Russian companies market value of which grew most in 1999-2007 Top 75

IFRS and GAAP are financial companies’ indices given according to the International Financial Reporting Standards. The currency is given according to the prepared reporting. The rating includes only the companies that entered the “Largest Russian companies“ rating both in 1999 and in 2007.

* As of June, 29, 2007
** As of June, 30, 1999
*** In 1999 the company was named Sibneft.

Starting terms

It is clear that white looks contrastingly on a black background. Nevertheless eight years is a short period. Namely such temporal interval divides the traditional ratings of the largest Russian companies, prepared by the Russian magazine “Money”, that we compared with each other. The first rating after the 1998 crisis in Russia (joint project of “Money” and AK&M Information Agency) included 150 largest Russian companies which market value estimation was given by the situation on June, 30, 1999. On the beforehand unplanned coincidence this actual interval almost coincides with two presidential terms of Vladimir Putin.

We will remind the situation in the Russian economy that has arisen after default in August, 1998.

By the summer of 1999 the financial market almost disappeared in Russia. Volume of transactions on RTS has somewhat decreased as compared to a precrisis level. Capitalization of telecommunication, power and engineering companies has considerably reduced. Oil companies (due to noticeable stake of their sales in export) and enterprises that oriented to the final consumer, were in the best position. Decline of ruble rate resulted in noticeable reduction of import and the enterprises of food and pharmaceutical industry managed to took advantage of it.
In a bank sphere the Savings Bank has easily and successfully outlived the crisis.

Another important factor became a price growth of oil that has begun soon after the August default.

In summer 1999 Lukoil was the largest Russian company by the market value. Its cost was then measured in an enormous figure - $6,666 bln. In 2007 the similar cost would not have allowed the company even to enter Top-10, such index would provide it only a 27th place.

OAO MOSENERGO that closed the Top-10 of 1999 cost $1,147 bln eight years ago. Today such index would hardly guarantee an entry to the Top-100 of the largest Russian companies (it corresponds to the 98th place in the last rating).

Samaraneftegaz that occupied the last, 150th place, in the rating of eight years ago, was estimated at a sum that is hard to take without a smile today - $2,545 mln.

For comparison. ARMADA Group that was on the last, 300th place rating, has a market value of $100,3 mln, that would guarantee it the 34th place eight years ago.

Superheavyweights

Let’s look at the first ten positions in ratings of 1999 and 2007.

As it was already mentioned, Lukoil was the winner of the first ratings (before the crisis it was the second trailing Gazprom). In the rating of 2007 Lukoil occupies the fourth line. For eight years the company market value has increased by relatively modest 873,5%. Though, in absolute, but not in relative figures an increase looks more convincing - the company added more than $58 bln to its cost.

If examine this increase in the figures of 1999, it will exceed the cost of all companies of the first ten of those times, and also will approximately correspond to the three profitable shares of the state budget of Russian Federation of 1999.

1999 was not a successful year for Gazprom. The largest Russian company before the crisis appeared on the second position after the crisis. Though later, it returned the usual place of the leader. The 2007 rating of the largest companies also begins with Gazprom, which market value grew by 4884,4% for eight years - from almost $5 bln to almost $245 bln. Last figure in the scales of the Russian economy of 1999 standard is simply nothing to compare to.

Surgutneftegaz (the third place in 1999) occupies the seventh position in the largest companies’ rating in 2007. Its market value for indicated period grew from $3,8 bln up to $38,6 bln.

Little changed the positions of RAO “UES of Russia” for eight years. In 1999 it was the fourth by size, in 2007 – the fifth. The value increase was almost 1500%. Thus it is necessary to take into account that not only RAO “UES of Russia” is present in the last rating, but also wholesale generating companies (WGCs) that have arisen as a result of its restructuring.

At the moment OGC-3 is the most expensive among OGCs (it includes Kostroma, Pechora, Cherepetsk, Kharanorsk, Gusinoozersk and Yuzhnouralsk SDPP) - its market value slightly exceeded $8 bln by the end of June, 2007. It is more than twice as more than all RAO cost in 1999.

Sibneft (the sixth place in 1999) grew up in price by 1163% in arrears, but it wasn’t enough to enter the modern Top-10. Gazprom Neft company (company’s current name) occupies now the 11th position in the last rating of the largest Russian companies.

Rostelecom showed relatively weak rates of cost increase for eight years (437%) that as a result fell from 7th to the 26th place in the rating.

Tyumen Oil Company that occupied the eighth place in the rating eight years ago, joined British Petroleum for the reporting period. But the incorporated company occupies the ninth place in the last rating.

Another company, representing oil industry, Surgutneftegaz, rose from the ninth up to the seventh line in the list of the largest Russian companies for eight years. Growth of its market value made up 921% for the indicated period.

MOSENERGO Company that closed Top-10 in 1999, in 2007 occupies just the 27th place. The company’s price grew not much for eight years – from$1,1 bln up to $6 bln.

Second largest company of 2007 standard – Rosneft – was out in the rating of eight years ago. During eight years in its fate happened the most serious changes (the most successful were the last four years). If in 2000 the great company success was considered the fact of its transformation into the profitable enterprise after a few years staying in crisis (not connected with the August default), so after the series of serious acquisitions, including assets of bankrupt YUKOS company, Rosneft became the leader of the Russian business.

The Savings Bank of Russian Federation (Sberbank) that occupied the third line in the 2007 rating, began to climb the ladder just in a post-crisis period. It would seem, for a bank that was the largest player on the Sate Commercial Association market, the August default of 1998 had been fatally dangerous. However, by good fortune, Sberbank has transferred the means from ruble bonds in currency ones just before the collapse of the Sate Commercial Association market and ruble rate, and that created the powerful stock of safety. In 1999 Sberbank occupied the 14th place in Russia by the market value, but still was second to none by profits and by income yielded only Gazprom. The relative increase of market value of the main bank of Russia for eight years impresses - 15 786,3%!

Vneshtorgbank that enters now the first ten (the eighth place), was out in the 1999 rating, because one couldn’t correctly state its market value before the recent public IPO of this bank.

Sberbank that grew up 150 times in price, enters one more first ten - companies, whose market value grew the most for eight years. In the composed rating of these companies this bank occupies the ninth place.

On the first place is Chelyabinsk Tube Rolling Plant that regenerated after the crisis as Phoenix from its ashes. After August, 1998 the plant market value reduced approximately 25 times - from $94,5 mln up to $4,7 mln. Chelyabinsk Plant occupied the 134th place in the 1999 rating with the last index. For the following eight years it not only regained the fall but also repeatedly exceeded the precrisis level. From 1999 to 2007 the plant market value has increased almost by $2 bln, i.e. has grown by 41 149%!

FESCO grew by 34 230% for eight years (the second index by the growth rates).

OJSC Udmurtneft is on the third place with an increment of 29 099%. It is interesting to mark that it is the only company of oil sector that got into the Top-10 of the most expensive. Another representatives of this business type had to satisfy with mainly 10-20-fold rising price (that approximately corresponds the increment of oil prices for the same period).

More than 100 times grew the cost of the following Russian companies in the post-crisis period: KAMAZ, Novolipetsk Steel (NLMK), Uralkali, AvtoVAZ, the Magnitogorsk Iron and Steel Works OJSC (ММК), Acron, Tolyatti Azot, Severstal, PC Apatite.
As for the companies that added the least to their value, OJSC Tomskenergo showed the most unconvincing result. It grew in price only 25% for eight years. It is not surprising, that such increment was accompanied by the company fall in the rating from 32nd to the 259th place.

YUKOS Company stands the second in the end, but even such index rather testifies in its favor, taking into account the hard company fate.

TSUM Trading House companies that oriented to the final consumer and for some time were protected from the western competitors by the 1998 default can’t boast of the cost increase 100 times. Except for Sberbank, cellular service provider VimpelCom (rose in price approximately 35 times) is the most grew up in price company, which the most of individual entities is necessary to deal with directly. It provides services of cellular communication under the Beeline trade mark. Moreover, in 1999 a cellular telephone was characteristic of people with high income, and by 2007 it became a mass product, slightly more prestigious than a fountain pen. If VimpelCom cost little more than $500 mln eight years ago and was the 11th largest company in the country, so now it occupies the 10th place and is estimated at $20 bln.

Baltika brewing company that was the first to prove the consumers that one can not only drink Russian beer, but moreover it can be not worse than foreign one, didn’t almost change the positions in rating in post-crisis period (it was on the 22nd place, became on 23rd), but this stability corresponds the 23-fold increase of company market value.

The main air transporter of Russia – Aeroflot – grew 20 times in price for eight years.

Moreover, comparing ratings of 1999 and 2007, in the last rating appear the companies that orient to the final consumer and they are out of the first rating. It is possible to name among them “Wimm-Bill-Dann” (it is just half-price than Lukoil of 1999 standard), Pharmstandard, OJSC Magnit, JSC “The Seventh Continent”, Lebedyansky JSC, North-West Telecom, Cherkizovo Group, Pharmacy Chain 36.6, OJSC Concern “Kalina”, JSC Moscow Confectionary Factory “Red October” etc.

An absolute proof of financial recovery is the apparent presence of large number of the building sector companies in 2007 rating.