Russia’s corporate profits dropped 21.3% in Jan, business climate worsened

MOSCOW (Reuters) – Russian companies made profits of 2.34 trillion roubles ($30.25 billion) in January, data from the federal statistics service showed on Wednesday, down 21.3% from the same period last year, while the business climate deteriorated.

Moscow’s decision to send tens of thousands of troops into Ukraine on Feb. 24, 2022, resulted in sanctions against dozens of large companies and entire sectors of Russia’s economy, particularly the financial and energy sectors.

Officials have flagged the drop in corporate profits as a key area of concern for the economy, which contracted by 2.1% last year, and is set for another decline in 2023, according to most estimates.

Russia’s economy proved unexpectedly resilient last year, but a return to pre-conflict levels of prosperity may be far off as more government spending is directed towards the military.

The January drop in profits followed a 12.6% slump in 2022 and was accompanied by lower business confidence.

Russian companies’ profits amounted to 2.18 trillion roubles in December, a 22.5% drop from 2.81 trillion roubles in December 2021, the Rosstat data showed.

Rosstat’s business confidence index, which has been rising so far this year, slipped in March, down 3.3% in the manufacturing sector and 2.3% lower in the mining industry.

Among the 4,600 organisations surveyed, the number that expect output to rise over the next three months is still higher than those expecting output to fall, Rosstat said.

($1 = 77.3455 roubles)

(Reporting by Darya Korsunskaya and Alexander Marrow; Editing by Mark Potter)