenues will still be down by the end of 2021, Deloitte found.
In the earnings reports already released, a number of companies have announced postponements to dividend payments, while others — including retailers who have seen a shift to online buying — are cutting back on investment programs or putting planned strategy updates and expansion plans on hold.
Just over half of Russia’s largest corporates have already published financial results for the first quarter — covering the period of peak financial volatility in mid-March but only the first few weeks of the coronavirus economic lockdown that started at the end of March.
The full impact of the lockdown will only be visible in the second quarter results as the full shut down of the economy only began in Moscow on March 30.
Banks: ​State-owned lender​ ​Sberbank​ has already seen profits atrophy, down 47% in the first three months of the year in official results, but profits were down 85% in April compared to last year during the first month of lockdown.
Russian banks are bracing for a much longer hit to earnings than just one or two quarters, Dmitry Puchkaryev, an analyst at BCS, told The Moscow Times. “It’s not possible to talk about improving results in the banking sector anytime in the near future.” Sberbank has increased its provisions for losses on its loan book eightfold in response to rising unemployment and falling earnings.
State-owned rival bank VTB saw profits down 14% in the first quarter as it also increased loss provisions and marked down the value of its investments.
While everyone agrees there is little chance of a financial crisis as banks are fundamentally more healthy than in previous crises, earnings will only fully recover in 2022, VTB Capital (VTBC) said in a note.
Energy: ​oil companies have been hit by the double whammy of lower oil prices and forced output production due to the renewed OPEC++ agreement between Russia and Saudi Arabia signed​ ​that will reduce production of oil by 9.7mbpd and was signed on April 13​.
Oil major​ ​Rosneft​ posted its first quarterly loss in eight years, hemorrhaging $2.2bn during the first three months of the year – twice as bad as analysts had expected.
Tech: ​the results of Russia’s flagship technology firms of Yandex and Mail.Ru
26​ RUSSIA Country Report​ June 2020 ​ ​www.intellinews.com