A significant portion of Russia’s largest companies are struggling with mounting debt, with one in six major firms unable to manage their financial obligations, The Moscow Times reported on September 17, citing Russia’s Central Bank.
This marks a growing financial crisis, as economic stagnation, high interest rates, and declining demand continue to take their toll.
Among the Russian companies facing difficulties are VK, Ozon, the United Aircraft Corporation (UAC), Rusal, Mechel, and AFK Sistema. These firms, along with others like OMZ, Energia, and M.Video-Eldorado, have seen their debts rise, with a total net debt of nearly 42$ billion—around 1.7% of Russia’s GDP for 2024, according to The Moscow Times.
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VK, Russian social network headquartered in Saint Petersburg, for instance, has seen its debt triple in three years and reported a record loss of almost 1.2$ billion by the end of 2024. Despite a stock issuance to raise funds, the company continues to struggle, particularly in attracting users to its platforms.
Ozon, one of the first Russian online stores, while increasing its turnover, also posted significant losses and remains burdened with a debt exceeding 2.8$ billion.
Rusal, the largest aluminium producer in Russia, has accumulated more than $6 billion in debt and is highly dependent on global aluminium prices for profitability.
Coal and metallurgical group Mechel, meanwhile, is in a serious financial trap, with a loss of over 432$ million and net debt significantly higher than its market value. AFK Sistema also faces similar issues, with a debt of 3.7$ billion, The Moscow Times reports.
The Russian Union of Industrialists and Entrepreneurs has urged the Central Bank to lower interest rates, currently at 17%, to help struggling businesses.
However, the Central Bank has been cautious due to the fiscal challenges created by Russia’s ongoing invasion of Ukraine, with government spending surpassing revenue.
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Russia’s Central Bank’s review noted that the corporate sector remains “financially stable and capable of meeting its obligations to creditors.” The regulator also estimates that troubled companies accounted for just 8% of total corporate debt at the end of last year, a figure that could rise to 10% this year.
Previously, it was reported that Russia’s economy had reportedly came to a halt. Experts from the Institute of National Economic Forecasting (INEF) of the Russian Academy of Sciences concluded that the country’s GDP growth is stagnating,
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