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Russian market prospects for 2009

How are manufacturing and consumer business companies coping with the crisis?

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Deloitte CIS has conducted a survey of top management at leading Russian and foreign companies operating in the manufacturing and consumer business sectors.

This survey largely confirms the messages we have been hearing from our clients; manufacturing and consumer business companies are increasingly assessing their options as they look to optimize the way their businesses function.

Companies in both industries are rethinking their pricing policies, and according to the results of the survey, many will raise the price of their products to cover increased expenditure due to the weakness of the ruble.  Manufacturing and consumer business companies are now forced to focus on the short-term; effective management of working capital will be the key to surviving the crisis. 

Graham Povey
Managing Partner, Clients & Industries
Manufacturing Leader

Key findings 

The survey highlighted the following trends and crisis-related measures taken by companies in these industries:

  • Over the last three months, decline in demand has affected respondents in the manufacturing sector more than those in the consumer business segment. A decrease in demand was noted by 74% of manufacturing companies surveyed and by only 50% of consumer business companies.
  • 70% of consumer business companies have already raised prices and 30% are planning to do so within the next three months. At the same time, 30% of manufacturing companies have already lowered prices and another 30% plan to do so within the next three months.
  • Manufacturing firms have no choice but to reduce staffing levels, principally through cutting shifts, whereas consumer business companies are turning to their advertising and marketing budgets to make savings.
  • In both of the industries surveyed, wages have either been cut or will be cut in the near future.
  • Employee compensation is another area in which companies are looking to make savings,
    either by not paying bonuses or by cutting benefits such as health care, corporate cell phones or transportation reimbursement.
  • Both manufacturing companies (80%) and consumer business companies (70%) feel that proper management of working capital is the most efficient crisis-related measure that can be implemented.
  • Almost a third of respondents have no plans to restructure their current liabilities. One fifth of consumer business companies surveyed and only 8% of manufacturing companies plan on obtaining funds from shareholders to restructure their current liabilities.
  • The majority of respondents agree that the worst of the crisis is yet to come.

The full results of the survey can be found attached. 

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Ekaterina Pavlova
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Deloitte CIS
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