Rosstat reported that in January–July Russian companies earned a total of 13 trillion rubles. This is the difference between the profits of profitable organizations and the losses of loss-making ones. The figure was the lowest since 2020, when COVID lockdowns were in effect, and was 15.7% lower than a year earlier.
Adjusted for inflation, real business profits over seven months fell by 21% and are almost half, down 44%, from the prewar 2021 level. Companies that remained profitable reduced nominal profit by 5.3% over the year, while losses of loss-making organizations increased by 25.6%.
The share of profitable companies fell to 66.6% — almost to the 2020 level, when it stood at 65.7%. Economic growth slowed sharply last year and has almost stalled this year, and companies in surveys complain about weak demand.
Economist Dmitry Polevoy explained that with high inflation and rising costs, businesses cannot fully pass expenses on to prices, so profits are falling. Alexey Klimyuk of Alfa Capital believes that high wages, interest rates, and the growing tax burden are weighing on results; as a result, investment is shrinking, companies’ credit quality is deteriorating, and the risk of defaults is rising.
According to Rosstat, wages rose by 12.2% over seven months, or by 6% in real terms. Analysts at Promsvyazbank note that strong consumer demand is still keeping the economy out of recession.
In retail trade, excluding automobiles, profits fell by 20% year on year. Analysts at Gazprombank attribute this to buyers’ greater sensitivity to prices, which is shifting traffic toward discounters and online delivery; according to their calculations, in the first quarter discounters accounted for 94% of new retail space opened by the largest FMCG chains.
At the same time, mining companies increased profits by 36%, and food and beverage producers by 34% and 32%. Oil refineries, some defense industry enterprises, producers of “other transport equipment” by 61%, and “computers, electronic and optical products” by 20% also improved their financial results.
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