The leading Finnish companies' 2020
RIDING A ROLLER COASTER IN RUSSIA
English summary
The leading Finnish companies' 2020

RIDING A ROLLER COASTER IN RUSSIA

English summary
The special project "The leading Finnish companies' 2020. Riding a roller coaster in Russia" is a result of the annual rating of "The leading Finnish companies in Russia" conducted by Fontanka.ru. It is a sequel of the projects "Business with a Finnish DNA" (2016), "Finnish Business leaders" (2017), "Finnish Business - In the expectation of new heroes" (2018), "Finnish Business - Looking for growth points" (2019).

More than 900 companies with Finnish capital work in Russia. The leading TOP-30 are the largest companies by revenue and investment, representatives of the main industries (manufacturing, retail, wholesale, service industry, real estate). According to their financial statements and investment strategies, we can provide an outlook upon Finnish business in Russia.

KEY FINDINGS FROM THE RESEARCH

Fontanka observes a recovery period of Finnish businesses between 2016-2020 in the aftermath of anti-Russian sanctions from 2014. In 2014-2015 several powerful blows hit Finnish companies operating in the Russian market: anti-Russian sanctions, which made banks less willing to lend money for expansion in Russia, the embargo that stopped food imports, and the depreciation of ruble, which made Finnish goods more expensive, and therefore less competitive.
In 2015-2019 five companies from the TOP-30 left Russian market: Kesko, Neste, Stockmann, Ruukki, Scanfert. Their total annual revenue (at the year of leaving) was 56 bln rubles. This accounts for around 17% of total Top-30 revenue in 2020.

Remainers show steady but slowing growth. The highest point of economic recovery was in 2017, when the total revenue of the largest Finnish companies in the Russian market increased by 7%. In 2019 revenue of TOP-30 increased only by 0.8%.
Aggregated Top-30 revenues, bln roubles

Aggregated Top-30 revenues, bln roubles

Business landscape has changed significantly over five years. Retail was the main victim. Its share in the TOP-30 revenue decreased dramatically from 20% in 2015 to only 3% in 2019.
The share of the service industry decreased from 3% to 2% over five years. New losses are expected. The mail company Posti is discussing the sale of their logistics business Itella in Russia.
The share of the service industry decreased from 3% to 2% over five years. New losses are expected. The mail company Posti is discussing the sale of their logistics business Itella in Russia.
The real estate segment has also noticeably dropped down. In 2015 its share in the TOP-30 revenue was 12%, but declined to only 6% in 2019. The number of players also decreased: Lemminkäinen merged with YIT. SRV and Technopolis did not launch new projects and lost rental revenue. As a result, they were not included in the TOP-30.
The real estate segment has also noticeably dropped down. In 2015 its share in the TOP-30 revenue was 12%, but declined to only 6% in 2019. The number of players also decreased: Lemminkäinen merged with YIT. SRV and Technopolis did not launch new projects and lost rental revenue. As a result, they were not included in the TOP-30.
Manufacturing has strengthened its position. The share of this sector in the TOP-30 revenue grew from 62% in 2015 to 70% in 2019. The growth was the result of substantial investment. The Top-30 Finnish companies invested EUR 9.6 bln in total since entering the Russian market, where 87% went into manufacturing.
Manufacturing has strengthened its position. The share of this sector in the TOP-30 revenue grew from 62% in 2015 to 70% in 2019. The growth was the result of substantial investment. The Top-30 Finnish companies invested EUR 9.6 bln in total since entering the Russian market, where 87% went into manufacturing.
Distributors' share in the TOP-30 increased from 3% to 19% since 2015. This segment adapted most easily to change. In the past three years distributors had the highest revenue growth.
Distributors' share in the TOP-30 increased from 3% to 19% since 2015. This segment adapted most easily to change. In the past three years distributors had the highest revenue growth.
The largest investors in 2016-2020 are Fortum (1225 mln euros), Nokian Tyres (225 mln euros), Wärtsilä ( 210 mln euros), UPM (70 mln euros), Fazer (26 mln euros).
Key industries share in total TOP-30 investments

Key industries share in total TOP-30 investments

New players occupied vacant market niches after the domestic economic recession in 2015: in 2016 42 companies with Finnish capital were registered in Russia. The market growth also attracts newcomers. In 2018 35 Finnish entrepreneurs started their business in Russia (the revenue of the TOP-30 grew by 7% in 2017). However, none of the new players who have launched a business in Russia between 2015-2019 have reached an annual turnover of 1 billion rubles and entered the TOP-30 so far.

The coronavirus pandemic dealt a blow to the Russian-Finnish trade. According to Russian customs data, in the first half of 2020 turnover decreased by 27% down to USD 5 billion. This was the largest decline since 2015, when turnover fell by 39%. Russian exports decreased by 29% to USD 3.7 billion. Finnish imports fell by 20% to USD 1.3 billion. Finnish customs estimates a decrease of Finnish export by 19% to EUR 1.7 billion, a decrease of Russian import by 35% to EUR 3.5 billion.
Key industries share
in total TOP-30 revenue
in 2015 and 2019

Key industries share in total TOP-30 revenue in 2015 and 2019

The total revenue of companies from TOP-30, which disclose quarterly results, fell by 10% between January and September 2020 in euros. In roubles there could be insignificant growth (+0,1%). But devaluation of the Russian currency increases costs and hits profits. Nokian Tyres has the biggest drop in revenue in January-September (48%). The company tried to reduce high carry-over stocks in the Russian distribution channel.

The crisis has set new challenges to Finnish companies. Fazer and Valio developed online sales, Atria invested in assortment. Finnish companies reduced staff in order to cut costs. Atria reduced the number of employees by 6% in 2020, Nokian Tyres by 5%.

There can be new losses. Posti is discussing the sale of their logistics business Itella in Russia. YIT will stop real estate development in Moscow and Rostov-on-Don by the end of 2020. Technopolis had been discussing selling Technopolis Pulkovo business center off, but did not come to a deal. However, some companies consider the possibility of launching a business in Russia.
TOP-30 revenue growth and number of new company registrations with Finnish capital

TOP-30 revenue growth and number of new company registrations with Finnish capital

ABOUT THE RESEARCH

The research "The leading Finnish companies 2020" was conducted by Fontanka.ru. It is based on a list of the 30 largest Finnish companies by revenue operating in Russia. We estimated revenue, revenue growth, investment activity. Our data sources are financial statements, company data, expert estimates and surveys.

Fontanka.ru is a well-known electronic mass media company in the North-West region of Russia, where you can find not only news from St. Petersburg but also the latest news of the day, and all the important and interesting events that take place in Russia and in the world as well. Our audience are business leaders and politicians, civil servants and hundreds of thousands of citizens.