While business in Russia is always a challenge, 2021 has become the most challenging year for foreigners on the Russian market. Finnish companies that learned tough lessons from the pandemic as well as got used to Russian economic ups and downs, showed sustainable outcomes. Many companies even increased their volumes.
about the project
This year Finnish companies reported the 2020 financial year which became almost the hardest year since Fontanka did its research. The first Finish Business Index was released in 2016. The previous research Finnish Business 2020.
The main criteria which were used to rank Finnish companies on the Russian market are revenue, net profit, and paid-out dividends for shareholders.

Two other criteria were taken into account as well. First, this is the number of employees. Secondly, this is the amount of taxes paid. The index is based on SPARK data with access to financial and accounting reports provided by the companies. Companies own data were used in some cases as well.
More Money, Less Profit
According to open data, 615 Finnish companies registered in Russia increased their revenue by 18.2% last year. The outcome is 403 billion rubles.
403 billion rubles
total revenue of Finnish companies in Russia in 2020
Source: SPARK, companies' own data
While this is just 0.4% of Russian GDP, Finnish business holds significant positions in the many key sectors such as wood processing, energy industry, chemical industry, food industry, and clothes.

The impact of COVID-19 pandemic in 2020 is visible. Net profit of Finnish companies dropped sharply by 13%, but still made 40 billion. However, Finnish entrepreneurs should not complain: the outcome is 38.9 billion rubles in dividends. This is less than a year ago when it was 48.1 billion rubles. However, this means that it is possible to earn money in Russia even during tough economic times.
Net profit of Finnish companies in Russia (billion rubles):
The volume of dividends paid by Finnish companies in Russia in 2020 (billion rubles):
Source: SPARK, companies' own data
At the same time, Finnish companies bring money to the Russian budget. Last year the amount was at least 23.2 billion rubles. This amount includes income taxes, property taxes, VAT, land taxes, transport taxes as well as contributions to PFR, FFOMS, and social security.
22.7 billion rubles
The total amount of taxes and fees paid by Finnish companies in Russia
Source: SPARK, companies' own data
What's New?
It is impossible to ascertain precisely the amount of 615 Finnish companies' cumulative investments. However, there are data on investments from the companies themselves. For example, Valio invested 178 million rubles in its situated near Moscow complex. Fazer said about its last year 308 million rubles of operations investments.

Indirect criteria help to assess the situation. For example, these may include annual assets value change or fixed assets change.

Looking at these figures, it becomes clear that Finnish business is increasing its volume in Russia. For example, the fixed assets cost of SATA company specializing in purchase and rental housing increased by 706 million rubles over the past year.

Stora Enso's transport department (Stura transport OOO) increased its fixed assets cost by 454 million for the year. Stora Enso Pakadzhing BB OOO increased this indicator by 200 million rubles. Huhtamaki increased its fixed assets in Yelabuga by 365 million. Clothing manufacturers Luhta, Rukka and Icepeak (Nordik feshn ritejl OOO) showed an increase by 182 million for the year.
The size of assets of Finnish companies in Russia by the end of 2020 (billion rubles):
Source: SPARK
However, comparing the fixed asset cost at the beginning and at the end of the year, depreciation and amortization that reduce that cost should be taken into account. For example, for that reason, Fortum PAO which is the largest Finnish company in the Russian market annually writes down 7-9 billion rubles. Though, formally the company assets decreased by 3.5 billion rubles last year, it cannot be said that the company invested nothing in its development. According to the IFRS report, Fortum invested 4.5 billion.
Losses and Gains
Only 14 new Finnish companies were registered in Russia in 2020. For comparison, in 2019 there were 29 new Finnish companies. Most of the 2020 new companies were subsidiaries of companies operating in Russia for a long time: Algol Chemicals, EKE, Metso Outotec, etc.

But there are those companies which enter or re-enter the Russian market. Among them are Meprus OOO (a small logging business of the Partanen family) and Vokant Group – Morgan Millz OOO (a large distributor of textiles and underwear). A sports analytics system provider Wisehockey registered in Moscow its company (Sportivnaya Telematika OOO) with 51% shares are owned by Russian KHL.

Shipping company Idän successfully entered the market. Its Idan Shipping OOO already has at least one freighter Kata under the Russian Federation flag.

At the same time, there were some losses. Neste sold its gas stations to Tatneft' in November 2019. Atria sold its meatpacking plant to Cherkizovo Group in early 2021. Now in Russia Atria has only a fast-food business under Sybilla trademark.

Castrén & Snellman is a big Finnish business law firm, exited the Russian market in 2020. The company served a number of Finnish companies which had finished their work in Russia.

14 Finnish companies are going to liquidate their business in Russia. For example, the Karelian division of Hubstock OY already fired all its staff. Finnish company FinTrack OY liquidates its R65 OOO. The company was engaged in railway transportation and showed high revenue, though there were no significant profit or dividends.
Strong Growth
n 2020, a notable development was in construction. For example, YIT and SVR showed double-digit revenue growth. Russian divisions of Adelis Holding (Quattroservices) which is engaged in real estate management has the most enviable position from the Top-30 companies. Its revenue is 2.3 billion rubles which is 4.6 times more than a year ago. KS-Montazh OOO showed the greatest growth gaining the benefits of a construction contract.

Building materials company Uponor also shows remarkable revenue growth (+28% – 23 billion rubles).

Metallurgical enterprise Elkat has 24.6% growth and its outcome is 17.4 billion rubles.

Pharmaceutical company Orion (Orion Farma OOO, 3.2 billion rubles) showed double-digit growth of revenue. UPM Kymmene is a forest industry company which has several companies in different regions, and has revenue as much as 21 billion rubles. Tver subdivision of Ahlstrom-Munksjö holding, a fiberglass manufacturer, has 2.8 billion rubles of revenue.

Finnish logistics state company Itella was severely affected – minus 19.4% of revenue, though the overall figure is not bad and reached 5 billion rubles. Heavy equipment distributor Ponsse, tire manufacturer Nokian Tyres, and packaging manufacturer Huhtamäki had a huge loss of revenue. Finnish state-owned energy company Fortum had the greatest losses (almost 3 billion rubles in comparison with last year), though this is just 3.7% of its volumes.
Mutual Benefits
This year trade turnover between Finland and Russia covers part of last year's losses. According to the Russian Federation Customs Service, by early October total exports and imports amounted to almost 8.8 billion dollars, 22% more than last year.

Imports from Finland are restored faster (almost + 25%), though in dollars this is more than two times less in comparison with exports. If trade continues to restore at the same pace, it will be able to reach the 2019 level (13.5 billion rubles) by the New Year.

The largest groups of goods which Russia imports from Finland have not changed. First of all, this is copper. Over a nine-month period this year, it was imported for almost 350 billion dollars, about 13.5% of total imports. That's about the same as last year's imports. However, the world market makes its own contribution. If last year the average price of Finnish copper in Russia was 9 thousand dollars per ton, this year the price is more than 20 thousand dollars. That means, although the volume of imports in money is significantly increasing, in tons it could be much less.

Next comes paper and paperboard (207 million dollars), agricultural machinery (74 million dollars), machines (50 million dollars), and other equipment for producing. More than 2.5 thousand vehicles were brought from Finland for a total amount of 30.1 million dollars.

There were no surprises in exports. Oil, gas, and petroleum were nearly half of exports. Nickel exports were also significant. One more interesting item is electricity. Last year Russia exported kilowatts to Finland for 100 million dollars, this year the amount is 370 million just for the first nine months.
Business Voice
Teemu Helppolainen
CEO of the company YIT Sankt-Peterburg AO, EVP, Head of Housing Russia segment of YIT concern
"For many years we have been developing our activities, changing organizational structure, paying great attention to staff development and business processes. Housing is a long-term business, which is gradually changing. In 2020 we reaped the benefits of measures taken as well as the situation on the market was favorable", - said Teemu Helppolainen, CEO of the company YIT Sankt-Peterburg AO, EVP, Head of Housing Russia segment of YIT concern.

"With respect to personnel, it was interesting to see how different markets have become similar over the years. There is a struggle for the competent employees on the market. The pandemic showed us how valuable employees are. IT skills and ability to remote work are essential qualifications. We have a good image as an employer, for us it is pretty simple to find competent employees, - explained Teemu Helppolainen. - In some regions (Ekaterinburg and Tyumen) there were some labour difficulties at the end of 2020. It happened mainly due to COVID-19 pandemic. We did not stop ongoing construction because of the pandemic, except for Moscow Oblast where temporary measures were imposed by official authorities. During the pandemic we paid special attention to the safety of our staff and took the necessary measures immediately."

Teemu Helppolainen stresses that the movement to remote work in 2020 changed attitudes to it forever. Managers and employees worked together to find a balance between work at home and work in the office.

"When we see each other less frequently, the role of trust and communication gains more importance. Managers are concerned with regular contact with their employees and try to be sensitive to the employees' sentiments. Since we have been cooperating with different offices from different cities and countries for many years, many of our teams had skills for virtual communication. This was promoted also by good analytics tools that allows the managers regardless of location to have up-to-date picture of business development", - said Teemu Helppolainen.

YIT's future plans include further rise in the client's satisfaction level, maintenance and increase the level of labour security, start of the new projects and integration of sustainable development in business.
Fish is Searching for a Deeper Place
Housing is not the only one successful market segment in 2020.
Svetlana Uvakina
CEO of UPM-Kymmene OOO, the Russian Division of the Forest Industry Concern UPM
"The global pandemic and quarantine restrictions led to shocks in the global and Russian economy as well as made society and business to face great challenges," – said Svetlana Uvakina, CEO of UPM-Kymmene OOO, the Russian Division of the Forest Industry Concern UPM. – Globally, the pandemic differently influenced our businesses, the same I can say about Russian business. For example, demand for plywood in the construction industry was high, but in industrial production it was low".

"Demand for most UPM commodities depends on overall economic activity and, hence, depends on pace of economic recovery. In 2021, a rise in plywood prices ensured financial success. Factory UPM Chudovo increased its volume of output in comparison with previous year. However, COVID-19 pandemic is still creating an uncertain situation on the markets in 2021, - noted company executives. The main objectives of Russian UPM for the end of 2021 and 2022 are to constantly increase efficiency of our work, make sure our clients are provided with high-quality production and international service level and continue to take care of the wellbeing of our employees."
Always Forward
Elena Kipeneva
CEO of Valio OOO
"In general, 2020 was marked by constant dynamic changes: consumer preferences and the market began to change faster. Epidemiological situation caused the popularity of home-cooking and home delivery, growing demand for goods near home, and discounters (these also were a result of changes in income), - said Elena Kipeneva, CEO of Valio OOO. – It was important to respond rapidly to these changes, ensuring high-quality and safety of products, and continuity of supply. Our company managed to make it all work out."

Despite COVID-19 restrictions, the Russian division of Valio demonstrated profit growth: revenue exceeded by 8.4% 2019 rates.

Besides that, online sales increased significantly: almost three times in comparison with 2019.

"Valio continues to develop its own production: new investment projects launched at the factory in Moscow oblast. Online retail still plays a key role: Valio invests in the development in this direction because the dynamic sales growth is maintained, - said Elena Kipeneva. - The Russian market continues to be a priority for Finnish concern Valio. The Russian division has permanent development and profit growth goals."
Time to Think of the Future
Ekaterina Kulinenko
Head of communications, Fazer in Russia
"2021 is a difficult year for bakers. Unprecedented rise of almost all components cost of our product including materials and supplies, as well as package and logistics significantly higher than rate of price increases that retailers accept", – said Ekaterina Kulinenko, Head of communications, Fazer in Russia.

However, there are certain advantages and development prospects. "During the last year's lockdown everybody started to make online orders. And they continue doing that. In 2021 our online sales have reached a high level that is even higher than in spring 2020, - said Ekaterina Kulinenko. – We see online-retailing prospects for bread and we will develop our online capacities including our own online stores."

Finnish entrepreneurs noted that Russian society started to pay much more attention to packaging and its recycling.

"In 2021 Fazer invests heavily in upgrading its production facilities and the purchase of new equipment that will expand the product range, increase the capacities of scarce products for supply in Russia and increase production flexibility, - said Ekaterina Kulinenko. – The company will also continue to invest in sustainable development projects that reduce the use of plastics, food waste, emissions, and increase the use of recycled plastic."
General partner of the project "Finnish Business 2021"