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Global Powers of Consumer Products 2014

Bratislava/New York – 30 April 2014 – Despite a slowdown in the global economy, the world’s 250 largest consumer products companies generated sales in excess of $3.1 trillion in fiscal 2012 (which encompasses fiscal years ended through June 2013). This resulted in an average company size of $12.5 billion, according to the 7th annual Global Powers of Consumer Products (will hyperlink to new page on AEM when created) report issued by Deloitte Touche Tohmatsu Limited (DTTL).

The report provides an outlook for the global economy, an analysis of market capitalization in the industry, a look at M&A activity in the consumer products sector, and a discussion of major trends affecting consumer products companies.

“In both mature markets and export-dependent economies, the industry’s overall rate of growth was much more subdued in 2012 compared with 2011 and 2010. On the other hand, it is reassuring to see that profitability strengthened—despite rising prices for inputs,” said Radovan Šavolt, Financial Advisory Manager, Deloitte.

Electronic products rebound after dismal 2011

After a dismal year in 2011 for manufacturers of consumer electronics, 2012 saw the sector bounce back. A moderate recovery among the Japanese companies following the disruption caused by the 2011 earthquake and tsunami, coupled with consumers’ increasing desire for connected devices, and pushed revenues up nearly 10 percent. Profits followed suit: the sector’s composite net profit margin nearly tripled to 7.2 percent in 2012 from 2.6 percent in the prior year.

Top 10 consumer products companies

2012 net sales rank

Company name

Country of origin

Product sector

2012
net sales
(US$mil)

2012
net sales
growth*

1

Samsung Electronics Co.

South Korea

Electronic Products

178,982

21.9%

2

Apple Inc.

United States

Electronic Products

156,508

44.6%

3

Nestlé S.A.¹

Switzerland

Food, Drink & Tobacco

98,372

10.2%

4

Panasonic Corporation

Japan

Electronic Products

88,367

-6.9%

5

The Procter & Gamble Company

United States

Personal & Household Products

84,167

0.6%

6

Sony Corporation

Japan

Electronic Products

68,864

3.0%

7

Unilever Group

Netherlands and United Kingdom

Personal & Household Products

66,007

10.5%

8

PepsiCo, Inc.

United States

Food, Drink & Tobacco

65,492

-1.5%

9

The Coca-Cola Company

United States

Food, Drink & Tobacco

48,017

3.2%

10

LG Electronics Inc.

South Korea

Electronic Products

45,354

-6.1%

Source: Published company data

2014 shaping up for increased consumer M&A activity

Despite a fragile global economic recovery, the report found that well-funded investors have continued to seek merger and acquisition (M&A) opportunities that strengthen their strategic positions. In 2012, there were 1,298 deals completed by consumer products companies, up from 1,274 in 2011 and 1,117 in 2010. For 2013, 1,182 deals had been reported as of February 22, 2014.

Deal activity was found to be stimulated by improved credit availability, low interest rates, rejuvenated capital markets, and, in some cases, companies’ sizable cash reserves. Private equity has shown a renewed interest in consumer products. In one of the largest acquisitions in the food business, H.J. Heinz was taken private in June 2013 by Berkshire Hathaway and Brazilian investment firm 3G Capital in a $28 billion buyout.

“The volume of deals in the global consumer products industry has increased in recent years given the slow tempo of the global economy,” said R. Šavolt, Financial Advisory Manager, Deloitte.

“However, as concerns over economic uncertainty begin to recede, 2014 is already shaping up to be a big year for M&A activity in the consumer products industry as companies look for growth not only organically either via acquisitions of suitable target companies in line with their strategy, ” he added.

Regional trends

The report measured year-over-year composite growth rates by region for fiscal year 2012, with Africa/Middle East (16.9%); posting the highest gains, followed by Latin America (16.8%) and Asia/Pacific (5.6%). Companies in this region—especially in Japan—were severely impacted by the March 2011, Great East Japan Earthquake, so a recovery in 2012 was to be expected.

The North American region dropped to 4.0 percent. However, North American companies continued to enjoy robust profitability. The 12.3 percent composite net profit margin in 2012 was up from an already-strong 10.4 percent result in 2011.

Within Europe, French companies year-over-year growth (6.6 percent), outpaced their German (6.2 percent) and British (4.8 percent) counterparts.

About Deloitte

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/sk/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member firms.

Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and deep local expertise to help clients succeed wherever they operate. Deloitte's approximately 200,000 professionals are committed to becoming the standard of excellence.

© 2014 Deloitte Slovakia

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