Profits At Russian Companies Have Plummeted
1- 30.09.2026, 22:38
To a pandemic low
The financial situation of Russian companies continues to deteriorate. In January–July, they earned a total of 13 trillion rubles, according to Rosstat: this is the difference between the profits of profitable companies and the losses of unprofitable ones. This is the lowest figure since 2020, when COVID-19 lockdowns were in effect, reports The Moscow Times.
Compared to last year, Russian businesses’ earnings fell by 15.7%, and when adjusted for inflation, real profits declined by 21%. For the first seven months, they were nearly half (44%) of what they were in 2021, before the war.
Profitable companies saw their nominal profits decline by 5.3% over the year, while the losses of unprofitable companies rose by a quarter (25.6%). One in three firms is in the red: the share of profitable companies has fallen to 66.6%, nearly the same as in 2020 (65.7%).
Economic growth slowed sharply last year and has nearly come to a halt this year; companies are complaining about low demand in various surveys. They are caught in a squeeze: inflation remains high, costs are rising, but weak demand prevents them from fully passing these costs on to prices, and profits are falling. The desire to raise prices is hampered by difficulties in implementing it due to demand issues, explained economist Dmitry Polevoy.
High wages and interest rates are putting pressure on corporate profits, notes Alexey Klimyuk of Alfa-Capital, while the growing tax burden leaves them with even less money. He believes this is the reason for the decline in investment: businesses lack sufficient capital, and borrowing is too expensive. For this reason, the Institute of Economics of the Russian Academy of Sciences (INP RAN) identified the decline in profits as one of the key risks to the economy this year.
Over the past seven months, wages have risen by 12.2%, or 6% in real terms, according to Rosstat. Strong consumer demand is propping up the economy, continuing to keep it from sliding into a recession, according to analysts at Promsvyazbank.
But it is becoming increasingly difficult to profit from this demand. In the retail sector (excluding automobiles), profits fell by 20% year-over-year. Gazprombank analysts note Russians’ heightened price sensitivity, which “is shifting consumer traffic toward discounters and online delivery”. According to their estimates, discounters accounted for 94% of new retail space opened by the largest FMCG chains in the first quarter.
Meanwhile, investment goods are failing to find buyers due to a decline in investment, says Moscow State University professor Natalia Zubarevich. Sergey Tsukhlo of the Institute of Economics at the Russian Academy of Sciences notes a “complete loss of optimism” among industrial enterprises regarding future production.
Klimyuk points out another consequence of falling profits: companies’ credit ratings are deteriorating, and with them, lending terms. As a result, the number of defaults is rising, he concludes.
Extractive companies significantly increased their profits—by 36%, largely due to rising oil prices caused by the crisis in the Middle East; food and beverage producers—by 34% and 32%, oil refineries, which are profiting from rising fuel prices, and part of the defense industry. Manufacturers of “other transportation equipment” improved their financial results by 61%, while those of “computers, electronic, and optical products” saw a 20% increase.
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