WhatWood: Russia’s forest industry Top 100 profit margin declined to 1.38% in 2012

In 2012, joint net sales of the 100 largest Russian forest industry companies that participated in the WhatWood rating declined by 0.87% to RUR 279.68 billion. Joint net profit of 94 companies of the rating who disclosed this indicator amounted to RUR 3.08 billion against RUR 13.14 billion a year earlier. Thus, the average rate of profitability of the Top 100 has decreased from 5.69% down to 1.38%.

The sales of the first fifty companies fell by 0.11% to RUR 271.66 billion, while the following fifty experienced a slump of 26.93% to RUR 8.02 billion. Among the last twenty companies, almost all suffered major losses.

The consolidation of the forest business in Russia therefore increased too: the share of the revenue of the first 50 companies in the Top 100 rose from 96.39% to 97.13%.

Almost all small companies were unprofitable last year, while the leaders ended the year in the black, with profitability in the area of 0-10% – as in the case with net sales, the change point is at the sixth dozen of the rating. However, the profitability ratio of the market leaders in most cases decreased slightly compared to the last year.

Among the major players, heavy losses were suffered by producers of newsprint (Volga, Kondopoga PPM and Solikamskbumprom all significantly worsened their performance), as well as by enterprises experiencing structural problems due to obsolete equipment and reduction in demand for its products during the year (Pitkyaranta, Baikal pulpmill, Solombalales).

Major manufacturers of lumber did quite successful business (Sevlespil, Lesosibirsk LDK #1, Titan, Vologodskie Lesopromyshlenniki, Lesresurs) – most of them increased sales and improved profit margins.

The rating “Top 100 forest industry companies of Russia in 2012” was released by the editorial staff of WhatWood News & Analytics in October 2013. This publication contains special section “10 opportunities to do profitable business in the current market conditions” prepared on the basis of comments by leading market players.

Regular subscribers of WhatWood Weekly received this publication as a free supplement. In order to purchase the rating please contact WhatWood editorial staff: kb@whatwood.ru.