23 Sep 2019
Posted in Business Fundamentals
Oil and gas sector continues to rule 2019 Fortune Global 500 list in revenue generation, finds GlobalData
Oil and gas sector has dominated the Fortune Global 500 list of world’s largest companies with a year-on-year (YoY) revenue growth of 23.4% in 2019, according to an analysis by GlobalData, a leading data and analytics company.
GlobalData analyzed the YoY change in revenue and profits, and the geographical spread of the Fortune Global 500 sectors and normalized them into appropriate sectors.
Murthy Grandhi, Company Profiles Analyst at GlobalData, says: “The overall revenue and profits of the Fortune Global 500 grew 8.9% and 14.5% YoY, respectively in 2018.
“The Declaration of Cooperation between OPEC Member Countries and 11 non-OPEC oil producing countries on 30 November 2017 for voluntary production adjustments to about 1.8 million barrels per day during 2018 to tackle slipping oil prices had a positive impact on the oil and gas sector.”
Metals and mining sector secured second spot with a 22% YoY growth on the back of northward trajectory in commodity prices, increased production levels combined with strong metal prices, reduced debts, and improved cash flows.
Construction sector occupied third position with a 20.5% YoY growth. The sector benefitted as a result of large-scale investment in infrastructure projects, increased demand for housing, and government initiatives to invest and expand road, rail and airport infrastructure projects in China and India.
Other sectors, which witnessed revenue growth are retailing, banking, technology and communication, and automotive with 9.6%, 8.5%, 5.8% and 4.5%, respectively.
Insurance, pharmaceuticals and healthcare, and consumer packaged goods were the three sectors in the top 10 to report a decline in revenue.
Grandhi adds: “Insurance sector reeled under the influence of Brexit, tariff dynamics across geographies and contracting Chinese life insurance market following stringent supervision on insurance intermediaries selling wealth management products by the China Banking and Insurance Regulatory Commission (CBIRC).”
On the other hand, imminent policy changes, increasing research and development expenses, demand for affordable healthcare, a moderately dry pipeline for new drugs, and adoption of cost control measures along with stringent regulations by governments in major markets are putting pressure on the pharma industry.
Grandhi continues: “Global economic slowdown, reduced rural demand in India and the ongoing US-China trade war affected the consumer packaged goods industry.
“Subsequently, this had an impact on bottom-line of both pharmaceuticals and healthcare, and consumer packaged goods sectors.”
Metals and mining was the major gainer with a profit growth rate of 81.4%, followed by oil and gas (81.2%), construction (27%), banking (25.1%), retailing (14.8%), insurance (5.2%) and technology and communication (5.1%).
Oil and gas sector continued to dominate the Fortune Global 500 with 85 entities, followed by banking (54), technology and communication (53), insurance (47), retailing (36), automotive (34), pharmaceuticals and healthcare (26), consumer packaged goods (24), metals and mining (24) and construction (17) in the top 10.
Among the regions, Middle East and Africa reported fivefold revenue growth owing to an increase in crude oil prices and tensions in the Gulf region, followed by Asia-Pacific (13.7%), North America (6.3%), South and Central America (5.6%) and Europe (1.1%).
The Middle East and Africa reported ten times profit growth on the back of strong performance of the oil and gas sector, followed by South and Central America (73.1%).