Against the backdrop of the aggravated geopolitical situation, 2022 turned out to be a difficult year for many sectors of the Russian economy. However, the government was able to soften the negative impact of sanctions pressure. The fact that the revenues of the 50 largest public non-financial companies (hereinafter, the Top 50) have continued to grow can be considered as an indicator of economic stability. In 2022, the indicator increased by 4% and reached RUB 66 tln. Prior to 2017, the revenues of the Top 50 on average grew in line with inflation, however, since 2018 annual average growth has substantially outperformed inflation, coupled with considerable growth of the volatility of revenues.
Growth of the revenues of the Top 50 since 2012 has generally overtaken GDP growth, which in a certain way indicated an increase in the concentration of the Russian economy on the largest business. The indicator has stabilized at around 42–49% since 2019; it was 44% in 2022 vs. 48% in 2021. The trend toward consolidation continues in many sectors of the economy, in connection with which ACRA assumes that in 2023–25 this indicator may again approach 50%.
Figure 1. Revenues of the Top 50 vs. GDP
Source: ACRA
1 For the purposes of this analytical commentary, ACRA understands public non-financial companies as organizations in the non-financial sector whose reporting is publicly available, as well as organizations that have stopped publishing their reports since 2022, but the Agency has sufficient information to take into account their financial performance. In 2022, the Top 50 included eight oil and gas companies, 11 metallurgy sector companies, six companies each from the retail trade and electricity sectors, and three transport companies. Besides these, 16 companies were included in the Other category.
Figure 2. Revenue dynamics of the Top 50 vs. inflation
Source: ACRA
The structure of revenues of the Top 50 by sector from 2012–22 remains stable. The largest share falls on oil and gas companies, whose share in the total revenue of the Top 50 consistently exceeds 50%. The only year when the share of the oil and gas sector dipped lower than 50% was the pandemic year of 2020 — the revenues of oil and gas companies fell due to a record production cut under an OPEC+ agreement amid a sharp decline in oil prices. This led to the overall revenues of the Top 50 falling.
The metals and mining sector occupies second place by sector in the Top 50 and stably accounts for around 11–13% of revenues. A decrease in the share of transport and an increase in the share of retail trade can be noted as the only structural change in 2012–22 in terms of the industry structure of the Top 50. Furthermore, in 2022 there were no significant changes in terms of the shares held by different sectors in the Top 50.
Figure 3. Revenue structure in the Top 50 by sector
Source: ACRA
The leverage of the Top 50 is sufficiently stable, with small peaks in 2015 and 2020. However, the deterioration of debt metrics in these years was not related to the growth of debt in absolute terms, but instead to a certain decline in incoming cash flows. Both of these years were relatively tough for the oil and gas sector, which, against the background of its significant share, was reflected in the total FFO before net interest payments and taxes. From 2021, the Top 50 managed to normalize leverage. Low interest rates in the debt market in 2020–21 had an additional positive impact on interest payment coverage. Thanks to this, the debt metrics of the Top 50 remained comfortable even in the challenging year of 2022 — the ratio of debt to EBITDA was 1.5x, while the ratio of EBITDA to interest payments was 12.2x. Under moderate stress scenarios, ACRA assumes a slight deterioration in these indicators (up to 2.5x and 7.5x, respectively) in 2023–2025, however, these dynamics may allow the Top 50 to maintain a high level of creditworthiness.
Figure 4. Leverage dynamics of the Top 50
Source: ACRA
In terms of sectors, the leverage of the Top 50 demonstrated varied dynamics, although ACRA cannot call leverage elevated in any of the sectors. After the abovementioned peak in the ratio of debt to EBITDA in the oil and gas sector in 2020, the indicator began to decline and by 2022 was near to its smallest value since 2012 — 1.1x. Metals and mining companies went through a peak in capital expenditures in 2013–15 and had the highest leverage. By 2021, the leverage of these companies had fallen back to a minimum, however, in 2022 the ratio of debt to EBITDA returned to its 2020 level of 1.7x.
The leverage of retail trade companies and electricity companies was much less volatile — for both sectors the ratio of debt to EBITDA was 2.7x in 2022. At the same time, such a significant increase in this indicator for electricity companies last year was caused by a large attraction of debt by one of the companies in the industry. If this fundraising is not taken into account, the debt burden of electric power companies, according to ACRA’s estimates, would be around 2.0x.
Figure 5. Leverage dynamics of the Top 50 by sector2
Source: ACRA
2 ACRA did not include the leverage of transport companies in this industry analysis due to their small number in the Top 50. Besides this, the Agency did not calculate the total leverage of companies included in the Other category due them belonging to different industries.
The continued growth trend in the share of the largest Russian companies in their industries allowed them to build a strong financial position, thanks to which they were able to maintain high revenue growth rates and low leverage in the turbulent period of 2020–2022.
