TOP 200 : The Big Hit – What Management’s 2009 Top 200 list reveals


At the end of the 21st century’s first decade, the view to 2020 isn’t all that clear. And the results from this year’s listing of New Zealand’s Top 200 companies don’t clarify things much either. They do show, however, that our largest enterprises suffered most from the global recession and, that the quick, nimble and innovative can succeed even in recession.
First, the good news. Collectively revenue was up – fraction short of five percent to $149 billion. Add in the country’s top 30 financial institutions and revenue grew six percent to $185 billion. But here’s the rub. The after tax profits of New Zealand’s top 200 companies plunged almost 40 percent on the previous year – falling from $7 billion to $4.4 billion. Two years ago total profits were up over $10 billion. Little wonder the Government was, at year’s end, reporting rapidly increasing deficit with its tax take from corporates down 38 percent to $2.5 billion and little prospect of improvement for some time yet.
Even more revealing is the extent to which the largest of the large lost ground. The collective profitability of the top 10 enterprises fell 70 percent. And the profits of the top 35 companies, those with incomes of at least $1 billion, plummeted almost 50 percent. Fonterra, which is still by far New Zealand’s largest company, boasted an almost 72 percent profit hike. Clearly, most of the others dining at the top 10 table starved, with seven of the next nine reporting profit falls.
The finance sector suffered significantly less. The revenue generated by the 30 banks and financial institutions included in NZ Management’s separate financial listing, climbed 12 percent and their after-tax profits fell just six percent. It is obvious which sectors of the New Zealand economy suffered most from the aftermath of the global financial meltdown.
The performance of the overseas-owned trading banks again demonstrated their collective reluctance to paying what recent court decision has determined was their fair share of taxes and what many observers perceive to be their continuing resistance to passing on the full effects of Reserve Bank interest rate cuts.
They are again this year, as they were in 2008, the country’s biggest profit makers. The major trading banks filled four of the top five profit maker places, up there with Fonterra. ANZ National Bank, just as it did last year, recorded the greatest profit at $1.163 billion, down just $500,000 on last year.
This year’s revenue cut-off, the lowest income figure companies must hurdle to qualify for Top 200 status, fell fractionally to $131 million, down about $200,000 on last year. The corporates’ asset base inched up 2.6 percent to almost $188.7 billion and their total equity improved just 3.9 percent to $85 billion. The impact felt by the adoption of International Financial Reporting Standards (IFRS) has now worked through and reported figures overall represent fair reflection of change on last year. The company that suffered most at the hands of IFRS this year was travel company Flight Centre. By dropping agency commissions from its reported revenue, the company plunged from 39th position on last year’s list, to nowhere.
Fonterra’s $16.3 billion of revenue is down four percent on last year Fletcher Building is still number two with revenues of $7.1 billion, down 0.8 percent. Its profits are, however, off 108 percent, reflection of write-downs and restructuring for the future. Telecom and Air New Zealand, third and fourth respectively, also took big hits after making tough change management and market adjustment decisions.
In general terms, 2009 was year for smaller, smarter and better-focused lower-ranked Top 200 enterprises. Take look at the companies that made it through as winners and finalists in this year’s Deloitte/Management magazine Top 200 Awards. Companies like Abano Healthcare Group, ranked 158th, Delegat’s Group, at 130, and Datacom Group, little larger at 54, are winners again. They are also successfully taking their offerings to the world, gearing up for growth and carefully considering new opportunities.
Healthcare company Abano, winner of last year’s Best Growth Strategy Award, moved on to become this year’s Deloitte/Management magazine Top 200 Company of the Year. Datacom, an IT information services success story, was finalist in the Company of the Year Award category last year, and is this year’s Best Growth strategist. Ebos Group, an 80-year-old homegrown medical supplies business, was last year’s Marsh Most Improved Performance Award winner. This year it is finalist in both the Deloitte/Management magazine Company of the Year and the Mediaweb Best Growth Strategy Award categories.
There are common threads to the performances of this year’s awards category winners and finalists. They were, to varying degrees, buffeted by the backwash from the recession but, regardless, are performing like optimists. They are innovative, think and act strategically and globally and they are future-focused. They should make it successfully to 2020.
Other 2009 winners and finalists, like kiwifruit marketer Zespri, Christchurch-based Solid Energy New Zealand and outstanding wine company Delegat’s, are all playing successfully on the world stage. They are building on indigenous agricultural and natural resource strengths or, in the cases of Datacom, Ebos and Abano, using smart technologies and people to deliver world-class services and business solutions.

Picking winners

It was difficult year in which to shine. On the other hand, the prevailing market conditions did sort relatively small handful of solid performers from the rest. It is not an easy task selecting Top 200 winners. range of criteria and performance considerations are taken into account. Numbers alone seldom tell the full story. How the numbers are achieved is more important.
The Top 200 Awards judges are chosen for their independence of either the awards’ long-standing and principal sponsor Deloitte, or the Top 200 list owner and this magazine’s publisher, Mediaweb. Judges with any professional link to an organisation or individual that surfaces in the selection process must declare their interest. And they don’t vote on winner selection.
As Alison Paterson, an awards’ judge of several years standing explains: “The process is efficient, professional, independent of the sponsors and promoters, and has successfully stood the test of time. The data gathered by NZ Management and analysed by Deloitte gets better every year and is now very comprehensive,” she says. “If you look back over the 20 years the awards have been in existence, I think the judges have collectively done very good job of identifying those companies which, in any given year, are on the top of their game.”
With the exception of the NZIM/Eagle Technology Young Executive of the Year and the Kensington Swan Ethical Governance Awards, which are categories within the Top 200 awards portfolio, companies are not invited to submit for an award. After the annual update and compilation of the Top 200 list and the 30 additional financial institutions published every year, the judges sift the comparative data, analyse it and, with regular reference to specific and individual award criteria, choose the finalists and winners.

Sectors

How New Zealand’s different economic sectors fared in 2009 is, in large measure, illustrated by the collective revenue and profit figures of the five top companies (ranked by their after-tax profit) in each sector.
• Automotive: Car sales crashed. The sector’s revenue dropped 28 percent and profitability stalled altogether, plunging horrifying 68 percent – at least for the top five motor companies.
Communications and Media: Given the market conditions and the dramatic technological changes transforming this sector, last year wasn’t as bad as might have been expected. The printing industry is facing real stress, but this was partially disguised this ye

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