Impact Analysis of Risk Profiles on Economic Profit of Russian Companies in Fertilizers

This study aims to investigate to study the impact of the risk profiles of Russian companies in the mineral fertilizer industry on their economic profit. The objects of research are three Russian companies: Uralkali, Phosagro and Akron. These companies are large companies, comparable in size, revenue and profits, as well as comparable in terms of their history and development. To assess the economic profit of companies, it was proposed to use the Economic value added and Sustainable growth rate, which show the ability of companies to generate economic profit, in absolute terms, and demonstrate relative sustainable growth in a given period. The study examined the risks specific to the mineral fertilizer industry; these risks were measured by the means of statistical and expert analytical methods. Important aspects of the research were: the study of non-financial factors influencing firm performance; structuring and evaluating operational risks and risks associated with the management of capital costs and financing. To do this, the author proposed a rating for assessing the quality of non-financial factors management, a rating of the profile of operational risks of companies; an approach to assessing the product specialization of companies in one industry was proposed. Based on historical financial performance data, as well as on macroeconomic and industry inputs, financial models were created, and statistical risk distributions applied to them. The interpretation of the simulation results was based on a comparison of historical EVA indicators with the values forecasted in risk-based models, as well as with forecasted SGI indicators. The results of the study showed the influence of risk profiles on the effectiveness of overall risk management system in the companies, and on the probability of generating positive economic profit and of sustainable growth of companies.