FX.co ★ Top 5 Russian economic sectors that are booming amid coronavirus pandemic

Disinfectant companies

Khimavtomatika Scientific Production Association, revenue - ₽76.7 million, revenue growth - 18,044%

With the outbreak of the coronavirus pandemic, there has been an enormous demand for sanitizers. Already in April 2020, the production of antiseptics increased more than six times. The number of disinfectant companies spiked to sixty, whereas there were only ten of them at the beginning. All these firms have already made a fortune and continue to generate strong profits. Notably, one company, which launched the production of sanitizers literally this spring, managed to make a real breakthrough. Khimavtomatika turned out to be the leader in terms of revenue compared to its competitors. Amid the widespread concern over the pandemic and a high demand for sanitizers that arose this spring, the company managed to start the production of disinfectants in three days. It helped offset interruptions in supplies from abroad and brought in substantial profits. Interestingly, the cost of antiseptics produced by Khimavtomatika has been below the market price. This makes the company’s products even more attractive to customers.

Telecommunications equipment manufacturers

Soliton Research and Development Center, revenue - ₽361.6 million, revenue growth - 247%

Ryazan Radio Plant, revenue - ₽2.24 billion, revenue growth - 94%

Lenpoligrafmash OAO (revenue - ₽200.8 million, revenue growth - 55%

Several companies that are involved in the production of telecommunications equipment also recorded an increase in profits during the pandemic. All these firms received orders from Russia’s Ministry of Defense. Therefore, their revenue spiked in the first half of 2020. Notably, the current revenue growth can be explained by a change in the companies' activity, since the number of orders from the government remains at the same level. Almost 98% of Soliton production is based on orders from the Russian authorities. Little is known about Soliton, as the company keeps its production secret. Meanwhile, Ryazan Radio Plant’s revenue decreased by two times in the past two years. However, this year, the plant has already doubled its profits. The revenue of Lenpoligrafmash also rose by four times in the last ten years. The company is mainly engaged in the production of high-tech equipment for the Ministry of Defense. All three companies are highly dependent on government orders which constitute the bulk of its activity.

Shipbuilding sector

Horizont OAO, revenue - ₽193 million, revenue growth – 145%

Amur Shipbuilding Plant, revenue – ₽6.9 billion, revenue growth – 38%

VYMPEL Shipbuilding Plant, revenue – ₽3.9 billion, revenue growth – 18%

Funding of the shipbuilding sector has increased significantly in recent years thanks to orders from the Ministry of Defense. Today, the Russian fleet is being re-equipped with modern ships. It costs a fortune to the Russian government. At the same time, it is an extremely profitable business for companies. In addition, the implementation of an interest rate subsidy loan program boosted the production of civilian vessels. The ship-breaking industry also receives financial support from Russia’s authorities which is highly beneficial for businesses. Due to the fact that the Russian fleet, both civilian and military, requires capital investments, the state is doing a lot to ensure that its re-equipment does not take long. Surely, manufacturers are taking full advantage of the situation, increasing their profits despite the global crisis driven by the coronavirus pandemic.

Precious metals mining

GV Gold, revenue – ₽16.4 billion, revenue growth – 92%

PJSC Polyus, revenue – ₽142.2 billion, revenue growth – 33%

Polymetal, revenue – ₽78.7 billion, revenue growth – 28%

Russia’s gold mining companies got the opportunity to earn more money thanks to the coronavirus crisis. Gold belongs to the category of safe-haven assets which usually increase in value during times of market turbulence. This year, the price of gold and silver has been growing rapidly, since the economic crisis is only gaining momentum. This means that gold miners do not have to expand production, as their profits increase thanks to the growth in the value of gold. The weakening of the Russian ruble also worked in their favour, as the difference in the exchange rate with the US dollar only boosted the company’s total revenue which spiked by 60–80%, offsetting the weeks-long halted production.

Heavy machine building industry

Uralmash, revenue – ₽5.6 billion, revenue growth – 82%

Power Machines, revenue – ₽21.9 billion, revenue growth – 34%

Tyazhmash, revenue – ₽7.4 billion, revenue growth – 29%

There is no such pandemic that could have stopped the production of strategically vital equipment. Therefore, neither the coronavirus nor the crisis have been able to affect the machine building industry. Nevertheless, companies confronted several problems due to supply chain disruptions. They included delays in the supply of components and the shipment of off-the-shelf equipment. Anyway, the pace of production and the volume of work remained at the same level as before the pandemic. Some companies in the sector report on rising sales on a regular basis. For example, Uralmash increased its revenue for the fifth time in a row. Companies continue to design new types of equipment and technologies for the market, receiving support from the government and, as a result, avoiding the damaging effect of the pandemic.