Executive Industry Outlook: Global Midwestern Firms Have Healthier Bottom Line – HSBC Report

Español: Torre HSBC Ciudad de México.

HSBC (Photo credit: Wikipedia)

 

In the past 6 years, Midwestern companies with high international sales and operations were about three times more profitable than their more domestic peers, according to a new report by HSBC Bank USA, N.A. (HSBC).

 

Findings from the report ‘HSBC Spotlight on U.S. Trade: Midwest’ show that highly international Midwestern companies had an average profit margin of nine percent while their less international peers had an average profit margin of about three percent during a six-year period between 2007 to 2012. Furthermore, highly international Midwestern companies demonstrated more consistent performance over the six years. Following the onset of the recession, these companies maintained healthy profit margins that never fell below seven percent, while profit margins at low international Midwestern companies dipped into the red before recovering in 2009.

 

“The report clearly shows that a diversified geographic customer base or operations have an impact on business performance,” said Steve Trepiccione, Senior Vice President and Managing Director, Head of Midwest Region, Commercial Banking at HSBC. “Highly international Midwestern companies were able to insulate themselves from domestic market fluctuations throughout the past six years and remain consistently profitable.”

 

The HSBC report analysed the level of overseas sales and operations at leading U.S. publicly listed companies based in the Midwest and across the nation to understand the impact of internationalization on business profit margins by region and select sectors, including consumer goods, healthcare, industrials, and information and communications technologies (ICT). Companies examined in the Midwest report included leading public companies in Indiana, Illinois, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin.

 

According to the report, Midwestern companies had the second highest average profit margins and the third highest level of internationalization compared to companies in other U.S. regions. Companies in the Midwest also had the highest average percentage of international sites (50 percent) compared with other regions. Still the region takes a backseat to other parts of the country in sheer export terms. The national export average is 12 percent of GDP while exports in the Midwest range from 12 percent of Michigan’s economy to just 4.5 percent of South Dakota’s, according to the Business Roundtable.

 

Consumer Goods Lead Midwest Growth Potential

 

Companies in the consumer goods sector, which dominate the Midwest sample in the report (nearly 52 percent), have benefited from global trade. In fact, highly international consumer goods companies were twice as profitable as their domestically-oriented peers (eight percent vs. four percent).

 

According to the latest HSBC Global Connections Trade Report, U.S. business leaders see Latin America as the most promising region for export trade growth in the near term, followed by China.

 

“The buying power of emerging economies holds great potential in not only buffering consumer goods companies from the fluctuations of the market, but also in satisfying an appetite for U.S. brands and goods abroad,” said Trepiccione. “More Midwestern companies may want to consider expanding abroad, and with the help of HSBC’s global footprint, heritage and expertise in connecting customers to international opportunities, they will find the support they need to build their cross-border trade activity and business.”

 

In July 2013, HSBC announced a $1 billion, 18-month dedicated loan program for small and medium size U.S. businesses looking to export or expand internationally, to help companies find global growth opportunities and to boost U.S. economic growth.

 

From: HSBC

 

**Share the Magazine with your executive colleagues and friends!

 

Follow the Magazine:

 

https://businessleadershipmanagement.wordpress.com/subscribe-follow-the-magazine/

 

(After you have filled in your email address in the column at the right hand side of the screen, a confirmation email will sent to your email address. You will have to confirm it before subscription begins)

 

Follow us on Twitter:

 

https://twitter.com/BusinessLeaders

 

Like us on Facebook:

 

https://www.facebook.com/BusinessLeadershipManagement

 

**As part of the Magazine’s drive to reward subscribers/followers, we will be providing subscribers/followers special access to exclusive content which will not be otherwise available to normal visitors. Please be sure to subscribe to the Magazine. Many visitors have given us positive comments that they will be bookmarking the site, but as the system is unable to capture a working email address to which the passcodes for exclusive content will be sent, they will miss out on this content. Do note that passcodes are locked to each exclusive content, not a one-for-all access, so do provide a working email address that you check regularly so as not to miss out on them!

 

 

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s