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. Last Updated: 07/27/2016

No Russian Firms Among World's Top 500



Surgutneftegaz has replaced rival LUKoil as Russia's largest company by market capitalization, but it is still 65 times smaller than U.S. behemoth General Electric, according to the Financial Times' new rankings of the world's top companies.

No Russian company cracked the annual global FT500, but five — Surgutneftegaz, LUKoil, Gazprom, Yukos and Unified Energy Systems — made the top 500 in Europe and 26 counted among the top 100 for Eastern Europe, up from four and 20, respectively.

LUKoil lost its status as the largest company in Eastern Europe and is now third, behind Polish telecoms giant TPSA and Surgutneftegaz.

LUKoil went from 191st place for all of Europe last year to 231st place in 2001, while Surgutneftegaz broke in for the first time at 214th place with a market cap of $7.4 billion.

In the ratings for Eastern Europe, eight Russian companies appeared for the first time and the sectoral representation of Russian companies became noticeably more diverse. In 2000, Russian metal companies were represented by Norilsk Nickel alone. Now Severstal has been added to the list at 47th. In the automotive sector, KamAZ joined the GAZ automobile factory. Nizhnekamskneftekhim is the first petrochemical company to appear on the list, at 68; and Mobile TeleSystems, which successfully issued American Depositary Receipts last year, appeared at 10th place, surpassing rival Vimpelcom at 28th place. The other new faces are Slavneft-Megionneftegaz (No. 66), Purneftegaz (No. 69), Sakhalinmorneftegaz (No. 70) and Lenenergo (No. 85).

MTS, which issued shares in 2000, immediately joined the top 10. Two companies, Sun Interbrew and Tyumen Oil, were dropped from the list.

For the second straight year, however, Poland, led by TPSA, had more companies on the Eastern Europe list than Russia. While 26 Russian companies were represented, 30 Polish companies made it, down from 32.

Because the Financial Times rates the companies according to market value, a company's position on the list is based not only on its commercial success, but also on its ability to attract investors. As a result, a giant like Russian Aluminum has never appeared on the list since it is not a public company.

Russia did not excel on account of its traditionally undeveloped corporate culture. Yukos and MTS made the list as a result of their improved corporate governance.

Russia is able to produce oil, smelt steel and make trucks. But Russian business does not yet have an understanding of what can be reaped from active work on the stock market. The example of Russian Aluminum shows this. Russian Aluminum became a giant on the domestic market without going public. Many Russian companies are now convinced it is more profitable to issue bonds than shares, given that issuing bonds does not obligate companies to share power with shareholders.

But that is the domestic market. As for the international market, isolation and the concentration of power in a single hand does not help companies join the list of leaders. The absence of Russian companies on the global FT500 ratings testify to this.

The interrelation between the old and new economy, which has determined the distribution of corporate power in the United States and Europe, has yet to have an impact on Central and Eastern Europe, where the top spots are held by formerly state-owned companies, the majority of which have preserved their monopoly positions in their markets.

But that list of big players is no longer as homogenous. Success is determined not by a company's categorization in the new or real economy, but by its readiness to reform. The companies moving forward are those that are actively privatizing and reforming their corporate management. TPSA, for example, moved from second to first place despite the general declining interest in telecommunications companies. The market value of TPSA rose from $9.45 billion in 1999 to $9.85 billion in 2000, largely because French Telecom bought a large stake of TPSA in 2000.

Among Russian companies, Yukos has achieved the most: Reorganization allowed the company to significantly increase its attractiveness to investors. The company rose from 58th to seventh place. Norilsk Nickel also strengthened its position, rising from 20th to 16th. Analysts polled said LUKoil and fourth- place Gazprom could significantly increase their market value and even join the list of the world's largest companies if they increased their standards of corporate transparency.

Thus far, not a single East European company has appeared on the list of the 500 world's largest companies, the smallest of which is worth more than $10 billion.