6. Financial conditions in the sector

The financial result of the chemical and petrochemical operations slightly deteriorated in 2001 compared to the previous year. The net profit over losses at large and medium-sized enterprises in the chemical sector dropped by 9.4 bln rubles since 2000 (by 30.2%) to Rbs 21,7 bln. (3.6% of the figure for Russian industries total) (Table 6.1). The overall profitability of major and medium enterprises across Russia was declining at a slower rate and decreased by 17.1% over the year. The deterioration in the financial results at businesses almost throughout the industry in 2001 served to confirm that the improvements in the financial conditions of the businesses observed after the 1998 crisis came not so much from the positive change in their production activity but rather from outside factors (ruble devaluation, world markets, growing prices) that gradually became exhausted. The proportion of loss-bringing businesses grew 1.1 percent on the year to 31.4%, while in the industry overall this indicator improved slightly (decreasing 0.9 %).

Table 6.1
Booked profits (looses) at chemical and petrochemical businesses in 2000-2001

The level of payables at chemical enterprises increased by Rbs 2.3 bln in 2001 to Rbs 112.4 bln. The sector enterprises seem, at the same time, to have been improving their payment discipline. Compared to 01.01.2001 when overdue payments exceeded half of the accounts payable, one year later the ratio dropped to 43.%., the overdue payables in absolute values stood by 2002 at Rbs 48.4 bln, which is Rbs 8.5 bln less than on 01.01.2001.
The level of accounts receivable rose over the year. As of 01.01.2002, the debt owed to Russian chemical companies reached Rbs 64 bln., having grown by Rbs 6.2 bln (10.7%). At the same time, efforts by at chemical enterprises management to collect payments from the consumers did not totally fail, and the level of overdue receivables in 2001 dropped 12.4% to Rbs 19.0 bln.

Table 6.2
Changes in the accounts payable and receivable at chemical
and petrochemical businesses in 2000-2001

Of the 2001 total overdue payables, 52.7% were owed to suppliers of goods (work, services); 21.5% to budgets of all tiers, and 18.1% to government extra-budgetary funds.

In the total accounts receivable, the lion's share was also the debt to suppliers (76.8%). However, during the year the tough policy pursued by the managers at chemical enterprises had a positive effect on the collection across the sector: the amount of debt outstanding dropped to Rbs 14.6 bln (Table 6.3).

Table 6.3
Structure of overdue accounts payable and accounts receivable at chemical
and petrochemical enterprises in Russia in 2001

Fig. 6.1
Ratio of accounts payable to accounts receivable at chemical
and petrochemical enterprises in 2000 - 2001, % (receivables total = 100%)

As of 01.01.02 accounts payable exceeded 1.8 times accounts receivable, and overdue payables were 2.5 times the overdue receivables, which seems to point to serious financial problems in the sector (the ratios were 1.5 and 1.8 times, respectively, in Russia overall) (Fig. 6.1). Note, however, that the ratios have improved since the last year. Besides, the proportion of large and medium enterprises in the sector with overdue accounts payable and receivable, narrowed by 6%.