03 Apr 2018
Posted in Consumer
Top 25 global consumer packaged goods companies by market cap (end 2017)
The performance highlights of the Top 25 publicly traded global consumer packaged goods (CPG) companies for the year 2017 have been confirmed in the latest research from GlobalData, a leading data and analytics company.
The completed analysis reveals a number of interesting insights. Nestle, Procter & Gamble (P&G) and Anheuser-Busch InBev (AB InBev) remained in the top three company positions in terms of market cap (M cap) with Nestle wrestling the No 1 position from P&G. AB InBev and Nestle witnessed a 19.4% and 18.2% growth in M cap, respectively. However, P&G’s M cap mostly remained unchanged at the end of 2017.
Amal George, Lead Analyst at GlobalData commented, ‘‘The majority of the companies in the top 25 list showed positive results, with 19 of them witnessing a double digit growth in M cap. Kweichow Moutai was the new entrant in the top 10 after realizing 1.3x growth in M cap value. Inner Mongolia Yili Industrial Group and Jiangsu Yanghe Brewery doubled their M cap, whereas Wuliangye Yibin grew by 1.6 times in M cap. P&G had a restrained growth, while Kraft Heinz, Mondelez and General Mills recorded a negative growth. Although Unilever slipped to seventh position in 2017 from the previous year’s sixth spot, its M cap value grew by over 21%.’’
GlobalData’s analysis of each business in the Top 25 is based on a number of key metrics including their market cap (M Cap), price-earnings ratio (P/E), earnings per share (EPS), enterprise value to earnings before interest, taxes, depreciation and amortization (EV/EBITDA), return on capital employed (RoCE %), return on assets (ROA), research and development as a percentage of sales (R&D/Sales %) and operating margin, to help assess the health of the top players.
In terms of revenue, 40% of the top 10 companies including Kraft Heinz, Kweichow Moutai, AB InBev and Diageo showed positive growth, whereas the remaining 60% remained mostly unchanged. Kraft Heinz recorded the most robust growth with a 44.4% increase on the previous year’s revenue.
The Top 25 had an average operating margin of over 22.3%, with good operating margin returns for AB InBev at 28.3%, Constellation Brands at 32.7% and Diageo at 29.7%.
The EV/ EBITDA average for the group was 25.8, with seven companies ranking better than the average. The average P/E for the group was 32.1 (excluding AB InBev, which had a P/E ratio of 171) with 10 companies above the average. Associated British Foods ranked lowest among the companies in the group with P/E and EV/ EBITDA of 19.1 and 14.1, respectively.
The EPS average for the group was US$2.7, with 13 companies above the average. Constellation Brands, L’Oreal, Kimberly-Clark, and Pernod Ricard recorded higher EPS, whereas Inner Mongolia Yili Industrial Group, Wuliangye Yibin, Jiangsu Yanghe, and AB InBev recorded lower EPS within the group.
George added, ‘‘It was a mixed result in terms of RoCE, with 11 players recording above the group average of 18.2%, despite 19 players recording double digit RoCE. Exceptional performance was recorded by Colgate-Palmolive with a RoCE of 43.5%. The average RoA of the group stood at 9% with nine players above the average recording double digit RoA.’’
The group continued to invest in R&D. In the majority of cases expenditure either remained the same or grew marginally over the year with an overall R&D/ Sales average of 1.5%. There was also some interaction amongst the top 25 with partnerships being formed between Procter & Gamble the Kao Corporation and Constellation Brands, General Mills partnered with Nestle and PepsiCo partnered and Diageo. Danone and Inner Mongolia Yili Industrial Group formed a joint venture, and Nestle entered into a research partnership with the EpiGen Consortium–Agency for Science and Technology and Research.