Titanic rating
How will the losses of large businesses affect the regions?
Author: Tatyana Rybakova
The unfavorable economic climate, the state's seizure of "excess" revenues through the "excess profits tax," and requests for "voluntary" contributions have led to three-quarters of large businesses losing revenue, or even becoming unprofitable. Meanwhile, for the regions where their production facilities are located, these companies are not only major taxpayers but also the largest employers and contractors for local businesses.
Incomes are falling
Twenty one of 28 analyzed by the Vedomosti newspaper Major Russian industrial companies from 10 sectors worsened their financial performance over the period 2024–2025. At the same time, the largest representatives of the ferrous metallurgy sector—Severstal, MMK, and NLMK—all three indicators used to analyze their financial condition fell: revenue, net profit, and EBITDA (earnings before mandatory expenses such as taxes, depreciation, loan payments, etc.). Revenue fell by 50% to 20%, among other factors. However, coal companies are the ones with the highest declines: Mechel and Raspadskaya increased their losses severalfold.
Non-ferrous metallurgy companies, gold miners, and fertilizer producers, supported by the global market situation, are currently performing better than others. However, the problem with fertilizers is that their raw materials are also used to produce explosives. Therefore, any fertilizer production is also a potential (and even actual) military production facility, making it a target for attacks by the Ukrainian Armed Forces. This is precisely what we are seeing: drone attacks have recently hit production facilities. Akron in the Smolensk region, EuroChem in the Stavropol Territory and Mineral fertilizers in the Voronezh region.
If the Strait of Hormuz blockade lasts long enough, oil and gas companies could improve their performance. Meanwhile, Rosneft's profits for last year fell almost fourfold, Gazpromneft and Tatneft's profits halved, and Lukoil posted its first-ever loss—minus 1,06 trillion rubles.
The causes of the financial turmoil are also clear: sanctions that complicate exports and increase costs, falling demand (this has had a particularly severe impact on coal mining and metallurgy), and the actions of the authorities, who already quite regularly impose a "windfall tax" on companies, which is defined as any income from favorable global economic conditions. Incidentally, it is precisely the danger of another such imposition tax does not allow oil producing companies to be particularly optimistic about the potential profits from expensive oil.
The dismal picture of large industrial companies has another important dimension. Nearly all of their production facilities are located in the regions, and these facilities are often the largest or among the largest. This means that the region's well-being depends on their financial standing: after all, their profit taxes go to regional budgets, and they are leading employers and the largest customers for local businesses—not to mention the dependence of virtually the entire consumer sector in any region on the fortunes of the largest and wealthiest employer and contractor.
The most vulnerable
Analyzing by industry, the most problematic regions are already, above all, coal mining and metallurgy regions, where crisis phenomena are already being observed. These include, first and foremost, the Kemerovo Region and Khakassia, where a full-blown crisis unfolded last year, as well as the Komi Republic, Murmansk Region, Lipetsk, Vologda, and Chelyabinsk Regions.
They are followed by regions where oil and gas production is located, where falling profits quickly impact the company's budget and investments in the region: these are the Tyumen Region, Khanty-Mansi Autonomous Okrug, and Yamalo-Nenets Autonomous Okrug.
The most vulnerable regions are those where the above-mentioned companies are also large employers and major taxpayers.
These are, first of all, the Khanty-Mansi Autonomous Okrug, the Yamalo-Nenets Autonomous Okrug, Tatarstan, the Tyumen Region, the Vologda, Chelyabinsk, Lipetsk and Kemerovo Regions, as well as individual territories with the presence of oil and gas, metallurgical and coal assets.
A decline in profits and EBITDA typically reduces corporate income taxes, dividends, and investment budgets, so the impact is felt immediately by regional revenues, employment, and contractors. This is especially significant for single-industry towns and industrial centers: freezing capital investment can affect infrastructure, production modernization, and enterprise social programs, which typically account for a significant share of the social programs of an entire city or industrial agglomeration.
From this perspective, the Kemerovo Region, Khanty-Mansi Autonomous Okrug, Yamalo-Nenets Autonomous Okrug, Tyumen Oblast, and Vologda, Chelyabinsk, and Lipetsk Oblasts appear to be the most vulnerable in the long term. These are the regions where large companies are often both major employers and key taxpayers.
In oil and gas regions, the impact is particularly dangerous, as falling profits at Rosneft, Gazprom Neft, Lukoil, Tatneft, and Novatek directly reduce the regional tax base, where their profit taxes are the main source of regional budget revenue. Furthermore, lower profits could delay the development of new fields, the construction of new pipelines, and oil and gas refining—which would also impact the companies that service these operations, creating a multiplier effect that impacts the entire regional economy.
In coal and metallurgical regions, the risk of negative impact multipliers is even higher due to the employment effect: a drop in orders quickly impacts wages, contractors, and local services.
Regardless of the current economic situation, it can be stated that the least stable economic situation is in those regions whose well-being depends on one or two companies or on one industry, where infrastructure is already highly deteriorating, the budget base is weak, and alternative employment is limited.
Who was lucky?
The regions suffering the least from the deteriorating situation of large manufacturing companies, as expected, are those with highly differentiated economies, including by industry and the ratio of manufacturing to non-manufacturing sectors. Naturally, these are the largest and wealthiest regions: Moscow and Tatarstan. Moscow is generally only slightly dependent on the manufacturing sector—it is more of a management, financial, and service center. However, I should note that the relocation of profit centers and/or headquarters of major industrial companies from Moscow to the regions or St. Petersburg is depleting a significant portion of the capital's income.
But Moscow still has an inherent advantage as a capital. The example of Tatarstan is far more interesting. The republic has benefited from the long-term, sound policies of its leadership, which has systematically expanded and diversified the region's industrial base and practiced sound budget management. As a result, the decline in oil and gas revenues is unpleasant for the republic, but manageable.
A far greater danger now is what has so far kept the republic's budget revenues and the population's well-being high: the emphasis on high-tech manufacturing. The fact is that at the moment, this production is partially or entirely in the interests of the defense industry. An example is the Alabuga SEZ, where the rapidly developing drone industry is...are being built all new workshops) has already caused a labor shortage - they are recruiting people to assemble drones children not from a good life. At the same time air attacks by the Ukrainian Armed Forces have become commonplace for the company. With such a battle for survival, it's difficult to talk about the region's investment attractiveness, meaning that if government contracts dry up, production faces a crisis.
Some resource-rich regions may also be able to partially withstand the financial blow to the largest regional taxpayers and employers if they maintain a surplus or have a wider range of companies. These include, for example, the Khanty-Mansiysk and Yamalo-Nenets Autonomous Okrugs, which are still donor regions for the federal budget.
Also, the following look relatively stable: Regions like Tatarstan, which, despite the weakness of one major sector, is experiencing growth in other sectors: government procurement (including defense procurement), logistics, or processing – as is the case, for example, in the Murmansk region.
Titanic rating
Based on this analysis, we can compile a survival rating for regions that face a higher or lower risk to their economies depending on the industries located within their territories. A sort of "Titanic rating": who will survive if the economic ship sinks, and who will immediately sink.
The already struggling Kemerovo Region ranks last in terms of survival. Its dependence on coal and global demand for it has always made the region's economy cyclical. However, now cut off from Europe by sanctions, Kuzbass relies almost exclusively on China, which itself has significant coal production. Therefore, to save Kuzbass, coal prices must not only rise, but also demand in China must become so high that it cannot be met by domestic production. Given China's accelerated transition to green technologies, this seems almost impossible. Furthermore, transportation costs for delivering coal to China must be low: it's worth remembering that when EU sanctions were imposed on Russian oil, Kuzbass coal miners had to literally fight with oil producers for the right to transport their cargo along the Trans-Siberian Railway.
Already in the Kemerovo region description of the condition the coal industry looks like reports from the front, and региональный бюджет lost 30 billion rubles. At the same time, the mines continue to closeUnemployment is growing in the region, and non-payment of wages has become commonplace.
The Khanty-Mansiysk and Yamalo-Nenets Autonomous Okrugs are slightly better off. As mentioned, they continue to contribute to the federal budget by maintaining the profitability of their oil and gas companies. However, their high dependence on a single sector and sensitivity to capital investment (many of which are currently required to invest in developing new fields to prevent production declines) make these regions highly vulnerable. In fact, right now, their fate depends on how soon the Strait of Hormuz opens and, consequently, how soon and how much oil and gas prices fall. However, there's no doubt that they will fall in the future.
At the same time, it's difficult to talk about diversification in these regions: extreme weather conditions, very sparse populations, and poor transportation accessibility leave few opportunities. All this makes them hostage to the oil and gas sector.
The Tyumen Region is slightly less vulnerable. It benefits from a strong connection with its former governor, now Moscow Mayor Sergei Sobyanin, a degree of diversification, and better transportation connectivity. However, most non-oil and gas companies are somehow involved in the contracting chain of key production facilities, meaning that a drop in oil revenues will impact them as well, and thus the region's budget.
The Vologda Oblast ranks higher in the survivability ratings. Firstly, it is located in the European part of the country, at a fairly busy transport hub, including for tourism. Secondly, its dependence on Severstal's metallurgical cluster is mitigated by the fact that it is a highly modern, well-modernized, and well-managed facility. The current woes are largely due to sanctions, not just the poor economic situation—weak demand in China. Moreover, unlike oil, the metals industry is not in a downward trend due to the "green transition": if initial reports about China's real estate sector stabilizing are accurate, we can expect an increase in steel demand soon. And if sanctions are lifted, Severstal—and therefore the Vologda Oblast—will benefit.
Roughly the same can be said about the Chelyabinsk and Lipetsk regions.
These are regions dependent on large metallurgical clusters; while Magnitogorsk Iron and Steel Works (MMK) in Chelyabinsk has good ties with China, the presence of a coal industry is currently not to the region's advantage. NLMK in the Lipetsk region once managed to diversify its production somewhat by using its steel for household appliances. While this is currently limited due to falling consumer demand, it is helping it weather these difficult times.
However, the industrial production index in the Chelyabinsk region In the first quarter of 2026, the region's output fell by 7,2% compared to the previous year. Manufacturing industries, which underpin the region's economy, contracted by almost 9%, while metallurgy fell by 10%. Such a sharp decline hasn't been recorded in the region since at least the late 2000s—even during the pandemic, the downturn was less severe. Amid falling demand and rising costs, large companies in the region are beginning to cut production and staff. ChEMK, ChMK, MMK, ChTPZ, ChERZ, Uralskaya Kuznitsa, Ariant, and other companies have already reported problems. Mass layoffs are also underway. NLMK — true, so far only among the management staff.
Khakassia also suffers from problems in the coal industry, but there is some, albeit limited, diversification, so the region can be classified as problematic, but with a relatively good survival rate. The same applies to Komi: in addition to Vorkuta coal, the republic also has a developed paper and pulp industry. Yes, it also suffers from sanctions (most of the production was exported to Europe), but as a result of these same sanctions, the raw material – wood – has become cheaper; in addition, the region has been able to become an import substitute for Western packaging products. However, the decline in company profits is having a significant impact on the regional budget. As a result, non-payment of wages and benefits has been observed in Khakassia since last year, and the republic's budget Komi remains in short supply.
The Murmansk Region is also suffering from a decline in production, but it is saved by the ice-free Murmansk port: it is currently diverting many cargoes from Northwest ports, which are under drone attacks. And although the share of unprofitable companies is growing, experts predict the situation will stabilize this year.
Finally, the leaders in survival are predictably Tatarstan and Moscow. While Moscow has better prospects due to purely political and managerial preferences, Tatarstan's survival is entirely the result of its leadership. Yes, focusing on developing the defense industry is risky, but on the other hand, the republic has already demonstrated its ability to quickly reorient itself toward promising areas, establish new industries, and, equally important, secure support from the center.
