Extractive Industry in Belarus Lost Revenue and Profit

In the past, mining companies were the driver of economic growth.

According to the results of 11 months, the output of large and medium-sized enterprises for the extraction of mineral resources fell by 2.2%. Over the same period, the output in the industry as a whole decreased by 0.7%. Consequently, in 2020, the industry is among the lagging behind in dynamics, the website banki24.by writes.

The financial results of the flagship enterprises come with a lag concerning the production indicators. Data for 10 months is available today.

Revenues of large and medium-sized companies in the extractive industry decreased by 3.8%, unadjusted for inflationary processes. During the same period, industrial producer prices in the industry increased by 4.8%. Therefore, the real revenues of mining companies fell even more significantly.

The industry's revenue in monetary terms amounted to BYN 4.872 billion, and the profit from product sales - BYN 354.2 million. In nominal terms, profit from sales fell 41% by 2019, adjusted for price increases - by 43.7%.

Return on sales is the ratio of revenue to profit over a period of time. It allows companies and industries to be compared regardless of their absolute size.

In 2020, the extractive industry's average profitability was 7.3% (versus 11.8% in 2019). In general, in the real sector, profitability reached 7.8%, in the manufacturing industry - 10.4%.

According to the results of 10 months, among the flagships in mining, one third was low-profit (profitability of 0-5%), and another third had a profitability in the range of 5-10%.

The final financial result of the work is the net profit (or loss). The size and sign of the final result are affected by debt payments and exchange rate differences.

The net profit of the industry flagships in 2020 fell 2.8 times to BYN 76.3 million. The net profit was influenced by the fall in commodity prices amid the global crisis, payments on loans and borrowings, as well as devaluation.

Over 10 months, payments on loans and borrowings from large and medium-sized enterprises in the industry increased by 88.6% to BYN 1.888 billion. Compared to revenue, these payments amounted to 38.8%, while the real sector's average indicator was 28.8%.

The total debts of the mining industry as of November 1 reached BYN 3.013 billion. Compared to the beginning of 2020, they increased by 78.3%.