Special project "Finnish Business 2018". "In the expectation of new heroes", a result of the annual ranking of "The leading Finnish companies in Russia" conducted by Fontanka.ru. It is a continuation of the projects "Business with a Finnish DNA", 2016 and "Finnish Business leaders", 2017.
More than 900 companies run in part or totally with Finnish capital work in Russia. The size of their investment varies from €12 to 15 billion. TOP 30 are the largest companies by revenue in Finland (with revenue of more than €1 billion) as well as the largest investors. Evaluation of their financial status, market presence and assets, and investment strategy provide an indication of the situation and outlook of Finnish business in Russia.

For the first time, a new methodology taking into account the sum of quantitative and qualitative indicators was used in the compiling of the list of the leading Finnish companies.
Key findings from the research
1
Large Finnish companies are leaving the Russian market. Kesko, Lemminkainen, "AVA-Peter", Stockmann, Ruukki exited or announced their exit from the market from December 2017 to December 2018. The reason is unsatisfactory financial results and low growth of the market.
2
Finnish business in Russia is growing following the Russian economic recovery. At the end of 2017, the total revenue of the 30 largest Finnish companies in Russia amounted to 281.6 billion rubles, a 7% increase from 2016. For comparison, the growth rate was estimated to be 5.2% in 2016. The Russian GDP grew by 1.5% in 2017 and by 0.2% in 2016.
3
Accelerated growth can be expected at the end of 2018: 8 companies from TOP 30 that have been showing intermediate results for three quarters have increased their sales by 8.5%.
4
The crisis has been overcome. All branches of Finnish business in Russia showed positive dynamics in 2017. Retail and manufacturing showed moderate growth (+5.5% and 6%, respectively). Real estate and distribution had double-digit growth (+17.6 and + 15%).
5
The risk of companies exiting the market still exists. A number of major players continue to work at a loss, for instance, Prisma, Atria, and Yliopiston Apteekki had a negative profit at the end of 2017.
6
Industry strengthened the position of the main branch of Finnish business in Russia; it accounted for 67% (188.5 billion rubles) of sales of the TOP 30 leading companies against 64% of sales a year earlier.
7
Retail lost its position and gave up its status as the second-largest industry to the real estate market players and contracting builders. This mainly happened because of the exit of such a large player as Kesko. In total, Finnish retail companies from TOP 30 earned 32 billion rubles in Russia, builders and developers — 32.6 billion rubles, logisticians and distributors — 18.8 billion rubles.
8
According to the FCS, Finland is in fifth place in terms of supplies to Russia among the EU countries. Finnish export to Russia in euros almost does not grow (+ 3% in the first half of 2018), but it shows the best dynamics in rubles and dollars because of the difference in the exchange rate.
9
Because of the size of the market, Russia remains attractive to Finnish companies, but low rates of economic growth and high competition make them take other directions for international expansion. The volume of investments in Russia among the TOP 30 Finnish companies was €362 million in 2018, 18% less than a year earlier.
10
Low customer demand continues to pressure Finnish companies operating in the consumer market, as well as currency fluctuations that affect the profitability of production. In the price war, Finnish companies lose to Russian competitors. As a result, investment projects are postponed (Fazer) or stretched in time (Atria).
11
The industry sector continues to attract investments, as other sectors continue to lose investments. The TOP 5 investment projects implemented in 2018 by the participants of TOP 30 and stated for the next five years are investments in the launch of new enterprises and the modernization and expansion of existing ones, as well as the acquisition of other players.
12
TOP-30 companies are represented in all Russian regions, except for North Caucasus Federal District. Fortum has started to work in three regions in 2018. Posti got rid of assets in two regions under the optimization program.
13
New players are trying to minimize their risks and investments. Of the three Finnish companies, only the paint manufacturer Nor-Maali Oy decided to build a factory from scratch. Peikko Group and Vilakone decided to organize production at leased capacities in the first stage.
14
New heroes of Finnish business are companies that previously supplied their products to Russia themselves or through their partners. Localization is a way to reduce the impact of exchange rates on product demand, as well as to take an advantage of the import substitution.
15
Players specialized in construction supplies, as well as IT companies and enterprises whose business is related to ecology and recycling will continue to show interest in Russia.
About the methodology of the research
The rating "The leading Finnish companies 2018" was conducted by Fontanka.ru. This is a list of 30 companies where their final influence index is based on the sum of points. Points were given for the size and dynamic of their revenue, investments, investment activity (size of investments for the last year and announced investment projects), geographical representation of asset, special achievements (innovations, environmental projects, and achievements in the field of corporate culture).

Data received from financial reporting, information provided by the companies and expert estimations served as a source of the research. The respondents were Finnish-Russian Chamber of Commerce, Consulate-General of Finland in St. Petersburg, East Office of Finnish Industries.

In case of discrepancy of the revenue data in the reporting under the Russian Accounting Standards (RAS) of the Russian legal entities and the data on the Russian subdivisions in the financial statements of the parent companies, preference was given to the last. Recalculation of their revenue to rubles was made at the average exchange rate of the Central Bank for 2017 (65.7 rubles a euro) and for the first nine months of 2018 (73.3 rubles a euro). The operation sector of each company was determined by their main type of activity. Their geographical presence was determined by the presence of key assets of their main activity.
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