Business is reconsidering opportunities – Kommersant FM

Every fifth large company in Russia is going to increase prices for its products due to expensive loans. At the same time, according to the results of the third quarter, the share of those wishing to take such a step increased from 14% to 23%, as follows from monitoring data of the Russian Union of Industrialists and Entrepreneurs. Businessmen interviewed by Kommersant FM agree with these conclusions. According to them, recently they have been faced with a sharp increase in costs, and one of the main items is debt financing. What other factors influence companies? Vladislav Viktorov found out.

While the Central Bank is trying to fight inflation by raising the key rate, business, on the contrary, is increasing the rate of price growth. Expensive loans are becoming one of the main reasons for increasing costs, which is why in the third quarter the number of companies that plan to revise the cost of their products approached the peak levels of early 2022. Then, due to the outbreak of hostilities in Ukraine and the imposition of sanctions, 35% of enterprises planned to rewrite price tags, as follows from monitoring by the Russian Union of Industrialists and Entrepreneurs.

This is especially noticeable, for example, in the mechanical engineering industry for the petrochemical and gas chemical industries. As Daria Builova, director of marketing and strategy for NATEK-Neftekhimmash, told Kommersant FM, despite the regulator’s attempts to restrain business activity, there are no fewer orders. But now, she says, each contract requires an individual approach:

“If in 2022 we enjoyed both subsidies and improved conditions for issuing loans for industrialists, now the situation has worsened. The rate is growing, there are quite a lot of contracts, the projects are very large and quite expensive.

Naturally, we open credit lines because clients are reluctant to pay advances, that is, our prices are primarily affected by the rate.

We build on each contract and increase or reduce some expenses for each one.”

For some Kommersant FM interlocutors, loan servicing costs have doubled in the last six months alone. And if you add to this exchange rate instability and difficulties with importing various components, then it becomes extremely difficult to make money.

If it weren’t for increased competition, for example, in the metallurgical sector, prices for final products could have soared by at least a third, emphasized Maxim Tretyakov, general director of the Elkat plant: “We are experiencing relative deflation. Even with raw materials becoming more expensive, the finished semi-finished product becomes relatively cheaper than before. This is due to the fact that the government introduced a 7% duty on exports, and the Russian market overnight turned into a super premium one, despite the fact that our costs have increased on absolutely everything.

Competition leads to the fact that the price has fallen; in terms of cost, we have dropped by 35 percent. That is, we need to raise our premium by a similar amount in order to show the financial result as last year.”

Those who do not have revolving loans have to postpone investment projects. For example, co-owner of TechnoNIKOL Sergei Kolesnikov is thinking about this. However, he cannot give guarantees that in the end there will be no need to increase prices for final products in the current conditions:

“The main factors for us are, of course, raw materials purchased from major petrochemical companies. The second point is the cost of labor, which is also becoming more expensive. The third is transportation costs.

So far we have reached such a state that prices for incoming raw materials have stopped rising. And if prices for bitumen and polymers do not increase, then we will not revise our price list for at least three months. Otherwise, we will simply be forced to follow the lead of prices for basic types of raw materials.”

Nevertheless, in Sberbank predictthat in the next two months the issuance of loans to legal entities will decrease by 15-20%. But, in addition to expensive loans, business operations are also hampered by difficulties in the supply of components, a sharp increase in prices for Russian products, as well as the inability to equip the enterprise with new equipment, as follows from the monitoring of the Russian Union of Industrialists and Entrepreneurs. So there are plenty of reasons for companies to revise prices.

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