IW 1000: A World of Hurt

July 15, 2010
The oil and metals industries take a hit in 2009 while growth slows for emerging markets.

Perhaps the economic crisis has brought with it a new era of self-awareness. After all, seven of the 10 manufacturing sectors on this year's IW 1000 list that showed average revenue gains produce some products that can be consumed, worn or used to improve a person's health. The medical-related, tobacco, textile and food and beverage industries were among a handful of sectors that averaged revenue growth in 2009.

Meanwhile, traditional heavy manufacturing sectors struggled mightily last year, particularly in mature markets such as the United States and Canada. Total average revenue declined or grew at a slower pace for most major industrialized nations represented on the 2010 list of the world's 1,000 largest publicly held manufacturers. U.S. manufacturers showed an average revenue decline of 11.6% compared with a 10.5% average increase in 2008. The decline was even more dramatic in Canada where revenues averaged a 16.3% drop compared with a mean increase of 24.2% in 2008.

Even in the emerging markets that are considered growth engines for many international firms, year-over-year gains slowed. For example, average revenues in India rose 19.6% in 2009, but that was compared to a 48.2% increase the previous year. Total revenue for the IW 1000 list of manufacturers declined 12.4% to $15.75 trillion in 2009.

Many companies that showed significant revenue gains in 2009 benefited from major acquisitions during the previous year. No. 241 Tata Motors Ltd. nearly doubled its revenue after acquiring Jaguar Land Rover in 2008. The Indian automaker struggled, though, in 2009 posting a loss of nearly $530 million on slow Jaguar Land Rover sales. But the company, which reported year-end 2010 results on March 31, said the Jaguar Land Rover business rebounded by posting a profit in the latest fiscal year.

Revenue for Belgian brewer Anheuser-Busch InBev SA grew 58.5% to $37.3 billion after the 2008 Anheuser-Busch/InBev merger. The beverages sector was one of only a handful of IW 1000 industries that as a whole accounted for positive average revenue growth in 2009, with mean increases of less than 1% for the 26 manufacturers in this sector. Other major industries averaging revenue gains in 2009 were the pharmaceutical, medical instruments and equipment, food, and aerospace and defense sectors. A total of 35 pharmaceutical companies averaged revenue increases of 7.8% last year. The medical instruments and equipment sector followed with a 4.2% rise.

The hardest-hit major sector was the petroleum industry. The 106 companies that comprise the IW 1000's largest industrial category showed average revenue declines of 16.7%. Global oil consumption in 2009 declined by 1.2 million barrels per day, or 1.7%, the largest drop since 1982, according to BP PLC's Statistical Review of World Energy published in June. Annual oil prices fell for the first time since 2001, the report said.

Third-ranked BP's revenue dropped 33.3% in 2009 to $244 billion while profit fell 22.6%. The UK-based company faces much tougher challenges ahead after the April 20 Deepwater Horizon oil rig explosion that left 11 workers dead and caused up to 2.5 million gallons of oil to spew per day into the Gulf of Mexico. As of early July the spill had cost BP an estimated $3.12 billion, the company said. The company also said it would donate revenue from recovered oil to create a wildlife fund to restore habitat along the Gulf coastline.

Metals and metal products companies also struggled in 2009. U.S.-based steel producers Nucor Corp. and United States Steel Corp. experienced some of the steepest revenue declines on the IW 1000 list. Nucor's revenue fell 52.7% to $11.2 billion. Similarly U.S. Steel's revenue dropped 53.5% to $11.05 billion. Luxembourg-based ArcelorMittal SA, the world's largest steelmaker, saw revenues fall 48% to $65.1 billion.

Global crude steel production declined 8% in 2009 to 1,220 million metric tons, according to the World Steel Association. With the exception of China and India, most major steel-producing countries and regions showed production declines in 2009, the association reports. However, the industry is showing signs of recovery. World crude steel production for the 66 countries reporting to the association was 124 million metric tons in May, up 29.1% over the year-earlier month. But the United States, Italy, Spain and Japan were still below May 2007 pre-economic crisis levels.

The growth trend mirrors a global industrial movement of more traditional manufacturing expanding in emerging markets as established economies concentrate on new technology solutions in the health-care and energy sectors.

See Also:

Entire IW 1000 List

Additional charts

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