Tuesday, January 22, 2008

Tom Hinton of ACC Assesses Most Profitable Companies

by Tom Hinton

In reviewing the results of the Fortune 500 rankings and profit numbers from the second half of 2006, it might surprise you that many of the most profitable companies are not household names. In fact, none of the top ten companies that posted the biggest percentage increases in profits from 2005 to 2006 are US companies. What’s even more surprising, three of the five companies that had the highest percentage gain in profits during the second half of 2006, are in the food services business.

While the ten most profitable companies in 2006 remain household names (ExxonMobil, Royal Dutch Shell, BP, Citigroup, Bank of America, General Electric, Gazprom, Pfizer, and Chevron), those rankings are certain to shift with the downturn in the US economy. Future financial fortunes are shifting from the US to more prosperous markets in Asia, China, India, and South America.

As the United States struggles through a recession in 2008 -- and Japan, Germany, France, China, and Britain try to avoid getting whipped by the American economic backlash -- investors are looking to top-performing foreign companies that are well-positioned to withstand America’s recessionary fallout.

Here are five companies worth examining based on their profitability, superior customer service, strong global positions, and capable leadership.

At the top of the leader board for most profitable companies in 2006 is Compass Group, a British-based company that is considered the market leader in providing food and a range of selected support services to customers in the workplace. Compass Group ranked Number One in “biggest increase in profits during the second half of 2006 with a whopping percentage increase of over 27,000%. That’s right! Mergers and acquisitions certainly helped Compass Group’s bottom line in 2006.

Edeka Zentrale, which ranked Number Two for the biggest increase in profits for the second half of 2006, is Germany's leading food retailer and wholesaler with more than 13,800 outlets which operate as largely independent retailers supplied by its own regional food wholesalers. Edeka Zentrale enjoyed a 3,000% increase in profits from 2005 to 2006.

Alcan was the third most profitable company during the second half of 2006. Alcan has evolved into one of the globe’s leading suppliers of bauxite, alumina and aluminum, and a top-ranked provider of engineered and packaging materials, delivering increased productivity, competitiveness and profitability to customers around the world.
Alcan has some 68,000 employees, including its joint ventures, in 61 countries and regions. It’s based in Montreal, Canada with 2006 revenues of $23.6 billion and a handsome profit gain of over 1,200% from 2005.

China Life Insurance Company captured the fourth spot with 2006 profit gains of 595% as compared to its 2005 performance. China Life provides annuity products and life insurance to individuals and groups in China. The company offers products and services, such as individual and group life insurance, accident, and health insurance. It distributes its products through its direct sales representatives; agents; intermediaries; and commercial banks, postal savings, and cooperative saving institutions. The company was founded in 1949 and is headquartered in Beijing, China.

In the number five spot is Royal Ahold based in Amsterdam, Netherlands. Ahold is an international group of quality supermarkets with operations in the United States and Europe. Among its US brands are Stop & Shop, Giant Foods, and Peapod.com which provides internet-based shopping and grocery delivery for other brands. Ahold enjoyed a 582% increase in profits in 2006.

While the United States will spend most of this year in a recession as a result of its mismanaged war spending and sagging consumer confidence, there are several financial opportunities on the horizon as more foreign companies emerge as profit leaders in 2008.

About the Author: Tom Hinton is president of the American Consumer Council. Tom is a popular speaker at business conferences and corporate events. He can be reached at tom@americanconsumercouncil.org

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