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5/2017


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DRINKS
Review of the Russian Beer Market
Research by the Company Euromonitor International

TEA & COFFEE
Review of the Russian Tea Market
Research by Company Step by Step

CONFECTIONERY
Review of the Russian Market of Chocolate Products
Research by the Company NeoAnalytics

Review of Foreign Trade Cookie Supplies in Russia
Research by Information-Analytical Company VVS

MEAT
Review of the Russian Turkey Market
Research by the Company Global Reach Consulting

DAIRY PRODUCTS
Review of the Russian Dairy Market
Research by the Company Market Analitika

Features of Branding in the Russian Cheese Market
Research by the Branding Company Labelmen

FAST FOOD
Review of the Russian Market of Snack Bars
Research by the Company Euromonitor International

CANNED/PRESERVED FOOD
Review of the Russian Market of Canned Meat
Research of the Company Step by Step

EQUIPMENT & MACHINERY
Russian Imports of Confectionery Equipment
Research by the Company ID-Marketing

PACKAGE
Review of the Russian Market of Shrink Films
Research by the Company Abercade

TRADE SHOWS
21st International Fair for Packaging Machinery, Packaging, Confectionery Machinery Interpack-2017


22nd International Specialized Exhibition of Materials and Technologies, Machinery and Equipment for Manufacturing of Packages RosUpak-2017


FINANCE & LOANS
The Russian Leasing Market
Research by the Rating Agency RAEX (Expert RA)

The Russian Leasing Market

Research by the Rating Agency RAEX (Expert RA)

AWAITING A RECORD
In 2016 the leasing market switched from its recession of the previous years to steady growth. In the previous year growth in new business equaled 36%, and the value of property leased reached 742 billion rubles, according to RAEX (Expert RA). The stabilization of the economy and a decrease in costs of bank funding increased the demand for leasing in SMEs, which contributed to the recovery of the leasing market in 2016. In addition, the end of last year involved major corporate deals, which positively affected the volume of the leasing market. As a result, in the fourth quarter of 2016 accounted for around 39% of the leasing business of the year (against 29% in the previous year).
Most contracts signed at the end of the year were major. Primarily they include railway and aircraft leasing as well as sea and river vessel leasing. According to Vladimir Dobrovolsky, Deputy General Director of Customer Service at the State Transport Leasing Company (GTLK), in the fourth quarter of 2016 the company systemically entered the helicopter market, was actively developing the Sukhoi Superjet 100 (SSJ-100) aircraft program and formed a reserve for 2017 most of the equipment has already been ordered.
In 2016 GTLK became the leader in the volume of new business (122.8 billion rubles), having formed around 17% of the market; at the same time 53% of the lessors new business fell on the fourth quarter of 2016. The volume of new business of Sberbank Leasing Group increased by 47%, which allowed the leasing company to rise to the second place from the third place; over half of the companys new business in 2016 was also formed in the last quarter of the year. It should be noted that the largest share (82%) in the annual volume of new business was demonstrated by MKB-Leasing Group.

INDUTRSY REVIVAL
In 2016, as in the previous year, the largest share in the structure of new business belonged to car leasing. Combined, passenger cars and trucks leased formed around 35% of new business for the past year, and in absolute terms car leasing growth amounted to approximately 37%.
Aircraft leasing was second in volume, its share in 2016 having remained at the same level (around 21%); however, in absolute terms the volume of the aircraft segment increased by 36%. The share of the railway segment in the structure of new business continued to decline from 18 to 13% in the past year. However, for the first time since 2012 the segment demonstrated no significant reduction in absolute terms.
All in all, the largest segments in the leasing market in 2016 did not undergo significant changes. At the same time substantial growth was observed in the share of sea and river vessel leasing from 2 to 7%. RAEX (Expert RA) states that at least 75% of the new business volume with water vessels fell on clients of Sberbank Leasing and GTLK leasing companies. The key reason of water vessel leasing growth is the significant decay of the fleet and the need for its renovation. At the moment a number of vessels in Russia have exceeded their planned service lives. In 2015, the average age of the cargo and passenger fleets was 37 and 35 years respectively*.
Substantial growth (around 64%) in new business volume was demonstrated by construction and road-building equipment, the share of which in the market amounted to 7% in 2016. Agricultural equipment also demonstrated positive dynamics: the absolute volume of the segment increased by 181%, and its share in the market reached 3%. Since the first half of the year, retail players have been noting growth in demand for leasing by agricultural enterprises as a result of increasing sales volumes, in particular caused by decreased competition from foreign producers.
The share of food processing equipment, including refrigeration equipment and restaurant equipment, remained at the level of 2015 in 2016 around 1% in the volume of new business. Nevertheless, in absolute terms the food industry segment increased by 15% and amounted to around 6.3 billion rubles in 2016. At the same time experts at RAEX (Expert RA) note that food processing equipment leasing has been growing by 14-15% for the second year in a row.
The largest number of contracts in the segment of food processing equipment was signed by Siemens Finance 2.1 billion rubles. It should be noted that Siemens Finance has been leading in food processing equipment leasing for the second year in a row. Second place in the rank is held by UniCredit Leasing, whose new business volume equaled 673 billion rubles, and Optsion-TM was third with 542.6 billion rubles.

SECOND YEAR IN THE BLACK
Official statistical data indicate a decrease in the reduction rate in the Russian economy, and the leasing market has already reacted to it, having shown recovery growth. According to experts of the RAEX agency (Expert RA), a higher level of certainty in 2017 will have a positive effect on companies plans in fixed asset upgrades, which will contribute to further growth of the leasing market. The state will still have the key influence on the volume of leasing transactions in the current year by implementing leasing subsidy programs. In addition, the decreased cost of bank funding, provided that there are no precedents of the key rate being raised, will lead to more active bank funding of leasing enterprises. RAEX (Expert RA) expects an increase in demand by enterprises for leasing transactions in the conditions of a high rate of fixed asset deterioration (around 48% in 2015, according to Rosstat).
Acording to the baseline forecast by RAEX (Expert RA), the volume of new business in 2017 will increase by 15% and will reach approximately 850 billion rubles. To a large degree, the realization of this scenario depends on signings of major corporate contracts in the railway and aircraft segments as well as sea and river vessels. Dmitry Zotov, General Director of TransFin-M, is confident in the growth of railway leasing in 2017, The main factor of growth is a significant write-off of the vehicle fleet: in 20152016 212 thousand gondola cars were written off. As a result, the rates of profitability of gondola operation throughout 2016 increased two-fold, and certain directions even demonstrated a shortage of cars, which leads to the recovery in demand for this type of car by operators.
According to forecasts by RAEX (Expert RA), the railway segment will demonstrate 10% growth after the volume stabilization in the leasing business primarily due to subsidized acquisition of innovative cars and growth in profitability of gondola operation. The volume of aircraft leasing in 2017 will demonstrate an increase at the level of 10%. The state program for subsidizing leasing of Russian aircrafts, including Sukhoi Superjet 100, will positively affect the aircraft segment.
Car leasing remains the largest segment of the market, which will be supported by the relaunch of the state program for preferential car leasing as well as partial realization of deferred demand. As a result, the volume of new business in the segment will increase by 20%. Regarding the segment as a whole, at the moment it looks very promising, in particular due to the low base effect, states Alexander Kozhevnikov, General Director of MKB-Leasing.
A significant part of the work on the preparation of infrastructure facilities for the 2018 FIFA World Cup will also fall on the next year, which will contribute to growth in the volume of construction and municipal equipment leasing. Other segments of the market as a whole will also demonstrate positive dynamics (+15%) as a result of growth in leasing transactions in the regions. The segment of food equipment leasing will demonstrate a similar growth level, according to RAEX (Expert RA), and will amount to approximately 7.2 billion rubles in 2017.

* Order of the Government of the Russian Federation dated February 29, 2016 N 327-r On the Approval of the Strategy for the Development of Inland Water Transport of the Russian Federation for the period till 2030.

Pavel Zholobov,
RAEX (Expert RA)





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