Food for thought -- and surprises -- in Fortune's latest annual round-up.
As I've remarked before, Fortune magazine's annual Global 500 provides investors with a very useful insight into the state and structure of the global economy. Once again, the latest issue of the magazine is given over to the 2011's compilation of the Global 500, and as usual contains some fascinating nuggets.
First, though, some quick words of explanation. Fortune measures the size of the world's 500 largest companies in terms of annual revenues, and then goes on to sub-classify the list by profits, assets and employees. What's more, not all of the companies are publicly-quoted: this year's list contains Britain's Co-Operative Group, for instance, and chemicals company Ineos.
Each year, too, there are some 'Top 50' and 'Top 40' lists as measured by various benchmarks -- largest profits, fastest-growing revenues, fastest-growing profits, and so on.
The Top 40 list that companies don't want to feature on is the list of the world's biggest money-losing businesses. This year, four of them (based on 2010 results) are British. Three of the names didn't surprise me; one did, though.
Had I previously appreciated that Wolseley (LSE: WOS) was among the world's top-15 biggest losers last year? No, in short. And the others? In order of appearance, Lloyds Banking Group (LSE: LLOY), BP (LSE: BP) and Royal Bank of Scotland (LSE: RBS).
In a similar vein, the main list and its various sub-lists contain a number of other surprises and reflections on the state of the world's businesses.
Here, in no particular order, are some of the things that struck me.
- 61 of the Global 500 are now Chinese companies. What's more, China has three companies in the Top 10: Sinopec, ChinaNational Petroleum and State Grid. China also features strongly in the Top 40 'new entrants' list, taking nine of the first ten places on the list, with such companies generally placed 450-500.
- Among the 40 firms with the fastest-growing profits, I counted no fewer than 14 continental European businesses. But I counted only two British businesses: Xstrata (LSE: XTA) in 16th position, and Rio Tinto (LSE: RIO) in 49th position. Bad news for dividend investors? I dunno -- but certainly a sobering statistic.
- The 18th largest business in the world is British-quoted -- but few of us had heard of it until earlier this year, and it didn't feature in last year's list. That's right: Glencore (LSE: GLEN). I wasn't tempted by Glencore's flotation, and this sudden prominence among the Global Top 20 makes me even more nervous.
- The world's largest employer is Wal-Mart (2.1 million employees), followed by China National Petroleum (1.7 million employees.) But the world's 11th largest employer caught my eye, because I've recently taken a small stake in it: Britain's Compass Group (LSE: CPG), with 428,000 employees. Did I know that it was the world's 11th largest employer -- ahead of McDonald's, Tesco (LSE: TSCO) and HSBC (LSE: HSBA)? No, in short.
- Everyone knows that Microsoft is hugely profitable. Even so, it's only in 10th place in the list of the world's most profitable businesses. Perhaps predictably, five of the remaining nine are oil and gas companies -- including Royal Dutch Shell (LSE: RDSB). Then there are two Chinese banks. But the world's most profitable business? Step forward Nestlé. Surprised? I am.
30 of the Global 500 are British companies. And again, the list is informative, being centred as it is around sales revenues, rather than market capitalisation. I'm not going to give the full thirty -- that's available on-line -- but here are the top 10.
Food for thought, in short. And, I've remarked before, a welcome reminder of how some of the companies that we think of as 'British' are actually global businesses. Increasingly, for instance, Tesco is an international retailer, not a British one. HSBC and Barclays straddle the world; so too does Vodafone.
And a goodly number of these businesses trade on lowish P/Es -- possibly because investors fail to appreciate just how global they really are.
In other words, to diversify across global markets, two or three well-chosen shares could be all it takes. To carry out your own research, here's the full list.
More from Malcolm Wheatley:
> Of the companies mentioned, Malcolm holds shares in Lloyds Banking Group, BP, Compass, Tesco and Aviva. The Motley Fool owns shares in Tesco.
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