Market Monitor - ICT industry - Russia

Market Monitor

  • Russia
  • Electronics/ICT

16 Jun 2016

Currently all Russian electronics / ICT subsectors face major troubles, especially those retailers and wholesalers that trade in foreign currency.

  • The Russian electronics/ICT sector suffers from the difficult domestic economic environment. Major retailers reported shrinking revenues in 2015, with decreases of 10%-30%, depending on the region.
  • In 2016 no rebound in demand is expected. Currently all Russian electronics/ICT subsectors face major troubles, especially those retailers and wholesalers that trade in foreign currency.
  • Consumer electronics is the most difficult segment, which is severely affected by the on-going slump in private consumption.
  • Telecommunications suffers from the weak rouble and currency volatility in emerging markets. Only the IT segment shows less deterioration in demand.
  • After decreasing in 2015, the margins of electronics/ICT businesses are expected to deteriorate further. Many players left the market, but nevertheless the degree of competition is steadily growing, and consolidation in the industry is on-going.
  • Depending on the level in the supply chain and market leverage of businesses, payment duration in the industry ranges from 30 days to 120 days. Non-payment notifications have increased in 2015, and this negative trend is expected to continue in the coming months.
  • Insolvencies have increased in the last 12 months, and further increases are expected in the coming months.
  • Most cases of late payments and business failures are seen in the segment of regional small- and medium-sized electronics/ICT wholesalers and retailers; especially with businesses that were ill-prepared for the drop in consumer demand, or which did not hedge against foreign exchange risks and had a high gearing.
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