Fortune's Global Top 500: Increasingly Outside of the U.S.

The leading story a few days ago on CNNMoney was Fortune's Global 500; its annual compilation of the top 500 companies in the world. As always, the report categorizes companies with a high amount of granularity: the report lets visitors analyze companies by location, fastest growing, most profitable, by industry, CEOs, largest employees, etc. This is Emerginvest's in-depth analysis of the top 500 global report, which includes substantial shifts away from US-based firms, in a traditionally US-dominated top 500 list. This is evidenced not only by the shift in the number of companies away from the US to emerging markets, but also according to the top companies by % increase in profitability, where no US-based company appears in the top 39 spots (AMR (AMR) squeaks in at #40).

Here are our thoughts:

Not all that surprisingly, Wal-Mart (WMT) clinched the top spot again this year with almost $379B in revenue, and approximately $12B in profit. The other top 4 spots went to 2) Exxon Mobil (XOM) [US],  3) Royal Dutch Shell (RDS.A) (Netherlands), 4) BP (BP) [UK], and 5)Toyota (TM) (Japan) (with revenues of: $372B, $355B, $291B, $230B respectively).

The most interesting part in terms of our global focus at Emerginvest, was the clear and unarguable shift in the world's largest companies away from traditional powerhouses like the US and Japan. The US  and Japan lost  the largest positions of the top 500 spots between Fortune's 2005 and 2008 reports, losing 23 of its 176 spots from 2005 (-13.1%) and 17 of its 81 (-21%) respectively. Many of those were picked up by emerging market countries like China (from 13 to 29, or +81%), South Korea (11 to 14, +36.4%), Spain (8 to 11, +37.5%), Mexico (from 2 to 5, or +150%), and Taiwan (from 2 to 6, or +200%). Portugal even got its first top 500 company ever between 2007 and 2008, with Galp Energia.

Aside from the large gainers enumerated above, the rest  of the top 500 spots diffused fairly evenly among smaller countries like Austria, Belgium, Brazil, and Ireland. While in absolute terms, gaining one or two spots does not seem like a substantial shift, but the fact that many smaller countries doubled their spots (like Ireland) clearly represents a notable economic movement.

I compiled the following chart based off of data from Fortune's Top Global 500 lists from 2005 and 2008.

Country:		No. Top 500 Companies (2005)	No. Top 500 Companies (2008)	+/-	% Change (over +/- 2)
Australia		9	8	-1
Austria		0	2	+2
Belgium		3	5	+2
Belgium/Netherlands		1	1	0
Brazil		3	5	+2
Britain		35	34	-1
Britain/Netherlands		2	1	-1
Canada		13	14	+1
China		16	29	+13	+81.3%
Denmark		2	2	0
Finland		3	2	-1
France		39	39	0
Germany		37	37	0
Ireland		1	2	+1
India		5	7	+2
Italy		8	10	+2
Japan		81	64	-17	-21.00%
Luxembourg		1	1	0
Malaysia		1	1	0
Mexico		2	5	+3	+150%
Netherlands		14	13	-1
Norway		2	2	0
Poland		0	1	+1
Portugal		0	1	+1
Russia		3	5	+2
Saudi Arabia		1	1	0
Singapore		1	1	0
South Korea		11	15	+4	+36.4%
Spain		8	11	+3	+37.5%
Sweden		7	6	-1
Switzerland		11	14	+3	+27.3%
Taiwan		2	6	+4	+200%
Thailand		1	1	0
Turkey		1	1	0
U.S.		176	153	-23	-13.10%
* Created by www.Emerginvest.com				** Originally Posted on the Emerginvest Blog (blog.emerginvest.com)
** Information from Forbes Global Top 500 Lists

To further augment the global shift in largest corporations, the top corporations by growth were heavily dominated by non-US and Japanese companies. Four of the top 10 spots of corporations by largest % increases in revenue were held by US firms. However of the next 20 (#’s 11-30), only one more US-based firm appeared on the list – Bunge (BG) at #27. Therefore, only 5 of the top 30 spots were US-held, and the majority of the rest were held by emerging countries such as Taiwan, India, China, and Spain (to name a few).

The top companies by % increase in profits tells an even stronger story.

None of the top 39 companies by % increase in profits were US-based. In my mind, that is shocking, considering that the US controls 30.6% of the entire list. Most of those top 39 spots were held by emerging and developed markets like Taiwan, South Korea, France, the UK, and of course, China. Speaking of which, China completely dominated this list, holding 3 of the top 5 spots, and 10 of the top 25. While this is not a good indicator of aggregation of wealth, nor is it a list of simply the most profitable companies, it still clearly demonstrates how many emerging market countries are gaining economic ground extremely quickly.

Lastly, of those top 500 companies which posted the largest losses, 9 of the top 12 spots were held by US firms (the other three were KFW Bankengruppe from Germany, UBS (UBS) – Switzerland, and Alcatel-Lucent (ALU) from France). Of the total $108.3B lost by these 12 companies, $91.4B, or 84.4% was incurred by US-based firms. General Motors (GM) and Sprint (S) (the top 2 largest money losers) accounted for $68.3B, or 63.1% alone. I choose to highlight these companies because I feel like they provide a stark contrast to the previous set (the highest % growth in profits). While the profits derived by the former group are significantly lower than their largest money-losing counterparts (the top 12 companies by % increase in profits garnered only $37.97B in profits combined), it demonstrates that many of the largest declining companies worldwide are US-based.

In conclusion, the report demonstrates a significant shift in economic movement in terms of the world’s largest corporations (according to Fortune) from US to emerging and world markets. This is evidenced by the shift in total number of top 500 companies away from the US to other countries, the US-dominated list of top money-losing companies, as well as by the fastest growing companies by % change in profitability worldwide (where China dominated 10 of top 25 companies and no US-based firm appeared until the 40^th spot). In our view, this helps to underscore the substantial, and fast-growing opportunities in foreign market economies. While some foreign markets have faltered in the last few months, there are strong signs (like those highlighted here), that world markets will continue to outpace the US economy in what seems like a natural flow of capital to these fast-developing nations.

Disclosure: no positions

 

Comments

[Mr Korea]

This is a very provocative and compelling piece on global markets. It really opened my eyes to a fresh perspective on how world markets (not including the traditional power house markets) are making huge strides forward, and will continue to make their presence felt on a global level. Very well written article, a certain eye opener.

[Dubbs]

Yeahhhhh

[Dubbs]

I also agree with Mr. Korea's comments. In addition, I believe this article is extremely well written and is the furthest thing from shallow and pedantic. I would love to see more publications by this author!