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Economic development of the Republic of Karelia in 2006

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   Results of 2006

The basic results of social and economic development of the Republic of Karelia in 2006

Last year in the republic as a whole positive dynamics of basic social and economic indices remained. By estimate, total regional product increased by 2.5% in comparable prices in comparison with 2005.

The consumer commodity and services market developed dynamically - within a year monthly increase in physical volumes of retail trade turnover, public catering and paid services was provided.

Regarding basic kinds of economic activities, increase in production was acheved, however, intensity of growth slowed down. After high rates of production growth in 2005 (118.7%) in 2006 index of production has made 103%.

As a whole, in the "extraction of minerals, manufacturing activity, electric power, gas and water genetating and distributing" activity category home-produced goods were shipped, works were executed, services were renderd by own means to the amount of 63,3 billion roubles, that in established prices 7% exceeds the level of 2005.

The basic gain of industrial production was provided by the following kinds of economic activities: extraction of minerals, production of cellulose, wood pulp, paper and cardboard and products made of them, production of electric equipment.

Production of paper sacks, commodity cellulose, cardboard, iron ore, building nonmetallic materials, modular ferro-concrete products and walling grew at the highest rates.

On rates of growth of industrial production Karelia is on the sixth place among other regions of the Northwest Federal District where last year growth has averaged 106.2%.

At the same time some categories of manufacturing activity in the Republic of Karelia high parameters of physical volumes remained. Higher, than in Russia, were indexes in textile and sewing manufacture, wood-processing and woodwork production, manufacture of machinery and equipment.

Financial condition of organizations of the republic. In 2006, as well as it was predicted, there occured decrease in financial parameters on large and medium organizations of the republic. Such dynamics was assumed basically due to Karelsky Okatysh, Inc., as a result of expected deterioration in iron ore raw materials market.

On results of 2006 balanced profit of organizations considered by the Commitee for Statistics in the Republic of Karelia, has totaled 7,9 billion rbl., that is 27.7% less than in 2005, including 5,1 billion roubles (47.6% decrease) in "extraction of minerals" category, 2,5 billion roubles in "manufacture of cellulose, wood pulp, paper and cardboard and products made of them" category, that 2.7 times exceeds the level of the last year.

The organizations, engaged in manufacture of nonmetallic mineral products, electric, electronic and optical equipment, and timber cuttings remain unprofitable. At preservation of unprofitability of activity categories as "wood-processing and woodwork production", "fishery and fish breeding", balanced losses on them reduced considerably - 6.0 and 2.3 times accordingly.

Within the considered period metallurgical production and production of finished metal articles, production of machinery and equipment, production of foodstuff, including drinks, passed into to the category of profitable.

Due to prospective reduction of profit for maintenance of stable receipt of budgetary incomes, Government of the Republic of Karelia at conclusion of Agreements with largest enterprises of the republic provided organizations' obligation of guaranteed payments into the budget of the Republic of Karelia.

Besides, financial parameters were affected by tax policy pursued by the Government of the Republic of Karelia in 2006 directed on creation of conditions for development of machine-building, logging, wood-working enterprises of the republic, renewal of their fixed capital, providing property tax privileges granting to organizations.

As a result, profit of organizations producing machinery and equipment has grown 8.3 times, profit of wood-processing organizations has grown 1.5 times, in production of cellulose, wood pulp, paper and cardboard profit has grown 2.4 times.

However, in view of profit decreasein extraction of minerals, generation and distribution of electric power, gas and water, general profit of profitable organizations of the republic in 2006 was reduced by 25%, and has made 9,9 billion rbl.

At the same time, profit formed for the purposes of taxation, in 2006 is estimated to be about 14,9 billion rbl., or 15% less, than in previous year, that is connected with growth of profit, of organizations which have not got included in supervised by the Commitee for Statistics in the Republic of Karelia sample and, accordingly, not considered in financial parameters, as well as located outside the republic and with territorial divisions in the Republic of Karelia.

Share of unprofitable organizations in 2006 has made 40.2%.

Account payable of large and medium enterprises of the republic on January 1, 2007 has made 18,2 billion rbl. (16,2 billion rbl. on January 1, 2006), including 5,1 billion rbl. delayed (5,3 billion rbl. on January 1, 2006), share of delayed account payable in a total sum of account payable has made 27.9% and has decreased by 5,2 points in comparison with the level of the corresponding period of 2005. More than half of delayed debts fall on extraction of minerals, manufacturing activity, generation and distribution of electric power, gas and water.

Accounts receivable on surveyed circle of enterprises on January 1, 2007 has made 17,6 billion rbl. (16,6 billion rbl. on January 1, 2006), of it - 4,3 billion rbl. or 24.7% is delayed account receivable. In comparison with the beginning of 2006 share of delayed account receivable was reduced by 11,1 points. The basic share in delayed accounts receivable falls on processing manufactures, generation and distribution of electric power, gas and water, real estate activities, leasing and granting of services.

As of January 1, 2007, as a whole in the republic the account payable has exceeded account receivable on 563 million rbl., or by 3.2% (in the beginning of 2006 account receivable exceeded account payable on 405 million rbl., or by 2.5%).

Timber industry complex (TIC) is a leading sector in economy of the republic and includes logging, wood-working, and pulp-and-paper enterprises.

In 2006 growth of TIC production volumes both in cost expression, and regarding basic nomenclature of the major categories of production has been observed.

Share of TIC enterprises in total amount of delivered home-produced goods, executed works and services rendered by own means on republic makes more than 30%. One half of people occupied at industrial enterprises work for TIC enterprises.

Production of timber industry enterprises has a significant place in the Russian market, too. On the share of Karelia there falls 59% of all-Russia manufacture of paper sacks, 24% of paper, 35% of newprint, 6% of industrial wood, 4% of saw-timber, 3% of woodchip boards.

Total amount of investments in timber industry complex in 2006 has made 3 676 million rbl.

Procurement of raw material of wood-working and pulp-and-paper enterprises of the republic depends on work of timber enterprises. However, the situation which has developed now in logging industry of the Republic of Karelia, may not be considered stable. In 2006 balanced losses in timber cuttings have made 455,5 million rbl. (2005 - 511,6 million rbl.), 70.6% of enterprises of the branch are unprofitable (76.5% in 2005).

Among the main reasons of decreasing in efficiency of timber cuttings there are great deterioration of capital assets, lack of network of roads for fuller development of calculated felling rate, lack of turnover means due to deterioration of financial condition of enterprises, accelerated growth of expenses, in particular, of fuels and lubricants, energy carriers, freight traffic.

Besides, decrease in volumes of logging and removal of logs influenced financial results of work of logging enterprises.

In 2006 volume of logging from major harvest has made 5 519,6 thousand m3, development of calculated felling rate regarding major harvest has made 62% (67% in 2005).

According to the Commitee for Statistics in the Republic of Karelia, in 2006 removal of logs on a full circle of enterprises has made 6 029,3 thousand m3 (94.7% to the level of 2005), manufacture of merchantable wood has made 5 669,8 m3 (98.2%).

In 2006 19 forest fund leasing enterprises increased volumes removal of logs: Segezha Pulp and Parer Mill, Inc., (138% to 2005); Shuyales Joint-Stock Company (111%); Kondopoga Timber Industry Enterprise, Inc., (122%); Swedwood Karelia, Ltd., (165%); North Inter House Joint-Stock Company (132%); Ladva Timber Industry Enterprise Joint-Stock Company (115%) and others.

A number of enterprises have admitted decrease on removal of logs to 2005. The greatest backlog was admitted by the following enterprises: Pyaozero Timber Industry Enterprise, Inc., Juškozero Timber Industry Enterprise, Ltd., Ledmozero Sawmill Enterprise, Inc., Voloma Karelia Timber Industry Enterprise, Inc., NInvest, Inc., KLDZtimber cutting, Ltd., Kem-Louhi-les, Ltd.

With a view of increasing in volumetric parameters on logging and removal of logs enterprises have undertaken measures on arrangement of means of production, selection of forest fund close to roads, creation of stocks of logged timber, purchase of new equipment for logging and removal of logs, attraction of contractors, material stimulation of workers on final results of work.

In 2006 growth of volumes of assortment technologies of timber cuttings has proceeded. The share of assortment logging in total amount of assortment by large leasing forest exploitators has grown from 55.2% in 2005 to 66.3% in 2006.

Due to active transition to assortment logging modernisation process of logging the enterprises proceeds. Total amount of investments in logging industry in 2006 has made 296 million rbl. Realization of some investment projects has created real preconditions for increase in volumes of production in woodworking industry of the republic.

Last year Karelian scientific research institute analysed provision of enterprises of the Republic of Kareliy with raw material, and prepared regional balance of production and consumption of wood raw material.

In 2006 there has begun and this year will continue tracking streams of deliveries of wood raw material from logging enterprises to processing enterprises of the republic, both by automobiles, and railway transportation.

Export of the raw timbering in 2006 in comparison with 2005 was reduced on 128 thousand m3, or by 3.3%. It is related to increase in exported raw coniferous timbering customs duties according to governmental order of the Russian Federation of March 24, 2006, N158, and to development of processing enterprises, increase of wood raw material costs by woodworking enterprises.

In 2006 consolidated budget of the Republic of Karelia recieved payments for forest fund using to the amount of 293,3 million rbl., that is 15% more, than in 2005. At the same time, as of January 1, 2007, rent arrears of tenants of forest fund sites for forest fund using in payment exceeding minimal rate of standing timber have made 94,1 million rbl., including 34,5 million rbl. of arrears for 2005.

In 2006 woodworking enterprises of the republic have made and shipped production to the amount of 4231,1 million rbl., that by 13.4% exceeds the level of 2005. Index of production regarding "wood-processing and woodwork production" categoty of activity has increased by 5.3%.

Among large woodworking enterprises sawing volumes were increased by such enterprises, as Segezhsky LDK, Inc., (102%), Medvezhiegorsk Timber Industry Enterprise, Ltd., (111%), Pegas International, Ltd., (121%), Setles, Ltd., (110%).

There has been produced 792,2 thousand m3 of saw-timber (99.9% to the level of 2005), 13,4 thousand conditional m3 of woodchip board (106.1%). Production of window blocks has grown 3.4 times, production of door blocks has grown 9.1 times. Insignificant decrease in production volume of saw-timber is caused by decrease in volumes of removal of logs in connection with weather conditions in the 4 quarter of fiscal year, and also with reconstruction held at enterprises.

Production index regarding "manufacture of cellulose, wood pulp, paper and cardboard and products made of them" category of activity in 2006 has made 104.6%. Total amount of production delivered by pulp-and-paper enterprises has made 15,9 billion rbl., or 111.9% to the level of 2005.

Paper production has made 960,6 thousand tons (102.6% to the level 2005), cardboard - 84,3 thousand tons (118.8%), cellulose commodity - 90,5 thousand tons (107.5%), paper sachs - 345,0 million pieces (110.7%).

In 2006 enterprises, engaged in production of cellulose, wood pulp, paper and cardboard and products made of them, received 2,5 billion rbl. of balanced profits, that 2.7 times exceeds similar parameter achieved last year.

In growth of physical volumes in TIC of the republic is supposed basiclydue to increase in production volumes of processing industries.

Production index regarding "Production of furniture and other produce" category of activity on results of 2006 has made 99.5% at growth of volumes of delivered production in value terms by 22.7% (98,5 million rbl.). In the republic there has considerably extended assortment of produced furniture articles. In 2006 there has been made 90 thousand pairs of skis, that by 4.3% has exceeded the parameter of 2005.

In mining complex of the republic growth of volumes of extraction of metal ores and other minerals has proceeded.

In 2006 rate of growth of extraction of minerals has made 107.3%, that by 4.3 percentage items advances rates of growth in processing manufactures (103%).

Share of enterprises of mining complex in general cost volume of industrial production of the republic has considerably increased in recent years. If in 2000 it made 15%, on results of 2006 it was more than 28%.

Macadam production volume in 2006 made 7564 thousand m3 (131.2% to the level of 2005) and exceeded maximal level achieved in pre-reforming period.

The best results on manufacture of macadam in the republic were achieved at Karelprirodresurs, Ltd., (159% by 2005), Mosavtodor Quarry Administration, Inc., (135 %), Pitkäranta Quarry Administration, Inc., (126%), Shoksha Quarry, Ltd., (148%), Granitnaya Gora, Ltd., (145%), Pudozh Quarry, Ltd., (190%), Lobskoye5, Ltd., (303%). In Sychevsky industrial combine, Ltd., (on the basis of Sortavalsky Grinding-Sorting Factory) - the largest manufacturer of macadam in the republic - volumes of macadam production in 2006 have exceeded 1 million m3, and have grown by 17% to the level of 2005.

Production of macadam in the republic will grow further. By 2010 it is planned to achieve production of 15 million m3 of macadam a year, and 30 million m3 by 2015.

Manufacture of natural stone blocks has made 20,4 thousand m3, that by 15% exceeds parameters of 2005. Production volumes were increased by Karelid - 1.7 times growth, Interkamen Joint-Stock Company - 2 times, Drugaya Reka Joint-Stock Company - growth by 42%.

Positive tendency in mining industry of the republic became creation of stone-working shops at operating block stone quarries. Thus, enterprises pass from simple extraction and selling of half-finished blocks to the stage of deeper repartition.

Good parameters have been achieved by Porfirit, Inc., in manufacture of raw material for mineral boards - 1.6 times growth, and Carboschungite, Ltd., in production of crashed schungite 111% to the level of 2005.

Ferrous metallurgy of the Republic of Karelia is represented by two enterprises of the branch: Karelsky Okatysh, Inc., and Wärtsilä Hardware Plant Joint-Stock Company.

Share of Karelsky Okatysh, Inc., in mining complex on volumes of produce sold in value terms makes more than 80%. The enterprise provides production of one quarter of all iron-ore pellets made in the Russian Federation, on its share there falls about 40% of iron-ore pellets exported by Russian consumers in non-CIS countries.

In 2006 in Karelsky Okatysh, Inc., pelletizing has made 9444 thousand tons and has exceeded the maximum level of pelletizing achieved in 1989 (9 106 thousand tons). Total amount of investments in the enterprise in 2006 has made 2 563 million roubles, of which 411 million roubles was invested in development Korpangsky deposit.

Wärtsilä Hardware Plant Joint-Stock Company is a part large industrial and financial association Mechel Steel Group, Inc., holding including enterprises of coal branch of Kuzbas, metallurgy of Ural Mountains, trading and insurance companies. Production volume of Wärtsilä Hardware Plant on results of work in 2006 made 115% to the level of 2005, or 62,6 thousand tons of hardware.

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Created: April 23, 2007. Last updated: May 17, 2007.
© The Administration of the Head of the Republic of Karelia, 1998