The revenue of Russian companies has grown a record: experts urged not to rush to rejoice

Import substitution accelerates consumer price growth

This figure will certainly impress the economically fragile minds of Russians. According to the Federal Tax Service, last year the revenue of Russian companies for the first time exceeded a quadrillion rubles. To be more precise, it amounted to 1268 trillion. Since we rarely meet such values, we need to clarify: a quadrillion means a thousand trillion, this is a figure with 15 zeros. So much for a difficult 2022, an economic downturn, “nuclear sanctions” against Russia – the reader will surely say. But let’s not rush to conclusions, this record has its own nuances.

As noted by the tax service, in the history of modern Russia, the revenue of domestic companies for the first time exceeded such a high milestone. Compared to 2021, it has doubled – then it was “only” 655 trillion rubles.

The Federal Tax Service experts call the growth of export earnings – mainly from oil and gas revenues in 2022, the recovery of consumer demand for goods and services, as well as the exchange rate difference of the ruble due to its high volatility, the components of success.

However, no matter how statistics juggle numbers with 15 zeros, the sum, as they say, does not change from the rearrangement of the places of the terms. After all, despite the fact that Russian companies were able to show such an impressive result in terms of revenue, the profits of organizations themselves increased slightly. From 30 trillion rubles in 2021 to 31.1 trillion rubles in 2022 – that is, by only 5.9%. And if we take into account the annual inflation last year at 12%, then in real terms, the profit has completely decreased. Profit – recall, this is revenue (that is, all income received) minus all expenses of the company.

How such a discrepancy in revenue and profit can be, we asked Alexei Zubts, a professor at the Financial University under the Government of the Russian Federation.

– Is the quadrallion of revenue the success of our business?

– I would say that this is just a coincidence, nothing more.

– What circumstances?

– A year ago, a good market situation for oil and gas, metal and everything else was developing for Russia. We have delivered a large number of goods abroad, and the ruble has greatly strengthened against the dollar. There was an excess supply of currency on the market. The most serious sanctions against the country were introduced towards the end of the year, and last summer we were able to sell energy products without restrictions. In a word, the past year was very successful for Russian companies, they made good money on international raw material supplies. Hence the huge profit.

In addition, inflation in Russia has skyrocketed, as a result of which ruble prices also went up. Thus, inflation also helped record revenue.

– It is clear with cash receipts. But where is the profit from them, where did it go?

– Following inflation, internal production costs began to grow, which “ate” a significant part of the profit.

– Did the departure of many foreign companies from our market affect this process? Has it become easier for us to make money?

– Certainly. Import substitution, in turn, provoked an increase in consumer prices. Russian products that replace foreign brands are sold more expensive, as production needs further development. If our company enters the market, it needs to take care of both new stores and additional workshops. All this is money, costs. How to fight them off? Price increase. Import substitution is great, but it has a side effect: higher prices and revenues while lowering profits.

– This year, such a story can repeat itself, when there is a lot of money, but little real income?

– Hardly. Prices on the foreign market today are much lower than a year ago. And oil and gas revenues in the first five months of the year declined significantly. Such a result in terms of revenue will definitely not work.