Russia through a lens - Deloitte United States · 2020-02-08 · 03 Russia troug a lens Contents 04...
Transcript of Russia through a lens - Deloitte United States · 2020-02-08 · 03 Russia troug a lens Contents 04...
Russia through a lensDeloitte Research Centre | 10th issue | 1Q 2018
Macroeconomic outlookKey Russian macroeconomic indicators in 1Q 2018
Page 04
Kids recreational services market in RussiaThe key drivers of the market are a flexible approach to sales and demographic growth
Page 18
Oil and Gas Industry BarometerThe base for future growth: maintaining performance indicators and keeping up with the pace of technology
Page 26
Integration of advanced information systemsDigitalisation boosts operating efficiency of oil companies
Page 28
Россия: сквозь призму последних событий
02
03
Russia through a lens
Contents
04Russia in figuresMacroeconomic outlook (GDP, inflation, trade indicators, currency rate, Central Bank key rate, commodity price dynamics etc.)
18Research Centre market analysis • Kids recreational services market in Russia
• Oil and Gas Industry Barometer
• Integration of advanced information systems
33Global windTop news: China and RussiaTop news: Europe and Russia
35Contacts
34Useful stickers
32Top M&A
We are pleased to present the latest edition of Russia Through a Lens, the macroeconomic journal produced by the Deloitte Research Centre in Moscow.
Established in December 2015, the journal is published quarterly and falls under the Research Centre’s monitoring activities.
In Russia Through a Lens, we focus on current key trends in the Russian economy and present our research in the following fields:
• Russia in figures: statistical analysis • Research Centre market analysis • Top M&As
If you have any questions or suggestions regarding this research, please do not hesitate to contact us at:[email protected]
Created by the Deloitte Design Group, Moscow
Russia through a lens | Russia in figures
04
Russia in figuresGDPGDP dynamics
Source: Rosstat, (*forecast) Institute for Economic Forecasting of the Russian Academy of Sciences (IEF RAS)
Source: Rosstat, (*forecast) Central Bank of Russia
Q1 GDP (at constant price 2011), bln RUB
According to the Central Bank, the GDP growth rate will amount to 1.5–1.8 percent in Q1 2018. Consumer demand continues to expand due to a wage increase and growth in retail lending. Investment activity has also increased. Under these circumstances, the output of most commodity groups has significantly increased. It is expected that the expansion of aggregate demand will drive ongoing production activity without excessive inflation pressure.
Source: "What the Trends Say. March 2018", bulletin of the Department of Research and Forecasting of the Central Bank
“This year [2018], Russia's GDP may increase by 2 percent, following a 1.5 percent growth in 2017.” Maxim Oreshkin, Minister of Economic Development of the Russian Federation
According to the Ministry of Economic Development of the Russian Federation, in annual terms, Russia's economic growth sped up to 2.0 percent in January. GDP growth accelerated mostly due to the recovery in industrial production, which, in annual terms, grew by 2.9 percent in January.
Source: “Overview of the Economy. March 2018” by the Ministry of Economic Development
GDP, bln RUB GDP growth, % (at current prices)
GDP volume indices, %
1.5
33,2
48
60,2
83 83,3
87
41,2
77 68,1
64 85,9
18
38,8
07
73,1
34 92,0
82
26,9
17 46,3
09
79,2
00 96,8
00
2009
2013
2017
2006
2010
2014
2018
*
2007
2011
2015
2008
2012
2016
24.6 19.38.3
24.213.1
3.0-6.07.3
23.5 30.2
5.3
8.2 4.5 0.75.2 3.7 -0.2-7.81.88.5 4.3 -2.5
7.2 5.1
12,5
64 13,3
86 14,0
86
13,7
17
14,1
15
14,0
25
12,4
55
14,2
92
14,0
94
11,6
26
12,9
62
14,3
59
14,3
05
2009
2013
2017
2006
2010
2014
2018
*
2007
2011
2015
2008
2012
2016
1.2
Russia through a lens | Russia in figures
05
Inflation rate, %
GDP forecasts
Inflation rate forecasts
Source 2018 2019 2020
Economist Intelligence Unit +1.7% +1.8% +1.6%
The Ministry of Economic Development
+2.1% +2.2% +2.3%
Central Bank +1.5% -
+2.0%
+1.5% -
+2.0%
+1.5% -
+2.0%
IEF RAS +1.2% +2.4% +2.3%
Standard & Poor's +1.8% +1.7% +1.7%
Moody’s +1.6% - -
Source 2018 2019 2020
European Commission +1.6% +1.5% -
World Bank +1.7% +1.8% -
International Monetary Fund +1.7% +1.5% +1.5%
European Bank for Reconstruction and Development
+1.9% +1.5% -
Gaidar Institute +1.5% +1.4% +1.6%
Organisation for Economic Cooperation and Development
+1.9% +1.5% -
Inflation in January–March 2018*: 0.8 percent Inflation target** in 2018: 4.0 percent
*The inflation figure is the consumer price growth rate over the corresponding month of the previous year.
**The inflation target is set for the consumer price growth rate over the corresponding month of the previous year (Source: Central Bank).
“If it [inflation] stagnates at 2–2.5 percent, we will take measures to raise it to 4 percent. Even if the transition from a neutral to a low rate will be required to achieve this.” Elvira Nabiullina, Governor of the Bank of Russia
Fact Central Bank (*forecast)
Ministry of Economic Development (*forecast)
Source 2018 2019 2020
International Monetary Fund 3.8% 4.0% 3.9%
World Bank 4.0% 4.0% -
Vnesheconombank 3.9% 3.8% 3.8%
Bloomberg poll (consensus) 4.0% - -
Economist Intelligence Unit 3.8% 4.5% 4.7%
2006
2010
2014
2018
*
2007
2011
2015
2019
*
2020
*
2008
2012
2016
2009
2013
2017
11.9
6.1
12.9
8.8
6.5
9.08.8
11.4
13.3
6.6
5.4
4.03.52.5
4.0
4.04.0 4.0
Inflation
Russia through a lens | Russia in figures
06
Trade structurePeriod: 2017
• Foreign trade turnover: USD 587.6 billion (+24.7% YoY)
• Trade balance: surplus of USD 130.6 billion (+USD 26.5 billion YoY)
• Exports: USD 359.1 billion (+24.8% YoY)
• Imports: USD 228.5 billion (+24.5% YoY)
Share of energy products in total exports, % (January 2006 – January 2018)
Source: Federal Customs Service
Period: January 2018
• Foreign trade turnover: USD 49.2 billion (+26.3% YoY)
• Trade balance: surplus of USD 18.0 billion (+USD 4.9 billion YoY)
• Exports: USD 33.6 billion (+29.1% YoY)
• Imports: USD 15.6 billion (+20.7% YoY)
Percentage in Exports to non-CIS countries
53.0
35.5
55.3
39.542.347.0
33.2
41.844.0 43.6
40.9
54.2
32.6
Percentage in Exports to the CIS countries
2006
2010
2014
Jan-
20
18
2007
2011
2015
2008
2012
2016
2009
2013
2017
68.072.7
66.469.6
74.5
63.270.3 70.8 73.472.4 73.0
62.0
70.8
“To some degree, the sanctions had been contributing to a drop in trade turnover between Russia and the West for a certain period of time, but this has served as a good impetus for our businesses to actively start developing new projects as they launch new industrial products. We can see the results: exports, and not just in commodities or energy, grew by about 19 percent last year [2017].”Denis Manturov, Russian Minister of Industry and Trade
Russia through a lens | Russia in figures
07
Russia through a lens | Russia in figures
08
Exports to the CIS countries (January–December 2017):
Percentage of exports to the CIS countries
In monetary terms YoY
In physical terms YoY
Categories
Energy products
33.2% 29.4% 5.3%
-2.3% Crude oil
35.7% Oil products
36.1% Coal
-21.2% Electricity
0.9% Natural gas
Metal products 12.2% 31.7% 11.0%
11.1% Ferrous metals
56.8% Ferroalloys
18.7% Flat iron non-alloy steel
12.7% Semi-finished products of iron or non-alloy steel
Chemical products
14.9% 22.0% 6.6%
-18.4% Products of inorganic chemistry
-5.5% Pharmaceuticals
12.4% Products of organic chemistry
36.9% Fertilizers
10.3% Plastics
51.3% Perfumery and cosmetic products
Machinery and auto
17.3% 27.9% n/a
25.0% Mechanical equipment
20.4% Electrical equipment
13.6% Passenger cars
31.7% Trucks
56.0% Ground transportation
Food and agriculture products
10.1% 14.6% 9.3%
35.0% Poultry meat
4.6% Fish
-11.9% Milk
-1.2% Cheese and curds
9.2% Sunflower oil
Timber, pulp and paper products
4.3% 23.4% 9.6%
5.2% Lumber
20.4% Cellulose
Russia through a lens | Russia in figures
09
Exports to non-CIS countries (January–December 2017):
Percentage of exports to non-CIS countries
In monetary terms YoY
In physical terms YoY
Categories
Energy products
63.2% 27.1% 1.7%
-1.3% Crude oil
1.4% Diesel fuel
10.3% Coal
6.8% Natural gas
-26.0% Motor gasoline
Metal products 10.2% 28.8% -2.0%
-6.3% Cast iron
16.2% Copper and copper alloys
-4.3% Aluminium
-6.5% Ferroalloys
-5.5% Semi-finished products of iron or non-alloy steel
Chemical products
5.4% 12.2% 5.5%
22.4% Products of inorganic chemistry
15.3% Plastics
4.1% Rubber
-8.2% Organic chemistry
6.1% Nitrogen fertilizer
Machinery and auto
6.4% 9.8% n/a
-5.9% Electrical equipment
24.0% Mechanical equipment
40.4% Passenger cars
29.3% Optical instruments and apparatus
-38.8% Trucks
Food and agriculture products
5.1% 23.4% 23.3%
Timber, pulp and paper products
3.2% n/a 6.1%
11.8% Lumber
-2.1% Cellulose
-3.6% Rough wood
Russia through a lens | Russia in figures
10
Imports from CIS countries (January–December 2017):
Percentage of imports from the CIS countries
In monetary terms YoY
In physical terms YoY
Categories
Energy products 4.6% 49.4% 7.8%
Metal products 16.9% 52.3% 38.4%
26.4% Pipes
36.5% Flat rolled products of iron or non-alloy steel
Chemical products
13.5% 18.5% 15.7%
8.7% Inorganic chemistry
-19.3% Organic chemistry
12.9% Plastics
Machinery and auto
22.0% 19.2% n/a
250.0% Railway equipment
9.4% Mechanical equipment
-14.6% Optical instruments and apparatus
34.4% Ground transportation
21.6% Passenger cars
23.7% Trucks
Food and agriculture products
22.5% 18.8% n/a
26.6% Fish
25.8% Milk
-1.6% Cheese and curds
-9.5% Butter
-21.5% Citrus
9.9% Poultry meat
Textiles and footwear 7.1% 14.2% 21.4%
Russia through a lens | Russia in figures
11
Imports from non-CIS countries (January–December 2017):
Percentage of imports from non-CIS countries
In monetary terms YoY
In physical terms YoY
Categories
Textiles and footwear 5.8% 24.8% 14.8%
Metal products 5.7% 32.0% 39.8%
10.2% Flat iron non-alloy steel
73.2% Pipes
Chemical products
18.3% 19.0% 2.5%
8.6% Organic materials
13.8% Rubber
4.2% Plastics
4.5% Pharmaceuticals
6.7% Paint
Machinery and auto 51.8% 28.6% n/a
36.7% Ground transportation
28.9% Mechanical equipment
24.1% Electrical equipment
21.2% Optical instruments and apparatus
-1.1% Passenger cars
64.0% Trucks
Food and agriculture products
11.5% 14.1% 8.3%
3.6% Butter
14.3% Cheese and curds
5.2% Meat
19.1% Fish
Russia through a lens | Russia in figures
12
EUR vs. RUB USD vs. RUB
RUB vs. EUR, RUB vs. USD
USD forecast (average per year), RUB
EUR forecast (average per year), RUB
Source: Central Bank of Russia
Source: Central Bank of Russia
Euro US dollar
01-Ja
n-20
15
01-Ja
n-20
16
01-Ja
n-20
17
01-Ja
n-20
18
01-A
pr-2
015
01-A
pr-2
016
01-A
pr-2
017
01-Ju
l-201
5
01-Ju
l-201
6
01-Ju
l-201
7
01-O
ct-2
015
01-O
ct-2
016
01-O
ct-2
017
01-A
pr-2
018
100
90
80
70
60
50
40
Average 2015EUR 68.0USD 61.3
Average 2016EUR 74.0USD 66.9
Average 2017EUR 66.0USD 58.3
Average Q1 2018EUR 69.9USD 56.8
Source 2018 2019 2020
Ministry of Economic Development 64.7 66.9 68.0
Gaidar Institute 58.9 58.8 58.1
IEF RAS 58.4 59.8 61.0
Economist Intelligence Unit 60.6 60.4 61.0
Source 2018 2019 2020
IEF RAS 67.5 66.6 67.1
Economist Intelligence Unit 72.4 71.3 73.5
Currency rate
+12%
Q1
20
17
Q1
20
18
Ma
r-20
17
Ma
r-20
18
69.9 70.3
62.6 62.0
+13% -3%
Q1
20
17
Q1
20
18
Ma
r-20
17
Ma
r-20
18
56.857.1
58.6
58.0
-2%
Russia through a lens | Russia in figures
13
Central Bank of Russia key rate, %
Forecast of the key rate year-end, %
Source: Central Bank of Russia
“The key rate approximates the range that has been classified as ‘neutral’, i.e. where the monetary policy does not contribute to the decrease or the acceleration in inflation with respect to the target. I would like to remind you that currently the target is 6-7 percent for the key rate.”Elvira Nabiullina, Governor of the Bank of Russia
Indexes (daily): January 2014–March 2018
Source: Moscow Exchange
MICEX Index, RUB RTS Index, USD
Russia's credit ratings
Agency Rating Outlook Date
S&P BBB- Stable 23 Feb 2018
Moody's Ba1 Positive 25 Jan 2018
Fitch BBB- Positive 23 Feb 2018
The global credit agency Standard & Poor's (S&P) upgraded Russia's foreign currency sovereign rating to 'BBB- ' from 'BB+' on 23 February 2018.
On 23 March 2018, the Central Bank reduced the key rate by 0.25 percentage points to 7.25 percent.
Source 2018 2019 2020
IEF RAS 6.25 5.75 5.25
Economist Intelligence Unit 7.00 8.00 7.80
“Economic recovery will likely be supported by the rebound in oil prices, a moderate expansion of domestic demand backed by gradual monetary easing, and the global economic upswing. At the same time, adverse demographics and low productivity continue to weigh on Russia's long-term growth potential.” Standard & Poor’s
01-Ja
n-20
14
01-Ja
n-20
15
01-Ja
n-20
16
01-Ja
n-20
17
01-A
pr-2
014
01-A
pr-2
015
01-A
pr-2
016
01-A
pr-2
017
01-Ja
n-20
18
01-Ju
l-201
4
01-Ju
l-201
5
01-Ju
l-201
6
01-Ju
l-201
7
01-O
ct-2
014
01-O
ct-2
015
01-O
ct-2
016
01-O
ct-2
017
2 3002 1001 9001 7001 5001 3001 100
900700500
The Central Bank’s key rate, indexes and credit rating
01-A
pr-2
018
5.50
9.50
14.00
10.509.00
7.00
10.50
12.50
10.008.50
7.50
17.00
11.509.75
8.258.00
15.00
11.00
9.25 7.75
01-Ja
n-20
14
01-Ja
n-20
15
01-Ja
n-20
16
01-Ja
n-20
17
01-A
pr-2
014
01-A
pr-2
015
01-A
pr-2
016
01-A
pr-2
017
01-Ja
n-20
18
01-Ju
l-201
4
01-Ju
l-201
5
01-Ju
l-201
6
01-Ju
l-201
7
01-O
ct-2
014
01-O
ct-2
015
01-O
ct-2
016
01-O
ct-2
017
7.50
7.25
01-A
pr-2
018
Russia through a lens | Russia in figures
14
Nickel forecast, USD/t Copper forecast , USD/t
Nickel and copper
“Copper, nickel and other energy metals will outperform in the next commodity up-cycle driven by electrical vehicles and renewable energy.”Erik Sardain, Managing Partner Victorem Capital
Nickel, LME, USD/t Copper, LME, USD/t
Source 2018 2019
Goldman Sachs 11,000 -
World Bank 10,559 11,039
Morgan Stanley 10,858 -
International Monetary Fund 9,360 9,557
Source 2018 2019
Goldman Sachs 8,000 -
World Bank 6,118 6,187
International Monetary Fund 5,957 5,992
Pan Pacific Copper 7,280 7,720
JPMorgan 7,405 -
Merrill Lynch 6,260 -
Source: Finam Holdings
Jan-
2015
May
-201
5
Sep-
2015
Jan-
2016
Jan-
2017
May
-201
6
May
-201
7
Sep-
2016
Sep-
2017
Feb-
2015
Jun-
2015
Oct
-201
5
Feb-
2016
Feb-
2017
Jun-
2016
Jun-
2017
Oct
-201
6
Oct
-201
7
Jan-
2018
Dec
-201
6
Dec
-201
7
Mar
-201
8
Mar
-201
5
Jul-2
015
Nov
-201
5
Mar
-201
6
Mar
-201
7
Jul-2
016
Jul-2
017
Nov
-201
6
Nov
-201
7
Feb-
2018
Apr
-201
5
Aug-
2015
Dec
-201
5
Apr
-201
6
Apr
-201
7
Aug-
2016
Aug-
2017
,15,
165
12,6
00
10,3
30
8,61
0 9,96
5
8,46
5
8,95
010,5
15
10,5
20
14,0
95
12,0
15
10,0
45
8,53
0
10,9
60
9,31
5
9,37
5
10,4
25 11,8
50 13,4
90
10,0
55
12,6
45
13,3
90
12,3
95
11,0
40
8,85
5
8,49
5
10,0
20
10,6
35
10,2
20
11,1
70
11,3
85
13,7
45
13,9
50
10,0
60
8,82
0
9,42
5
9,45
5
9,77
0 11,7
95
5,50
8
6,03
4
5,23
0
4,49
9 6,00
4
4,56
7
5,67
5
4,88
0 6,49
8
5,93
0
5,76
8
5,10
6
4,66
6 6,01
2
4,84
7
5,96
8
4,87
2 6,93
8
7,05
7
5,53
0 7,26
4
6,66
5
6,07
5
5,19
0
4,57
1
4,81
6
5,85
4
4,91
0 6,38
2
5,87
9
6,78
0
6,92
0
6,35
3
5,14
1
4,70
7
5,03
1
5,72
8
4,60
3
6,84
1
Maximum for the period
Maximum for the period
Minimum for the period
14-year minimum
Top pricing (nickel and copper)
Russia through a lens | Russia in figures
15
Gold forecast, USD/oz Aluminium forecast, USD/t
“From 23 of March 2018 the United States imposed additional duties of 25 percent on steel and 10 percent on aluminum on imports from all countries of origin except Canada, Mexico, Australia, Argentina, South Korea, Brazil and member countries of the European Union.”Source: U.S. Customs and Border Protection
Source 2018 2019
Goldman Sachs 1,250 1,375
World Bank 1,238 1,226
Morgan Stanley 1,269 1,265
Credit Suisse 1,375 -
Oxford Economics 1,311 1,323
Citigroup 1,350 -
Source 2018 2019
Goldman Sachs 2,000 1,950
World Bank 1,968 1,987
Morgan Stanley 2,116 -
International Monetary Fund 1,913 1,940
Oxford Economics 1,924 -
Merrill Lynch 2,380 -
Gold and aluminium
Source: Finam Holdings
Aluminium, LME, USD/t Gold, COMEX, USD/oz
Jan-
2015
May
-201
5
Sep-
2015
Jan-
2016
Jan-
2017
May
-201
6
May
-201
7
Sep-
2016
Sep-
2017
Feb-
2015
Jun-
2015
Oct
-201
5
Feb-
2016
Feb-
2017
Jun-
2016
Jun-
2017
Oct
-201
6
Oct
-201
7
Jan-
2018
Dec
-201
6
Dec
-201
7
Mar
-201
8
Mar
-201
5
Jul-2
015
Nov
-201
5
Mar
-201
6
Mar
-201
7
Jul-2
016
Jul-2
017
Nov
-201
6
Nov
-201
7
Feb-
2018
Apr
-201
5
Aug-
2015
Dec
-201
5
Apr
-201
6
Apr
-201
7
Aug-
2016
Aug-
2017
1,86
4
1,74
0
1,57
2
1,51
5
1,82
1
1,55
7
1,93
1
1,67
3
2,10
6
1,81
5
1,69
1
1,48
1
1,57
2
1,92
1
1,62
6
1,92
3
1,73
7
2,16
1
,2,2
10
1,68
8
,2,2
80
2,00
5
1,78
5
1,62
0
1,44
9
1,52
1
1,96
1
1,64
0
1,91
8
1,73
1
2,04
6
,2,1
32
1,92
0
1,60
5
1,50
1 1,67
2 1,91
8
1,61
5
2,12
8
1,28
4
1,19
2
1,11
4
1,12
2
1,21
1
1,21
7
1,27
1
1,31
9
1,28
3
1,21
4
1,17
4
1,14
2 1,24
5
1,24
5
1,32
3
1,24
1
1,27
7
1,27
0
1,34
7
1,15
2 1,30
5
1,32
5
1,18
7
1,09
5
1,07
1 1,23
3
1,25
2
1,35
7
1,27
6
1,17
7
1,27
8
1,31
4
1,18
2
1,14
2
1,06
1 1,29
5
1,26
5
1,31
3
1,32
5
Maximum for the period
Maximum for the period
Minimum for the period
Minimum for the period
Top pricing (gold and aluminium)
Russia through a lens | Russia in figures
16
Brent oil and natural gas
Source: Finam Holdings
Brent crude oil, ICE, USD/bbl Natural gas, NYMEX, USD/mmbtu
OPEC and non-OPEC oil giants, including Russia, have agreed to extend oil output cuts (stipulated by the agreement dated December 2016) until the end of 2018 in an effort to clear the global supply glut and keep prices buoyant.
“We are working to shift from a year-to-year agreement to a 10–20 year agreement. We have agreement on the big picture, but not yet on the detail.” Mohammed bin Salman, Saudi Crown Prince
Natural gas forecast, USD/mmbtu Brent crude oil forecast, USD/bbl
Source 2018 2019
World Bank 3.12 3.25
Economist Intelligence Unit 3.14 3.35
Source 2018 2019 2020
US Energy Information Administration
63.4 62.7 -
World Bank 58.0 59.0 60.0
Standard & Poor’s 55.0 55.0 -
European Central Bank 63.0 64.0 65.0
Goldman Sachs 62.0 - -
IEF RAS 62.0 64.0 67.0
JPMorgan 70.0 - -
Economist Intelligence Unit 63.0 60.0 57.8
Central Bank of the Russian Federation (Urals)
61.0 55.0 50.0
Jan-
2015
May
-201
5
Sep-
2015
Jan-
2016
Jan-
2017
May
-201
6
May
-201
7
Sep-
2016
Sep-
2017
Feb-
2015
Jun-
2015
Oct
-201
5
Feb-
2016
Feb-
2017
Jun-
2016
Jun-
2017
Oct
-201
6
Oct
-201
7
Jan-
2018
Dec
-201
6
Dec
-201
7
Mar
-201
8
Mar
-201
5
Jul-2
015
Nov
-201
5
Mar
-201
6
Mar
-201
7
Jul-2
016
Jul-2
017
Nov
-201
6
Nov
-201
7
Feb-
2018
Apr
-201
5
Aug-
2015
Dec
-201
5
Apr
-201
6
Apr
-201
7
Aug-
2016
Aug-
2017
2.68
2.62
2.53
2.22
3.16
2.28
3.09
2.90
3.02
2.71
2.82
2.31
1.70
2.77
2.96
3.04
3.00
2.91
2.96
3.74
2.72
2.73
2.66
2.71
2.25
1.95
3.19
2.84
2.83
3.34
3.06
2.65
2.72
2.68
2.35
2.14
3.28
2.87
3.05
53
65
48
36
55
50
51
50 57
62
63
50
37
56
50
49
49
61
69
57 64
69
55
52
45
40
54
43
53
52
63 65
67
53
38
47 52
47 53
Top pricing (oil and gas)
Maximum for the period
Maximum for the period
Minimum for the period
Minimum for the period
Russia through a lens | Research Centre market analysis
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Russia through a lens | Research Centre market analysis
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Research Centre market analysis
Kids recreational services market in Russia
The demand is highest in Novosibirsk (97 percent) and Kazan (95 percent).
Top 5 reasons parents send their children to camp:
have sent their children to camp within the last two years.
8 out of 10 respondents
Entertainment and recreation
Athletic development
Health improvement and treatment
Education and cultural development
Language learning
has sent their children to international camps only.
The most popular session duration is 14 days.
The average price for 14 days is RUB 45,000.
1 out of 10 respondents
Top 5 destinations:
1
25
4
3
SpainBulgaria
Turkey
Czech Republic
Germany
8 out of 10 respondents send their children to local camps.
have only sent their children to Russian camps.
7 out of 10 respondents
The demand is highest in Perm (84 percent), as well as among parents with children aged 10-12 years (78 percent) and 16-17 years (80 percent).
Current demand
Russia through a lens | Research Centre market analysis
19
tend to change camps after the second or third visit.
prefer sending their children to the same camp.
2.6 out of 10 respondents
3 out of 10 respondents
have not sent their children to a camp within the last two years.
2 out of 10 respondents
Top 5 reasons parents do not to send their children to camp:
Financial limitations or limited access to social benefits
More preferable options available for children’s recreation
Concerns over camp security and safety
Concerns over health while at camp
Kid not willing to go
send their children to camp at least once a year.
7 out of 10 respondents
High-income households most often report sending their children to camps – 1.3 times a year. There are two other groups of respondents who most often send their children to camps: parents who send their children to language camps (1.4 times a year) and parents whose children go to a camp for sessions that last from 6 to 8 days (1.5 times a year).
Therefore, the demand drivers include short camp sessions, as well as language learning, education, and cultural development opportunities.
Russia through a lens | Research Centre market analysis
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Potential demand
have plans to send their children to camp within the next two years.
have plans to send their children to Russian camps only.
have plans to send their children to international camps only.
9 out of 10 respondents 6.5 out of 10 respondents 2 out of 10 respondents
The most popular session duration is 14 days.
The average price for a 14-day session is RUB 50,000.
Top 5 potential destinations:
UK
The highest potential demand is in Kazan (100 percent), Novosibirsk (97 percent), and St. Petersburg (97 percent), as well as among the parents who prefer changing camps after their children visit a camp two or three times.
The key driver is the child’s experience at the camp.
The highest potential demand is among those who prefer sending their children to the same camp (87 percent), as well as among respondents from Perm (75 percent) and the Volga Federal District (73 percent).
The key driver is having an experience sending children to Russian camps.
1
2
35
4
SpainBulgaria
Turkey
Czech Republic
do not have plans to send their children to a camp within the next two years. However, they note that they could change their mind under certain circumstances.
1 out of 10 respondents
Top 5 reasons parents change their minds in favor of sending children to camp:
Subsidies
Kid willing to go
More affordable prices
Acquaintances among the camp staff
Other children going to the same camp
Russia through a lens | Research Centre market analysis
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Subsidized recreational programs for children
Top 6 issues with subsidized camp programs:
Top 5 issues facing parents who use their own money to finance a camp session:
have used full or partial subsidies to finance a camp for their children.
are ready to send their children to camp even if there is no longer subsidized support
6 out of 10 respondents 8 out of 10 respondents
Issues when paying for a camp
Processing times
Children having difficulties communicating with other children
No loans available to finance a camp session
Kid not willing to come back to a camp
Limited number of camps with subsidized enrollment
Poor transportation services (out-of-date vehicles)
Lack of publicly available official state documents or inspection certificates (e.g. certificates issued by the Federal Service for the Oversight of Consumer Protection and Welfare)
Limited information on camps in Russia
Uncomfortable transportation (e.g. packed buses, too many stops, etc.)
Lack of information on international camps
Russia through a lens | Research Centre market analysis
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The competitiveness of Russian camps
Drivers undermining the competitiveness of Russian camps
Drivers boosting the competitiveness of Russian camps
Top 5 reasons for selecting a Russian camp:
have plans to send their children to an international camp within the next two years.
send their children to local camps that are not far from where the family lives.
2 out of 10 respondents 9 out of 10 respondents
Top 5 reasons for selecting an international camp:
Language learning facilitated by native speakers
Different climate conditions
More engaging programs (e.g. cultural exchange, seeing new places, etc.)
More comfortable accommodation
More relevant offers in terms of value for money
The camp is not far from where the family lives
The camp is accessible by a means of transport most convenient for the parents (e.g. by bus, train, private car)
Regular communication with camp representatives
Camp access control, daily camp site patrolling (including by night), camp leaders constantly present and 24/7 video surveillance
Affordable prices; no situations where children are left with limited funds for extra expenses while staying at camp
Russia through a lens | Research Centre market analysis
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Top 10 issues related to camps in Russia
High prices
Limited number of camps with subsidized enrollment
Red tape in obtaining a subsidy
Tour operators having limited information on the current situation at camps
Limited information on the subsidy process
Untimely information on subsidy opportunities
Subsidy processing times
Limited information on a camp of interest
Lack of publicly available official state documents or inspection certificates (e.g. certificates issued by the Federal Service for the Oversight of Consumer Protection and Welfare)
Limited information on camps in Russia
Current quality offered by camps in Russia
Long-term track record
Location close to woods, park, etc.
Positive personal experience cited by parents or their acquaintances
Sufficient meals
Engaging entertainment program with recreational activities
Lack of efficient language learning programs
No common chat for parents, camp leaders, and the camp principal to communicate with each other
No online reports on “how it went during the session”
Lack of engaging/focused courses developed in cooperation with leading universities and/or companies
Lack of appropriate equipment at the camp (PCs, payment terminals, ATMs, etc.)
Top 5 advantages of Russian camps:
Top 5 disadvantages of Russian camps:
believe that Russian camps do not offer value for money.
believe that camp offerings are overpriced in terms of price vs quality.
6 out of 10 respondents 4 out of 10 respondents
Russia through a lens | Research Centre market analysis
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Nutrition and meal service
Staff and communication
Transportation
considerations when selecting a camp:
Top 3
Top 10 considerations when selecting a camp:
Constant availability of medical personnel with appropriate professional skills and qualifications
Regular communication with your child
Clean rooms and camp site, with regular cleaning
Sufficient meals
Comfortable eating area (comfortable seating, clean place, etc.)
Professional security guards on constant duty
Taste and food quality
Qualified and friendly camp administrators
Qualified transportation attendants
Availability of information about the camp including general information, meals, etc.
Top 3 considerations before taking a final decision about sending a child to a camp:
The major issues occur at these stages:
Top 5 concerns when sending a child to a camp in Russia:
do not decide on a camp until discussing it with their children.
report having issues when sending their child to camp.
5 out of 10 respondents 4 out of 10 respondents
Camp visit
Testimonials and public opinion
Discussion with child
Low quality accommodation
Low quality meals
Potential health problems while at camp
Lack of on-site supervision over children by camp leaders/administration
Poorly qualified personnel
Selecting a camp
Doing paperwork
Obtaining a subsidy
Staying in a camp
Selecting a camp
Russia through a lens | Research Centre market analysis
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Loyalty
Loyalty indices by Russian industry, 2015–2017
Source: NAFI Research Center, Alhorum, Oy-li, Retently
Car sales
Shops and supermarkets
Training and consulting services
Insurance
Banking
Telecommunications
Healthcare, private clinics
Camps for children
Restaurants and cafes
Online commerce
Hotels
Construction and maintenance
60
50
40
35
30
25
25
22
20
20
19
15
say that their children would like to go back.
8 out of 10 respondents
Net Promoter Score is 22 percent, which is similar to NPSs in the industries such as healthcare, restaurants/cafes, and online commerce.
are likely to recommend the camp to their friends and acquaintances.
4 out of 10 respondents
say that their children have positive experiences from camps they have visited in Russia.
9 out of 10 respondents
3 out of 10 respondents would be ready to send their children to the same camp, subject to certain improvements.
Almost every tenth respondent does not feel ready to send his or her children to the same camp.
are ready to send their children to the same camp.
6 out of 10 respondents
Russia through a lens | Research Centre market analysis
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Oil and Gas Industry Barometer
0.7*
-1
0.4
0
1
0.7*
0.4
0.4
0.4
The current state of affairs in Russia’s O&G industry
The current state of affairs in an archetypal Russian O&G company
The outlook for the Russian O&G industry
The outlook for an archetypal Russian O&G company
0,7*
-1
0,4
0
1
0,7*
0,4
0,4
0,4
Market sentiment
Expectations for companies’ key performance indicators
Expectations relating to the industry trends
Interviews with experts show that the representatives of the O&G industry are optimistic about both the current state of affairs and the outlook for the industry.
We polled our experts regarding the key areas of investment in 2018. The absolute majority is not going to invest in other industries and will remain ‘faithful’ to the O&G industry, particularly to the refining business.
Our O&G experts expect the market to grow slightly in 2018.
The representatives of the O&G industry do not expect costs to change in the key operation areas such as seismic exploration, exploration drilling, or the number of filling stations. No increase in product investments or service range expansion is anticipated either.
Experts expect an insignificant increase in production drilling costs.
• Operating costs
• Cost of capital
• Headcount
• Average salary
• Revenue
• Profit
When speaking on the topic of oil demand in Russia in 2018, our O&G experts expect it to remain flat compared to the current levels.
The CEOs of O&G companies expect the global demand for oil to increase slightly.
The local demand for gas is likely to increase slightly. While the global demand for gas is set to grow significantly.
Our O&G experts believe that the oil and gas prices in 2H2018 are set to remain at the level of the end of 2017 or early 2018.
to stay at the 2017 level slight growth
0,7*
-1
0,4
0
1
0,7*
0,4
0,4
0,4
2017 2018
0,7*
-1
0,4
0
1
0,7*
0,4
0,4
0,4
refining business
oil services
exploration
production
0,7*
-1
0,4
0
1
0,7*
0,4
0,4
0,4
Russia through a lens | Research Centre market analysis
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Drivers and barriers for the industry
Technology and green initiatives
Our O&G experts singled out the following most sought after technologies in the industry:
Companies allocate up to 1 percent of the revenue to R&D for leading-edge technology development and plan to increase investments to 1-5 percent of the revenue.
Overall, our O&G experts view the operations of companies in the area of green initiatives as rather active while the significance of environmental risks remains high. However, the efficiency of environmental risk management is seen as average, at most.
Big data processing
applications
Full automation of business process
chains
Cloud-based information technologies
Russian investments
State subsidies
Loans from foreign banks
Top 5 barriers to industry development in 2018:
• Deficiencies of government regulation of the industry
• Growing field development costs
• Corruption
• Constrained accessibility of foreign capital
• Lack of high technology
Top 5 drivers of industry development in 2018:
• Investments in technology development
• Business development through organic growth
• Launch of new products/services on the market
• Cost cutting
• Short-term capital optimization and operating model revision
Sources of financing
Top 3 sources of financing:
Russia through a lens | Research Centre market analysis
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Integration of advanced information systems
According to the annual CFO survey conducted by Deloitte CIS Research among the leading Russian companies, both 2016 and 2017 saw oil and gas respondents name cost control as their top strategy. This suggests an obvious approach – analysing the cost structure to apply operational control.
This approach relies on innovative data solutions and technologies to cut down well costs across the board – construction, operation, and maintenance. At the same time, the sophistication of basic technologies and increased amounts of data generated at each stage drive the need for technology solutions, with data analysis efficiency remaining the same.
Technology's path to optimisation
Well construction and maintenance is the largest cost item for the oil and gas industry. Today’s low oil prices, geopolitical instability, limited access to external technologies, production cuts under the OPEC+ agreement, stricter environmental regulations and the evolution of shale technology make cost saving a priority.
This can be achieved by the gradual digitalisation of production assets, with the integration of various solutions increasingly playing an important role. The oil and gas sector needs industry standards to speed up the digital integration.
Both theory and practice have shown that digital technology can be broadly applicable to both new and old depleted assets. Digital solutions can deliver a significant boost to asset performance, generating additional cash flows along with cost savings.Dmitry Kasatkin, Lead Analyst, Deloitte CIS Research
Costs are here to stayRussia is clearly witnessing a trend for declining oil production efficiency. The 11 percent growth in output during 2007–2016 required a boost of 42 percent in investment in terms of constant prices, as well as an increase of 37 percent in new wells commissioned, a growth of 79 percent in operational drilling and a 4.5 time ramp-up in horizontal drilling. In other words, each tonne of oil increasingly takes more drilling at a higher cost because of drilling methods. According to some estimates, keeping the existing pace of oil production would require an average annual investment increase by 2-2.5 percent, with no inflation added. This brings cost management into focus.
Today, the digital economy is becoming widespread as it reaches across industries and geographies. Understandably, the oil and gas sector has a clear need for a set of solutions that reflect the nature of the industry. At the same time, the accumulation of global digital practices for the implementation of advanced oil and gas solutions will continue at a dynamic pace. This is also true for expanding the product mix and better service quality. Translating these practices into a local context is a practical task that is highly relevant for the Russian industry.Andrey Kolpakov. The Institute for Economic Forecasting, RAS
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Integrating solutions needed for the implementation of technology requires an informed buy-in from key shareholders and the board. Focus should be on the practical application rather than on creating a buzz in the media.
The next important step is developing a strategy to integrate information systems and technologies. The 2017 CFO Survey conducted by Deloitte CIS Research among the leading Russian companies has identified key drivers and impediments to digitalisation in the oil and gas industry. Seventy-one percent of respondents named limited infrastructure availability and organisational deficiencies as key impediments while 100 percent cited market and competition as digitalisation enablers.
A strategy requires a comprehensive approach, including setting up a project team to bring together edge R&D providers, business stakeholders, and leading consultants. The project team will run health checks to analyse an organisation's environment and select best fitting solutions. Next comes the most important step – integrating technology in the production environment.
At the current stage, well construction and operation as part of the digital strategy is focused on the least. It is quite a different story with exploration: oil service providers engage more actively in business process transformation. With larger amounts of data available, they are better positioned for further development. However, Russia has a huge number of old and unused wells that could be refitted, with an ultimately positive impact on maintenance costs.
Systematic technology integration
The fourth industrial revolutionResearch evidence on Russian and international approaches to drilling management and oil well maintenance has demonstrated that a centralised digital platform (CDP) can unlock more efficiencies. The CDP is based on two leading concepts:• Platformisation, including digital business processes and a 360-degree integration• Technological modernisation, including automated operations and a combination of technology innovations
These approaches are most promising and popular in developed nations. The Russian oil service market is also moving in this direction. Platformisation and technological modernisation are key to the Fourth Industrial Revolution.With a global shift toward innovations driven by a combination of new technologies, automation, artificial intelligence and other disruptive solutions in nanotech, materials science, power accumulation, etc., oil companies need to rethink how they produce their products. The same applies to the future of the oil service market.Eleonora Krainova, Gubkin Russian State University of Oil and Gas
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Deloitte has designed a model for gradual digital transformation that has a successful implementation track record. The implementation stages below are just the first step. The cycle should then be repeated for new wells, spreading thereafter across the entire production environment from exploration to sales to form a new business ecosystem. (Please see Digital transformation across the production process.)
Digitalisation model
Digita
l to p
hysica
l Physical to digital
Digital
CybersecurityDigital DNA
1. Equipment deployment An organisation first needs a set of automated
mechanisms based on hydraulic, pneumatic and power management systems to enable equipment monitoring and remain prepared for potential on-site incidents and emergencies.
2. Sensor deployment The equipment deployed is fitted with sensors.
3. Data transmission mechanismsSpecialist solutions are installed to transmit
sensor data to the data centre. This stage already provides an organisation with the capability for 24x7 asset monitoring and operational control. The organisation can proceed to the next stage as soon as it has established an efficient process for using new data and has seen the first performance improvements in the asset.
4. IntegrationThis stage involves capturing and synchronising
data from various sources, as well as implementing new standards and protocols.
5. AnalysisToday’s advanced solutions enable the processing
of large amounts of data at a fast speed.
6. VisualisationAt this stage, solutions are implemented
to visualise captured data and enable training and labour optimisation at the site. The industry is already active in using virtual technologies and augmented reality.
7. Automation of the decision-making for production processes
Driven by regular data inputs, self-learning applications can make decisions to improve the efficiency of production processes. These solutions can also provide analysis-based recommendations to support strategic decisions for a specific asset.Digitalisation efforts tend to stop here as companies, having seen some economic impact, elect not to consider further goals. However, traveling the full digitalisation cycle to achieve a real sea change along with earning the title of a leading technology-enabled company requires taking further steps.
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Digital transformation across the production process As-is state and expected evolution by production stage
Stage Exploration Construction Operations
Phase
Viab
ility
as
sess
men
t
Seis
mic
ex
plor
atio
n
Expl
orat
ion
dr
illin
g
Plan
ning
Infr
astr
uctu
re
cons
truc
tion
Dri
lling
Dev
elop
men
t
Prod
ucti
on
Mai
nten
ance
From physical to digital environment
Equipment deployment
Sensor deployment
Data transmission mechanisms
Digital environment Integration
Integration
Analysis
Visualisation
Automated operational decision-making
From digital to physical environment
Robotics
Tailored approach to infrastructure
Virtualisation
As-is state Evolution expected over the next two years
Source: Deloitte
8. RoboticsAt this stage, the asset is fully or partially autonomous,
and decision support applications use mechanisms driven by processed data, adjusting processes for better efficiency.
9. Enabling a tailored approach to infrastructureOnce data have been accumulated, an organisation
can go on to build a data set to unlock real potential, including exploring opportunities for fine-tuning the existing equipment, as well as designing and developing new facilities and structures that are tailored to a specific asset.
10. VirtualisationVirtualisation delivers a final touch, generating virtual
copies of assets and bringing online a virtual environment with which to design and implement new solutions (organisations can also extend this to all assets). Apart from maximising value, the virtual environment also drives the transition to a new type of thinking – a digital ecosystem.
Russia through a lens
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Top 5 M&AsTarget company Industry Bidder
companySeller company
Deal value (USD, mln)*
Additional information
Magnit OJSC (29.1% Stake)
Consumer: Retail
VTB Bank OAO Sergey Galitskiy (Private Investor)
2,442 Mr. Sergey Galitskiy resigned from the post of General Director of Magnit and as a member of its Board of Directors. VTB Bank and Magnit will continue with Magnit’s existing dividend policy.
Donskoy Tabak JSC
Consumer: Agrobusiness
Japan Tobacco Inc.
Ivan Savvidis (Private investor)
1,749 The acquisition enables JT to further strengthen its number one position in Russia. It will also enable JT to broaden its distribution network and enhance its competitiveness on the market by leveraging the salesforce and complementary product range of Donskoy Tabak.
Dixy Group (77.13% Stake)
Consumer: Retail
JSC Dixy Yug Prosperity Capital Management Limited
1,102 The repurchasing of its shares and possible delisting from the Moscow Exchange will enable Dixy to ride out an unsatisfactory business performance. It provides for an equal opportunity to Dixy’s minority shareholders to tender their shares in a fair, common way.
Eldorado Limited Consumer: Retail
M.Video Safmar Industrial & Financial Group JSC
794 The transaction is expected to realize the investment potential of M.Video and Eldorado. It will strengthen the market position of the combined entity on the consumer electronics market. It is expected to generate synergies in the form of additional EBITDA of up to RUB 18 billion (USD 314 million) in 2018–2020.
United Company RUSAL Plc (6% Stake)
Energy & Resources: Mining
Zonoville Investments Limited
The ONEXIM Group
658 With this acquisition, Zonoville and its associate SUAL Partners Limited together will hold a 26.5% interest in RUSAL. The transaction will lead to Onexim exiting from RUSAL.
(Russian companies)
*Public information on deal value
Source: Merger Market
Russia through a lens
33
Source: InvestinRussia.com
Global windTop news: China and Russia
Top news: Europe and Russia
26 March 2018China Minmetals eyes copper mineChina Minmetals, one of the largest metallurgical companies in China, is considering a stake in the Malmyzhskoe copper-gold field in Khabarovsk Krai. Exploration and mining licenses are held by IG Copper LLC (Canada) and Freeport-McMoRan (USA); however, investors are seeking a partner. The development of the Malmyzhskoe field is estimated at USD 1.5 billion. China is actively increasing its participation in copper assets alongside an electric car boom.
16 March 2018Gruppo Colorobbia to invest one billion rubles in a glass plantThe Italian company Gruppo Colorobbia has announced its intention to implement a major investment project in cooperation with North Glass Container Company LLC, which manages a glass plant in the Vologda Region.
06 March 2018Kronospan may build a plant in Novosibirsk RegionThe Austrian company Kronospan is considering the construction of a large timber processing complex in the Novosibirsk Region. Investment in the project is estimated at RUB 20 billion, the infrastructure cost – at over RUB 1 billion. It is expected that the plant will process 5 million cubic meters of timber.
13 February 2018Ding Dairy Farming to invest USD 302 million in dairy production in Russia's Far EastThe Russian Far East Agency and Ding Dairy Farming have signed a Memorandum of Intention according to which an investment plan for the construction of stock breeding facilities will be implemented at Mikhailovsky ADT in Primorsky Krai. The Chinese company has already invested USD 18.3 million in the construction of a farm in the region, as well as the purchase of a farm, cattle and land.
08 February 2018China to buy a stake in Amurmetal Torex Group, which owns Amurmetal, is negotiating the sale of the plant’s stake with a Chinese company.
06 February 2018China Railway Group Limited to build roads in Primorsky KraiThe parties are discussing the issues of the joint development of international transport corridors (ITCs) Primorye-1 and Primorye-2. The projects are intended to ensure northeastern Chinese companies’ access to the ports of Primorskiy Krai.
30 January 2018Chinese banks financed construction of polymer production in Kabardino-BalkariaChinese banks invested USD 1 billion in the first phase of polymer production in Kabardino-Balkaria. The financing amount was announced at over USD 12 billion for the period up to 2030.
18 February 2018French SNF to invest approximately RUB 3.5 billion in a petrochemical plant in SaratovThe French company SNF will invest about RUB 3.5 billion in the first phase of the construction of a polyacrylamide and acrylamide facility on the site of Saratovorgsyntez.
15 February 2018Enel Russia to build a wind farm in Rostov Region Investment in the project will amount to EUR 132 million; the projected capacity is over 90 MW. The wind farm will be able to generate about 300 GWh per annum.
29 January 2018Bulgarian shoe factory to open in Leningrad RegionA shoe factory will be constructed in the Leningrad Region by the end of 2019, which was fully initiated by the Bulgarian party. Investment will amount to approximately EUR 1 million. Apart from the shoe factory, investors are considering the construction of a dairy plant in the region.
17 January 2018Fortum's first industrial wind farm in RussiaThe Finnish energy company Fortum has launched the first 35 MW wind farm in Russia in the Ulyanovsk Region. It was put into operation in January 2018 on the wholesale electric energy and power market.
Russia through a lens
34
Useful stickers
100 RELIABLE RUSSIAN BANKS – 2018 FORBES MAGAZINE (in Russian)
THE BIGGEST TECH TAKEAWAYS FROM THE 2018 WORLD ECONOMIC
7 TAKEAWAYS FROM DAVOS
THE RICHEST RUSSIAN BUSINESSMEN IN THE FORBES RANKING – 2018 (in Russian)
Contacts
Lora ZemlyanskayaResearch Centre [email protected]
Dmitriy KasatkinSenior Research [email protected]
Mikhail GordeevSenior Research [email protected]
Vladimir SokolovSenior Research [email protected]
Yulia AfanasyevaIntern [email protected]
Victoria PigalkinaIntern [email protected]
deloitte.ruAbout Deloitte
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