Business analysts at IBISWorld have today revealed the 2016 list of Australia’s Top 1000 companies, offering detailed and diverse insights into the nation’s most successful companies, growing and declining sectors, and new businesses to watch in 2017-18 and beyond.
The companies on the list account for $1.98 trillion in revenue. Approximately two-thirds of companies on the list reported an increase in revenue for the year, with total revenue for the list growing by 1.9% since IBISWorld’s 2015 Top 1000 companies list.
However, net profit after tax (NPAT) has declined significantly on the list. This was partly due to some poor performances among the top 10 companies, which account for just less than 20% of all revenue on the list. Woolworths went from profit to loss this year, reporting a $1.2 billion loss in 2015-16. Three of the big four banks also saw a decline in NPAT in 2015-16, including ANZ, Westpac and NAB.
Real Estate Services
The bulk of growth in real estate has come from rising residential property prices. Residential housing prices increased substantially during 2015-16, with IBISWorld’s residential housing price index increasing 7.3% over the year. Real estate agents work on commissions, so revenue generally rises as property prices increase. However, many agents have not increased their commissions due to strong competition in the industry. Brookfield Global Integrated Solutions was a newcomer on the list, coming in at 735 after it acquired the remaining share in Brookfield Johnson Controls Australia, previously a joint venture with Johnson Controls Inc.
Sluggish growth in traditional investment streams has caused many investors to turn to other assets, such as commercial property. This has increased interest in commercial property investments, which are typically managed by non-residential property operators.
Australia’s increasing white-collar workforce and transition to a service-based economy have boosted demand for office property operators, as many businesses rent office space through property operators. Online shopping has created strong demand for warehouses and other supply chain-related property, increasing demand for industrial property and boosting revenue for related operators. Rising rent costs for retail property have helped lift revenue for retail property operators. Cromwell Property Group entered the list at rank 600, following significant fair value gains from its investment properties.
The Internet Publishing industry is expanding as its scope increases. Companies such as Netflix and Spotify are changing the way consumers digest content, drawing revenue away from traditional media sources. Firms such as REA Group (realestate.com.au), Domain, SEEK and Carsales.com are becoming increasingly popular as they draw the highest volume of web traffic for their individual services. This subsequently attracts advertisers, which is driving their growth and causing declines in traditional media such as newspapers and magazines. SEEK saw the biggest rise in the industry, jumping from 455 to 327 this year on the back of 27.3% growth in revenue. This was largely due to the sale of its stake in IDP Education Pty Ltd when it listed on the ASX.
Mineral and Petroleum Exploration
Trends in global commodity prices drive exploration for mineral and petroleum resources. Exploration activities are funded through the capital expenditure budgets of large mining companies or capital raised on the sharemarket for smaller miners. As global commodity prices plummeted over the past few years, profitability has fallen for major miners, which has reduced capital expenditure and exploration budgets. The incentive to explore for new resources has been low, which contributed to a sharp revenue decline in 2015-16. Japan Australia LNG (MIMI) recorded a significant decline in revenue for the year as LNG and oil prices plummeted, with the company falling from 134 to 293 on the list.
Mining Support Services
These firms provide specialised drilling, cementing, water pumping and other extra services for mining firms, generally during the construction phase of a mine or gas well. Due to low commodity prices and weaker mining capital expenditure, demand for these players has plummeted over the two years through 2015-16. These firms mostly rely on trends in capital expenditure and commodity prices, and generally have less scope to innovate or change services to stay afloat. As a result, the Mining Support Services industry is highly volatile. Halliburton recorded a large decline in revenue and fell from 669 to 816 on the list. This was due to weaker demand from mineral explorers as the outlook for commodity prices remained uncertain.
Petroleum Product Wholesaling
The Petroleum Product Wholesaling industry recorded a sharp contraction in sales, stemming from the slump in global crude oil prices. This fed through to lower local wholesale prices and lower pump retail prices for petroleum and diesel. Over the two years through 2015-16, industry revenue slumped by over 20%, while the volume of petroleum product sales grew marginally, reflecting growth in the population and motor vehicle registrations. Chevron Australia, which fell from 184 to 124, was significantly affected as company revenue fell by 30.6%.
The industry has undergone substantial restructuring as the supply chain has adjusted to accommodate a greater focus on importing and distributing refined fuel. Shell’s exit from the industry included the sale of most of its assets to Viva Energy (Vitol). Viva has retained the Shell brand for downstream retailing through Coles Express and rationalised some plants.
Heavy Industry and Other Non-Building Construction
The Heavy Industry and Other Non-Building Construction industry has fluctuated significantly over the past five years. Unprecedented activity coincided with the mining boom. However, the completion of major infrastructure projects caused a sharp correction, which contributed to revenue volatility. The Mining division has transitioned from the development phase to the production phase, causing demand for this industry’s construction activity to sharply decline. Similarly, large corrections have also taken place in non-mining infrastructure markets following the build-up of assets and production capacity through to a peak in 2013-14. This has been highlighted by McConnell Dowell’s fall in the list from 169 to 324, after revenue declined by 44.7%. However, strong activity has continued in the railway and telecommunications markets, associated with the NBN rollout and generational rail programs in Sydney.
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For more information, to obtain industry reports or to speak with an analyst, please contact:
Anne Wild / Shae Courtney
IBISWorld Media Relations Representatives – Anne Wild & Associates Pty Ltd
Tel: (02) 9440 0414
Mobile: 0420 736 136