Page 27 - RusRPTJun20
P. 27
was mixed, with their diversified holdings, earnings streams and cash buffers providing a degree of protection.
Revenues at both grew during the first quarter, up 25% at Yandex and 14% at Mail.Ru, while profits fell back: Yandex’s profits were down 5%, while Mail.Ru’s fell 22%.
A drop in advertising revenue is expected to hit both harder in the second quarter, while the quarantine in big cities has seriously affected Yandex’s transport units.
Customers at market leader Yandex.Taxi dropped 70% between the beginning and end of March, while a ban on car sharing in Moscow has seen Yandex.Drive’s fleet of around 20,000 cars sit idle since early April. But Yandex has a cash pile of RUB200bn ($2.75bn) which is enough to weather the storm.
Mail.Ru’s management withdrew its earnings guidance for 2020 — a measure taken by many firms — stating volatility was too high to give an idea of how much cash it will bring in.
E-commerce: online shopping has seen a boost in sales but at the same time the fall in incomes and the increased caution of the population means the affect on revenues and profits is mixed. The use of online food delivery services jumped by three quarters in the first quarter, such as express grocery service Yandex.Lavka and restaurant delivery app Yandex Eats.
Mail.ru’s revenues from its food delivery venture, Delivery Club more than doubled over the last year.
Retail: this sector has done best and seen the least impact from the coronavirus stop-shock. Among those companies whose results were not adversely affected by the coronavirus are the Moscow Exchange, Magnit and X5 Retail.
Revenues at retailers Magnit and X5 Retail were up by more than 10% each in the first three months, boosted by panic-buying and orders for people to stay at home.
SME: The proportion of companies reporting a lack of working capital increased by 2 percentage points in the middle of May compared to the previous week, up to 36%. It indicates a gradual increase in financial problems. For many companies, this problem will be temporary, and their financial situation will be restored as the economy recovers. However, for enterprises with high debt overloaded risks may be higher.
Over a third of Russian companies from various industries could go bankrupt amid the coronavirus (COVID-19) crisis, Reuters said on May 14 citing the study of the Center of Strategic Research (CSR) think-tank. The risk of bankruptcy currently is double that of 2014 crisis that was marked by international sanctions for Crimea's annexation. According to the monitoring of the business climate and surveys performed by the CSR since March 2020, up to 40% of the companies in trade and services are in risk of bankruptcy, due to a drop in demand, inability to service debt, and forced shutting down of the business. CSR notes that the specific feature of the current crisis is the totality
27 RUSSIA Country Report June 2020 www.intellinews.com
