Russia Business review, Q1 2018

We are pleased to present you the quarterly Russia business survey results prepared by our partners, CEEMEA Business Group. This is a document to benchmark your sales, profits, investments and salaries with other companies and to use as ammunition with your global HQ. 

Business results out of Russia still rank among some of the best in the world!

2017 was not bad with 67% of respondents reporting very good or decent results. Many companies expect 2018 to be reasonable despite the April events: about two-thirds of companies forecast sales this year in a range of 5-15% with a big cluster around 7-11%. The April “crisis” has not done too much damage “yet” to sales and profit outlooks BUT executives may be already downgrading some FX results marginally.

Whereas only 12% of companies predict flat/negative rouble sales, some 28% forecast this for their FX sales.

Companies in Russia (and globally) in 2017-18 (and globally) are coming under more cost pressures from global HQs. Some 69% of companies are on or ahead of their 2018 budget. But some budgets for 2018 did look quite ambitious to us which may explain why 31% of companies are behind budget.

Consumer products forecast a steady recovery in 2018 with 30% of firms looking to double-digit sales increases. Pharma & medical also look to high-single digit sales (33% of respondents) while remarkably 53% expect double digit sales in 2018. B2B firms are moderating away from double digits. But some of the largest companies tend to be growing in lower single digits rather than 5-13% range.

Sales growth in roubles, 2017 and 2018.PNG

24% of companies plan new investments in manufacturing, logistics and warehousing in 2018. Companies are interested in e-commerce but not quite pouring into it (38% plan a sizeable initiative).

As we expected, with average inflation trending at about 3.5% in 2018 (lower at the start of the year), companies will continue to offer increases around inflation in 2018. Few companies plan any extensive staff cuts: 76% plan none at all.

Price increases in 2018 will mirror those in 2017 and be very limited indeed. However, further deterioration of the rouble could start to alter that. CIS markets are fairly stable but 34% of executives do perceive see a strong improvement and benefit to the Russian business from the other CIS markets.

Download the full survey

CEEMEA Business Group works with over 5,000 executives from over 400 international and regional companies in Europe, Middle East and Africa. Thanks to our cooperation with CEEMEA, our clients receive first-hand top-quality independent cross-sectoral analytical reports intended for Russian top managers so that they can make well-informed strategic decisions.