The companies in this year’s 500 list slashed costs so fast and so deeply especially labor that even in a feeble recovery, their earnings soared.
The long-awaited recovery is now under way, but it’s a slow, painful slog that’s short on trust and confidence and long on a drumbeat of numbers that mostly shift from dreadful to less depressing. Twenty-seven months after the recession began, unemployment is stuck at 9.7%. Housing starts are dragging near half-century lows. Consumers are finally spending again, but they’re still too fearful about their jobs and homes to crowd malls and auto lots with the buoyant abandon that heralds a full-rigged revival, the kind Americans are used to.
Amazingly, as consumers struggle, U.S. corporations are staging a nearly unprecedented comeback that’s largely escaping notice. The gargantuan, dispiriting job cuts that seem to dominate the news have also been the spur for an epic resurgence in profits. For 2009, the Fortune 500 lifted earnings 335%, to $391 billion, a $301 billion jump that’s the second largest in the list’s 56-year history, approaching the increase in the robust recovery of 2003. For last year the 500 raised their return on sales from less than 1% to 4%. That’s close to the list’s 4.7% historical average.
Hence, the 500’s profits virtually returned to normal after years of extremes — bubbles in 2006 and 2007, collapse in 2008 — despite a feeble overall recovery that’s far from normal. This year’s list — reminder: the Fortune 500 ranks U.S. companies by revenue — is packed with changes that reflect and spotlight the trends reshaping corporate America. The homebuilders that occupied 14 places in 2007 and three last year, including Centex and Pulte, have all disappeared, casualties of shrinking sales. No fewer than nine newcomers from recession-resistant health care joined in 2009, among them drugmakers Genzyme (sales: $4.5 billion) and Allergan ($4.5 billion).
The fall in commodity prices removed half-a-dozen energy production, oil refining, and pipeline companies, and bumped last year’s No. 1, Exxon Mobil ($285 billion), into second place, far behind the new leader, Wal-Mart ($408 billion). The collapse in car sales pushed General Motors ($105 billion) from sixth to 15th place, the first time in the list’s history that GM didn’t make the top 10.
The rebound comes chiefly from three sectors: financial services, consumer cyclicals — items ranging from toys to furniture — and health care. In 2009 banks, securities firms, and insurance companies lowered their combined losses from a staggering $213 billion to just $20 billion. Buoyed by a government bailout, AIG swung from a loss of $99 billion in 2008 — a Fortune 500 record — to a deficit of $11 billion last year. The combined losses at Fannie Mae and Freddie Mac shrank by $15 billion to a still-huge $94 billion, as write-downs continued on subprime mortgages. By contrast, the banks and brokers, including J.P. Morgan, Wells Fargo, and Goldman Sachs, rebounded from losses of $8.7 billion to $38 billion in profits. Write-downs on toxic securities receded, and investment-banking profits jumped, helping offset losses on credit cards and mortgages. J.P. Morgan Chase doubled earnings to $12 billion, thanks chiefly to big gains in fixed-income trading.
In consumer cyclicals, a category that could be labeled “things you’d like to buy but can put off,” companies suffered losses of $42 billion in 2008. Casino operators, electronics retailers, and auto-parts suppliers saw revenues fall faster than they could slash costs. That trend reversed in 2009. Wal-Mart managed to lift revenues, on top of a big increase in 2008, by attracting bargain-hungry customers from competitors with remodeled stores and inexpensive private-label goods, offering everything from frozen pizza to patio furniture in one stop. A single trip also meant less spending on gas. Result: Earnings surged 7.0% to $14.3 billion.
The 500’s most exceptional study in ingenuity may be Mattel, the world’s largest toymaker. In late 2008, Mattel foresaw that sales would plunge in 2009 and introduced a clench-jawed cost-cutting campaign called Global Cost Leadership. Mattel pared its professional workforce by 10%, or 1,000 employees; paid down debt to lower interest costs by $10 million; and reduced overhead by $132 million. Its revenues did drop by $487 million, or 8%. But costs fell much more, by a remarkable $669 million before tax. Mattel booked a net income increase of $149 million, or 39%.
The star of 2009 is undoubtedly health care. The sector’s earnings jumped to an all-time high of $92 billion, placing it second behind tech at $94 billion. Health-care earnings rose by $23 billion, or 33%.
The Fortune 500’s remarkable response is yet another chapter in the saga of a list that’s gone from boom to bust to almost normal, all in the space of three short years. Never has getting to “almost normal” been a bigger achievement.
From:www.fortune.com
| Rank | Company | Revenues ($?millions) |
Profits ($?millions) |
|---|---|---|---|
| 1 | Wal-Mart Stores | 408,214.0 | 14,335.0 |
| 2 | Exxon Mobil | 284,650.0 | 19,280.0 |
| 3 | Chevron | 163,527.0 | 10,483.0 |
| 4 | General Electric | 156,779.0 | 11,025.0 |
| 5 | Bank of America Corp. | 150,450.0 | 6,276.0 |
| 6 | ConocoPhillips | 139,515.0 | 4,858.0 |
| 7 | AT&T | 123,018.0 | 12,535.0 |
| 8 | Ford Motor | 118,308.0 | 2,717.0 |
| 9 | J.P. Morgan Chase & Co. | 115,632.0 | 11,728.0 |
| 10 | Hewlett-Packard | 114,552.0 | 7,660.0 |
| 11 | Berkshire Hathaway | 112,493.0 | 8,055.0 |
| 12 | Citigroup | 108,785.0 | -1,606.0 |
| 13 | Verizon Communications | 107,808.0 | 3,651.0 |
| 14 | McKesson | 106,632.0 | 823.0 |
| 15 | General Motors | 104,589.0 | N.A. |
| 16 | American International Group | 103,189.0 | -10,949.0 |
| 17 | Cardinal Health | 99,612.9 | 1,151.6 |
| 18 | CVS Caremark | 98,729.0 | 3,696.0 |
| 19 | Wells Fargo | 98,636.0 | 12,275.0 |
| 20 | International Business Machines | 95,758.0 | 13,425.0 |
| 21 | UnitedHealth Group | 87,138.0 | 3,822.0 |
| 22 | Procter & Gamble | 79,697.0 | 13,436.0 |
| 23 | Kroger | 76,733.2 | 70.0 |
| 24 | AmerisourceBergen | 71,789.0 | 503.4 |
| 25 | Costco Wholesale | 71,422.0 | 1,086.0 |
| 26 | Valero Energy | 70,035.0 | -1,982.0 |
| 27 | Archer Daniels Midland | 69,207.0 | 1,707.0 |
| 28 | Boeing | 68,281.0 | 1,312.0 |
| 29 | Home Depot | 66,176.0 | 2,661.0 |
| 30 | Target | 65,357.0 | 2,488.0 |
| 31 | WellPoint | 65,028.1 | 4,745.9 |
| 32 | Walgreen | 63,335.0 | 2,006.0 |
| 33 | Johnson & Johnson | 61,897.0 | 12,266.0 |
| 34 | State Farm Insurance Cos. | 61,479.6 | 766.7 |
| 35 | Medco Health Solutions | 59,804.2 | 1,280.3 |
| 36 | Microsoft | 58,437.0 | 14,569.0 |
| 37 | United Technologies | 52,920.0 | 3,829.0 |
| 38 | Dell | 52,902.0 | 1,433.0 |
| 39 | Goldman Sachs Group | 51,673.0 | 13,385.0 |
| 40 | Pfizer | 50,009.0 | 8,635.0 |
| 41 | Marathon Oil | 49,403.0 | 1,463.0 |
| 42 | Lowe’s | 47,220.0 | 1,783.0 |
| 43 | United Parcel Service | 45,297.0 | 2,152.0 |
| 44 | Lockheed Martin | 45,189.0 | 3,024.0 |
| 45 | Best Buy | 45,015.0 | 1,003.0 |
| 46 | Dow Chemical | 44,945.0 | 648.0 |
| 47 | Supervalu | 44,564.0 | -2,855.0 |
| 48 | Sears Holdings | 44,043.0 | 235.0 |
| 49 | International Assets Holding | 43,604.4 | 27.6 |
| 50 | PepsiCo | 43,232.0 | 5,946.0 |
| 51 | MetLife | 41,098.0 | -2,246.0 |
| 52 | Safeway | 40,850.7 | -1,097.5 |
| 53 | Kraft Foods | 40,386.0 | 3,021.0 |
| 54 | Freddie Mac | 37,614.0 | -21,553.0 |
| 55 | Sysco | 36,853.3 | 1,055.9 |
| 56 | Apple | 36,537.0 | 5,704.0 |
| 57 | Walt Disney | 36,149.0 | 3,307.0 |
| 58 | Cisco Systems | 36,117.0 | 6,134.0 |
| 59 | Comcast | 35,756.0 | 3,638.0 |
| 60 | FedEx | 35,497.0 | 98.0 |
| 61 | Northrop Grumman | 35,291.0 | 1,686.0 |
| 62 | Intel | 35,127.0 | 4,369.0 |
| 63 | Aetna | 34,764.1 | 1,276.5 |
| 64 | New York Life Insurance | 34,014.3 | 682.7 |
| 65 | Prudential Financial | 32,688.0 | 3,124.0 |
| 66 | Caterpillar | 32,396.0 | 895.0 |
| 67 | Sprint Nextel | 32,260.0 | -2,436.0 |
| 68 | Allstate | 32,013.0 | 854.0 |
| 69 | General Dynamics | 31,981.0 | 2,394.0 |
| 70 | Morgan Stanley | 31,515.0 | 1,346.0 |
| 71 | Liberty Mutual Insurance Group | 31,094.0 | 1,023.0 |
| 72 | Coca-Cola | 30,990.0 | 6,824.0 |
| 73 | Humana | 30,960.4 | 1,039.7 |
| 74 | Honeywell International | 30,908.0 | 2,153.0 |
| 75 | Abbott Laboratories | 30,764.7 | 5,745.8 |
| 76 | News Corp. | 30,423.0 | -3,378.0 |
| 77 | HCA | 30,052.0 | 1,054.0 |
| 78 | Sunoco | 29,630.0 | -329.0 |
| 79 | Hess | 29,569.0 | 740.0 |
| 80 | Ingram Micro | 29,515.4 | 202.1 |
| 81 | Fannie Mae | 29,065.0 | -71,969.0 |
| 82 | Time Warner | 28,842.0 | 2,468.0 |
| 83 | Johnson Controls | 28,497.0 | -338.0 |
| 84 | Delta Air Lines | 28,063.0 | -1,237.0 |
| 85 | Merck | 27,428.3 | 12,901.3 |
| 86 | DuPont | 27,328.0 | 1,755.0 |
| 87 | Tyson Foods | 27,165.0 | -537.0 |
| 88 | American Express | 26,730.0 | 2,130.0 |
| 89 | Rite Aid | 26,289.5 | -2,915.4 |
| 90 | TIAA-CREF | 26,278.0 | -459.1 |
| 91 | CHS | 25,729.9 | 381.4 |
| 92 | Enterprise GP Holdings | 25,510.9 | 204.1 |
| 93 | Massachusetts Mutual Life Insurance | 25,423.6 | -115.1 |
| 94 | Philip Morris International | 25,035.0 | 6,342.0 |
| 95 | Raytheon | 24,881.0 | 1,935.0 |
| 96 | Express Scripts | 24,748.9 | 827.6 |
| 97 | Hartford Financial Services | 24,701.0 | -887.0 |
| 98 | Travelers Cos. | 24,680.0 | 3,622.0 |
| 99 | Publix Super Markets | 24,515.0 | 1,161.4 |
| 100 | Amazon.com | 24,509.0 | 902.0 |
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