THE Chinese are in; the Japanese are out. The Europeans are dwindling and the Americans ... well, they are being just plain stubborn, just like they always are in everything they do. This is the map of this year’s Fortune Global 500, the annual list that celebrates global corporations and their success in churning out profit-based balance sheets, year after year. And last year, 500 of the best companies to dominate the global markets did better than ever, in terms of profits and revenues.
Starting with the numbers, and this is a game all about numbers, the world’s 500 hundred largest companies reported revenues of $14.9 trillion, higher than $14.1 trillion, which was attained at the height of the tech boom in 2000. Profits, too, soared to record breaking heights, a whole $731 billion worth. In fact, the results of 2003 were the best since the Fortune list started 10 years ago. In these years the total revenue of the 500 companies has increased by 45 per cent, profits have nearly tripled and employment has risen by 11 million. And leading from the front in this decade of growth have been the capitalist powerhouses of the US. American companies accounted for 39 per cent of the revenues and as of today, they account for 189 of the 500 largest global companies. Ten years back, there were 151 of them.
On the other hand, the picture has not been this pretty for Japan. The Asian powerhouse saw its fortunes dwindle and come down from 149 to 82 in the same period. Another headache that the Japanese have had to put up with is the changing accounting practices.
Trading companies especially have been at the receiving end as they are now reporting transactions on a net basis, in line with the US Generally Accepted Accounting Principles. Previously, companies booked the gross value of their trade as revenue, just as US energy trading companies did until 2002. This has led to companies like Mitsubishi, that was placed last year at No 10, to fall all the way down to No 389, reporting a revenue of $14.1 billion, as compared to $109.4 billion in 2002.
Still, after years of uncertainty, it seems that Japan is trudging into the black, thus making 2003 one of its best years in sometime. Toyota Motor led the way as its profits jumped 67 per cent, making it the most profitable automobile manufacturer in the world.
On the other hand, the emerging global giant and Japan’s next-door neighbour, China, continued its sizzling run. With an economy that is growing at an envious pace of eight per cent, per year, today there are 15 Chinese companies on the global 500 list, compared to just three a decade before.
Last year, China accounted for a third of the world’s oil demand, thus making it the second largest oil consumer in the world. It also went on to gobble up half of the world cement, a third of its steel, a quarter of its copper and a fifth of its aluminium.
New comers included Shanghai Automotive that sold 848,000 vehicles last year and saw profits jump to 150 per cent. But most of the Chinese companies on the list remain in the hands of the state and have a lot of work to do before they become efficient and competitive in the world market. The China National Petroleum is one good example. The company is No 73 on the list and is 35 per cent bigger than Norway’s Statoil (No 112). At the same time, however, it also has 53 times as many employees as Statoil.
Another Asian powerhouse to make its way onto the list is India. Three newcomers were Baharat Petroleum, Hindustan Petroleum and Reliance Industries. However, the best Indian company in the list remained Indian Oil (189). It posted revenues worth more than $25 billion while all of the four featured are from the petroleum refining sector.
Well, India’s participation wasn’t that surprising at all as oil companies were the biggest winners in 2003. Soaring oil prices helped companies like the British Petroleum (BP) reach success of astronomical proportions as it saw its revenues jump 30 per cent to $232 billion dollars. The BP also became the second largest Fortune Global 500 company, behind Wal-Mart.
For the third year in a row, the company posted revenues well into the billions, this time $263 billion, seven per cent higher than the year before. Its profits increased by 13 per cent and it went on to hire a further 100,000 more people, reaching a total employee inventory of 1.5 million.
However, the biggest moneymaker proved to be another oil giant, Exxon Mobil that reported net earnings of $21.5 billion. Citigroup posted the best profitable results with $17.9 billion. But where there are winners, there are losers too. And the biggest loser was AOL Time Warner.
After posting a loss of $98.7 billion in 2002, the company returned to the black, reporting profits of $2.6 billion and in the process dropping AOL from its name. It also regained the No 1 spot as the world’s largest entertainment company.
Google may have come out with the most anticipated IPO of the year, but their fortunes remained at the lowest for the technology sector. Still reeling in the after-effects of the dot com bust, technology companies again experienced a struggling year. Whilst some of them lost big, some still managed to remain in the list — Sun Microsystems lost $3.4 billion and managed to just keep within the confines of the 500 list at 478 — others weren’t so lucky. Lucent Tecnololgies found itself out — its was placed 368 last year — as did Nortel Networks, which was struggling to be in the list at 470 last year.
In the end, it is all left to the trustworthy Microsoft to post a profitable look on the technology sector. It was the ninth most profitable company in 2003, posting second highest return on revenues (31 per cent) and featuring at No. 17 on the list of highest returns on assets (12.6 per cent).
And by the way, US Vice-President Dick Chenny’s favourite company, and probably the biggest US army contractor in Iraq, Haliburton, too received one of the biggest losses, standing at $822 million. At the same time it featured in the top 25 climber’s list, jumping up 78 places and standing at 322. I guess that explains all the inflated bills that the Pentagon had been receiving from the publicly controversial company.
The Lufthansa Group was the best airline of 2003, $18 billion in revenues. Intel ($89 billion in revenue) featured best in the Computer Office Equipment list while Nokia came out on top in the Network, Other Communications Equipment list ($33 billion in revenue).
Like I said in the beginning, America will continue to dominate the global corporate scene for good time to come. And while Japan is slowly finding its feet again, it is of course China that is aggressively in hunt for most companies in the Fortune Global 500 list. Is there anybody to stop these communists?
THE Chinese are in; the Japanese are out. The Europeans are dwindling and the Americans ... well, they are being just plain stubborn, just like they always are in everything they do. This is the map of this year’s Fortune Global 500, the annual list that celebrates global corporations and their success in churning out profit-based balance sheets, year after year. And last year, 500 of the best companies to dominate the global markets did better than ever, in terms of profits and revenues.
