The commodity sector was the only profitable in Russia

The growth of profits of Russian companies this year was due to the growth of profits of companies in the oil and gas sector.
Rosstat estimated the increase in the net financial result of companies (except for state employees, the financial sector and small businesses) at 30.6% in January – August 2018 compared with the same period a year earlier, primarily because of the increase in profits in oil and gas production 2.2 times on the increase in the price of oil and additional quotas on exports from the Russian Federation under the OPEC + agreement. Profit growth before taxes slowed down by 4.1 percentage points compared with January – July, while trade (the third largest sector in terms of profit in the economy) recorded a loss of 42 billion rubles in August. Against this background, the share of profitable companies in the economy fell to 68.2% (69.1% a year ago).

Differentiation of sectors in terms of profitability has increased markedly. “The profitability of working capital in almost half of the sectors is lower than the profitability of alternative risk-free areas for placing free funds (government bonds) and even more so - interest rates on loans to enterprises,” noted in the October report of the Thirteen Theses on the Economy.

In addition, taking into account the profitability of businesses, the accumulated debt burden and payment discipline, “in an acute crisis we have almost the entire investment-oriented segment of the economy” - construction, real estate, building materials, some engineering industries, the center's analysts say. For example, net liabilities to EBITDA in real estate operations in June 2018 amounted to 7.1%, in the production of machinery and equipment - 7%. The share of overdue loans in construction in August 2018 was 22.5%, and in the production of building materials - 17.6%.

In general, stating the “sustainable stagnation” in which the Russian economy is today, the CMAPC notes: “In a situation where diversification of production and export of products is a necessary objective condition for the transition to intensive sustainable economic growth, in our economy the process is exactly in the opposite direction - to simplify the structure of the economy, and exports. An integral structure of economic growth has been formed, in some way reproducing the features of even the Russian economy of the 1990s, but the Soviet one of the 1980s. ”