one might say, is like creating something out of nothing.
Or less than nothing. For instance, if a company's sales
fall, so should profits, right? Not with the magic of restructuring.
Just ask the bean counters at Mitsui & Co., the sogo shosha,
or general trading company, that has topped The Asiaweek
1000 ranking of the largest companies in the region since
1997. Last year sales fell 5.6% in yen terms. And profits?
Up nearly a fifth.
It's much the same story for a host of leading companies
in the 1000, from third-ranked Toyota Motor to consumer
electronics giant Matsushita Electric (No. 9) and utility
Chubu Electric (No. 41). Toyota may not have scored the
huge profits of the region's most profitable venture, Hutchison
Whampoa. Hong Kong-based Hutchison got a one-time boost
from the sale of its stakes in British cellphone network
Orange and Germany's Mannesmann group. No such asset-shuffling
luck for Toyota; its bottom line of $3.57 billion was $12
billion less than Hutchison's. Still, Toyota managed a 14.2%
increase in net income even as sales rose just 1%. How?
Restructuring: the carmaker has slashed costs and streamlined
Many other corporate behemoths are learning the same lessons.
One of the strongest trends in the 2000 edition of the 1000
ranking: across Asia, companies are scrambling to boost
efficiency, profitability and innovation, especially in
Japan. Restructuring, combined with the regional economic
rebound and the surge in oil prices, helped lift bottom
lines in many companies. Among the top 100, notable beneficiaries
of leaner and meaner strategies include electronics manufacturers
Matsushita Electric (profits up 636% on sales down 4.5%)
and Sharp Corp. (No. 54, profits up fivefold on sales up
6.3%). Sogo shosha Marubeni (No. 7) and Nissho Iwai (No.
10) grossed about 15% less, but managed to swing back into
Some Japanese companies still don't get it, though, judging
from their vital statistics. State-controlled Japan Tobacco
(No. 18) puffed up sales by 12.8%. But profits slid by nearly
a third. Turnover at Tokyo Electric (No. 16) held steady,
but net income was down one-tenth. Tohoku Electric (No.
71) did even worse; its gains dropped by two-fifths even
as gross revenues inched up by 2.5%. Compare those utilities
with Chubu Electric: its turnover also stagnated, yet net
income advanced by 87%. And in a year when oil prices were
climbing, one has to ask what was going on at oil explorer
Japan Energy Corp. (No. 49) and refiner-distributor Idemitsu
Kosan (No. 51). The former went into the red despite a 12.4%
surge in sales, while the latter saw profits retreat by
almost a quarter despite grossing 14% more.
The boon of skyrocketing oil prices is easier to spot and
predict. Thank crude's tripling in value since the depths
of the Asian Crisis in 1998 for spectacular gains at leading
oil companies. Malaysia's state-owned Petronas (No. 55)
was third in profits among the 1000, netting $3.3 billion,
an 85% surge, on sales of nearly $16 billion, up 43%. Another
government oil company, Pertamina of Indonesia (No. 48),
grossed 25.7% and netted 374% more. Caltex Trading,
a Singapore subsidiary of the U.S. petroleum concern, jumped
from No. 65 in the 1000 last year to No. 43 in the current
ranking, on the back of a 60% surge in sales to $18.9 billion
retaining its place as Southeast Asia's largest business.
Asia's rebound from the Crisis, propelled mainly by exports,
is the third factor that shaped the 1000 of 2000. Whether
it is Samsung Electronics' (No. 28) swing back to profits
of $2.9 billion, riding the microchip boom, or the 35% rise
in net income at Thai Airways (No. 413) to $140 million,
the recovery rolls on. Which is another reason for Asia
to use the upswing to get on with the restructuring pronto.