The number of unprofitable business sectors in Russia has increased significantly in the past year, according to recent reports. Data from Rosstat, Russia’s federal state statistics service, shows that 11 out of 79 sectors of economic activity recorded a negative financial result between January and July. The most affected sectors include metallurgy, which saw a loss of 269 billion rubles (2.8 billion euros) for large and medium-sized enterprises, finance and insurance (-247 billion rubles), and coal extraction (-178 billion rubles). Despite these losses, the total profits of large and medium-sized enterprises amounted to 13,000 billion rubles (136 billion euros) during the period, a 16% decrease compared to the previous year. In total, 43,000 companies reported a profit, while 22,000 recorded a net loss. The share of unprofitable companies has risen to 33.4%, an increase of 2.8 percentage points compared to the same period in 2025. The difficulties faced by Russian businesses are largely attributed to high loan costs and rising operational expenses. Although the central bank reduced its key interest rate to 14% in July—7 percentage points lower than its peak between October 2024 and June 2025—many companies still face loan rates exceeding 20%. In addition, the Russian government raised the value-added tax (VAT) from 20% to 22% in January 2025, increasing the cost of goods and services. However, weak consumer demand has made it difficult for businesses to pass these increased costs onto consumers. A survey conducted in June by PSB, a Russian bank, found that 22% of companies have adopted a "survival" strategy as their primary business approach. Not all sectors are experiencing the same level of economic hardship. The oil and gas industry, for example, saw a 51% increase in profits during the period, driven by higher oil prices linked to the blockage of the Strait of Hormuz. Pharmaceutical companies and industries involved in defense orders also reported significant profit growth, with increases of 34% and more, respectively. However, Russian oil companies face challenges due to prolonged production suspensions and frequent maintenance work caused by Ukrainian military strikes. To ensure continued fuel supply to the domestic market, the Russian government provided the largest subsidy to oil companies since April 2022 in September, amounting to 305 billion rubles (3.2 billion euros). The economic situation has forced many businesses to adapt to a more difficult environment. While some sectors, particularly those tied to energy and defense, have seen profit growth, the overall trend indicates a challenging climate for Russian enterprises. With rising costs and limited ability to raise prices, many companies are focused on maintaining operations rather than expanding. This has led to a significant increase in the number of sectors that are not generating profits, reflecting the broader economic struggles faced by the country.