Asia's Outstanding Companies Poll 2018: Overall Winner profiles
This summer Asiamoney took on the difficult task of finding the outstanding company in each market in the region.
We invited 2,075 sell-side analysts and 7,000 investors from more than 3,000 institutions to participate in our survey, nominating the top companies in a variety of sectors.
Participants were asked to consider companies that had excelled in areas such as financial performance, management team excellence, investor relations activities and corporate social responsibility initiatives. Nominated companies ran the gamut of sectors, from banks to energy companies, from real estate to health care.
Our ‘outstanding’ winners racked up the most votes in their respective countries, demonstrating the voters’ recognition of their stable business models, innovative approaches to their industries, strong leadership in their sectors and countries, and most importantly their worthiness of recognition.
We know how difficult it is to be an outstanding company in today’s world. Around the globe, businesses have suffered market volatility, threats of trade wars and geopolitical noise, on top of the exponential rise of technology and shifting consumer demands.
The pace of change today has never been seen before.
We congratulate our winners for continuing to thrive under these pressures, and for setting an example to their peers. Below are profiles for each of the 16 companies that topped our list, including ties for most outstanding company in three countries.
China: China Merchants Bank
Of China’s many companies, Shenzhen-headquartered China Merchants Bank stands out in the market as the best. Founded just 31 years ago, CMB has weathered the rapid changes in the Chinese economy, the ever-in-flux regulatory environment and the increasing global spotlight on the Middle Kingdom.
Under the leadership of chairman Li Jianhong for the last four years, the bank has focused on the Chinese domestic market, but also operates internationally through subsidiaries in Hong Kong, London, Luxembourg, New York, Singapore, Sydney and Taipei. CMB serves clients across retail finance and wholesale finance, including corporate clients, government agency clients and financial institutions.
In many ways, CMB demonstrates the power of Chinese banks and their expanding role in the Asian market, as well as globally. Wholly owned unit CMB International Capital, for instance, has been actively building its debt capital markets team in an attempt to be a true competitor in offshore DCM. CMB is likewise on track to be one of the top 10 private banks globally. The bank added more than Rmb400 billion ($58. 8 billion) in assets under management in 2016, as it made a dedicated effort to build its private bank business.
The lender has also made strong steps in reaching its goal of ‘building the best commercial bank in China with innovation-driven development.’ Last year, CMB made efforts to incorporate cutting-edge technology into its business, for instance launching a cross-border direct link payment blockchain platform, and using apps as customer tools but also essential platforms.
In 2017, CMB reported a net operating income of Rmb221 billion and a net profit attributable to shareholders of Rmb70.2 billion, up 5.12% and 13% respectively from the year before. Total assets for the bank surpassed Rmb6.29 trillion at the end of 2017, an increase of 5.98% from the end of the previous year.
Bank president Tian Huiyu wrote at the end of 2017 that CMB has a vision of being “a bank that thrives for centuries”. If CMB continues its current pace of innovation, pairing it with a dedicated focus on its client base, we have no doubt that it will be able to fulfil that goal.
Hong Kong: Sun Hung Kai Properties
Sun Hung Kai Properties (SHKP) ranks not only as best property company in Hong Kong, but also as our poll winner for outstanding overall company in the Special Administrative Region.
SHKP has a massive land bank of 55.1 million square feet, as of the end of 2017, including 21.4 million square feet under development, 30.9 million square feet in completed properties for rent or investment and 2.8 million square feet in completed properties pending for sale. It also has 29 million square feet of agricultural land in Hong Kong’s New Territories – no small feat in a compact city the size of Hong Kong.
SHKP’s business is focused on property development for sale and investment, but it also operates in hotels, property management, construction, and insurance and mortgage services. Importantly, the company is not overly focused in just one area. It invests in other businesses, including telecommunications and information technology.
As it grows, SHKP has been upgrading its mall portfolio, and sees opportunities in the office leasing market.
The company reported revenue of HK$55.2 billion ($7 billion) during the second half of 2017, up 19% from the previous year. Underlying profit attributable to the company’s shareholders during the same time period was HK$19.97 billion, compared to HK$14.61 billion the previous year, boosted by the completion of some development projects in the first half of the 2017.
Hong Kong’s property market can be a lucrative one, but it’s also quite punishing. This summer, SHKP faced a pile of pressures – including the US-China trade war and a volatile stock market – as it tried to sell flats in a residential building in Hong Kong’s Yuen Long and other units above the Nam Cheong MTR station. The company struggled to sell the flats, despite having cut prices, as nervous investors shied away. A few buyers even pulled out of the Yuen Long project, forfeiting substantial deposits. Cancelled sales are not a good sign for the cooling property sector in Hong Kong, and pressures will not be dissipating any time soon.
SHKP will have to prove its resilience in the coming year to live up to its title as outstanding company.
India: Tata Consultancy Services
Asiamoney’s outstanding company in India, Tata Consultancy Services (TCS), is the perfect example of the global reach of Asian technology. When TCS was established 50 years ago, its founders had the foresight to be leaders in the technology revolution, giving the IT services and consulting company the tools it needed to be agile and revolutionary.
“I don’t think the founders had a very good view of the speed of change or the extent of change,” says chief executive Rajesh Gopinathan, but he points out that one of the founders said in the 1960s that “India missed the industrial revolution, but this [is] the tech revolution”. So, Gopinathan says: “We would only have ourselves to blame if we missed this one.”
Unlike many other companies in Asia that start locally and grow to become regional and later global in their reach, TCS started with a focus on international markets, and that has continued to today. More than 90% of the company’s revenue comes from outside India. Continental Europe represents the biggest growth market, at 19.1%, for TCS in the 2018 fiscal year, which ended on March 31, 2018.
TCS reported revenue of Rs1.23 trillion ($17.64 billion) for the 2018 fiscal year. The TCS brand value crossed the $10 billion mark last year, representing 14.4% growth year on year.
For a company like TCS, opportunities for growth are plentiful. TCS has balanced offerings, giving clients both products and consulting services. As technology becomes more embedded in the value chain of every industry, TCS has positioned itself to work with clients each step of the way.
For instance, the company is working with grocery retailers to use data from sensors across the supply chain to monitor fresh produce and provide real-time updates. Such technology reduces waste for stores and consumers, and helps to create a more efficient supply chain.
As TCS points out, firms around the world are pouring more money into tech programmes, be it in banking, automobile production or other industries. The company is now working with firms including UK retailer Marks and Spencer, Rolls-Royce and US insurer Transamerica to transform their companies into digital-first businesses.
TCS had made its name synonymous with technology.
Given the potential of the tech revolution, TCS is perfectly positioned to be an industry leader for years to come.
Indonesia: Bank Central Asia
Trustworthy service and quality support are key in any sector. Those characteristics have been attributed to Bank Central Asia (BCA) for more than 60 years, making it Indonesia’s outstanding company.
Since its establishment in 1957, BCA has seen the many ups and downs of the Indonesian economy. Over the last four years, the country’s economic growth has continued at a modest pace and is looking at an upward trajectory, thanks in part to the reform efforts of president Joko Widodo.
BCA has benefited from the economic boost and has fuelled its own successes by meeting its customers’ needs with an expansion of product offerings. The bank reported total assets of Rp750.32 trillion ($51.46 billion) in 2017, representing more than 10% growth year on year.
BCA also had a net income of Rp23.32 trillion.
With global advances in technology, BCA has adapted its capabilities to meet its customers’ changing needs, such as the increased use of digital transactions. BCA found that the frequency of transactions through digital channels contributed 97% to the bank’s overall 2017 transactions, a substantial 96.2% jump from 2016. To keep pace with this demand, BCA works to constantly improve its internet and mobile banking platforms.
BCA demonstrated agility with the development of new products such as the e-wallet app Sakuku and a virtual assistant.
Such innovation will be key to BCA’s continued success in southeast Asia, as foreign payments companies try to break into the region. Southeast Asia’s increasing mobile dependency, which many believe will usurp the use of cash the way it has in China, presents ample opportunities for fintech.
BCA’s e-wallet and established presence as a reliable brand in Indonesia put it steps ahead of startups and foreign companies hoping to tap the Indonesian population.
Malaysia: IHH Healthcare Berhad (joint first)
IHH, which is dual-listed in Malaysia and Singapore, unites what were once four standalone companies: Acibadem, International Medical University, Pantai and Parkway. Parkway Pantai, which operates 28 hospitals, is now the group’s largest operating subsidiary, made up of Pantai Holdings and Parkway Holdings. IMU Health is the company’s fully owned medical education arm, and Acibadem Holdings is a Turkish healthcare provider in which IHH owns a 60% majority stake.
|Tan See Leng
Under chief executive Tan See Leng, the company now operates 49 hospitals in nine countries, including what it considers its home markets of Malaysia, Singapore, Turkey and India. IHH has situated itself strategically in markets with huge growth potential. For instance, Malaysia has nearly 32 million people, many of whom are aging. At the same time, household incomes are rising, opening IHH to untapped potential in its home market.
Like other companies in Asia, IHH has turned its sights on China as a key growth market, particularly as Chinese regulators open the country to more foreign ownership.
IHH opened a hospital in Hong Kong in 2017 and it plans to open another in Chengdu early next year, as well as two more in Nanjing and Shanghai in 2020. The Gleneagles Hong Kong Hospital was a deliberate move to seize market share in a city where hospitals are often overcrowded; it was IHH’s single largest hospital investment since the opening of Mount Elizabeth Novena in Singapore in 2012. Gleneagles was also the first step in IHH’s ambitious plans to operate a hub and spoke model in Greater China, with other hubs in Beijing, Chengdu, Guangzhou, Shanghai, Shenyang and Hong Kong.
Such focused growth plans will serve IHH well as it continues to thrive in the broad Asia region. The company showed strong growth in the first quarter of 2018, reporting revenue of RM2.9 billion ($708.87 million), an increase of 6% from a year ago, helped in part by the addition of the Hong Kong hospital as well as another in Turkey.
Malaysia: Tenaga Nasional (joint first)
Tied for the top business in Malaysia is the country’s largest electricity company, Tenaga Nasional (TNB). As a company that has provided energy to Malaysia for nearly 70 years in different capacities, TNB has demonstrated how adaptability and modernization is important to be successful in a growing, changing country.
TNB was established in its current form in 1990, wholly owned by the government. Today, the company not only dominates the Malaysia market, but it also has a presence internationally in India, Indonesia, Kuwait, Pakistan, Saudi Arabia, Turkey and the UK.
Despite rising energy costs and market volatility linked to geopolitics, the company reported revenue of RM47.42 billion ($11.59 billion) for the financial year ending August 31, 2017, a 6.5% increase year on year. TNB’s profit after tax during the same time was RM6.9 billion, showing 5.6% growth.
For TNB to stay relevant and successful globally, evolution is essential. The future of electricity is changing, and companies like TNB need to focus on stable and sustainable returns, turning away from dependency on coal and oil.
TNB has embraced these changes, establishing a clear sustainability agenda and turning its attention to solar and wind projects at home and abroad. Last year, TNB bought 50% of Vortex Solar UK, one of the UK’s largest solar portfolios. The company also plans to offer products and services related to clean power generation and smart-home technology. For instance, in 2017, TNB began offering self-generation packages to customers to use rooftop solar panels. It has also been building a large-scale solar project in Malaysia, due to be completed this year.
Like many of our other winners, TNB sees smart technology and automation as a key growth area for its business. As customers use these technologies in their homes and buildings, TNB will need to keep pace, rolling out more initiatives like its recent programme to provide online energy monitoring system to customers.
Pakistan: Indus Motor Company (joint first)
In Pakistan, two very different companies stood out at the top of our list. We look first at Indus Motor Company (IMC), an automobile company that was founded in 1989.
IMC was created to manufacture and market Toyota brand vehicles in Pakistan as part of a joint venture agreement between companies under House of Habib of Pakistan, Toyota Motor Corp and Toyota Tsusho. Production has boomed over the years, from 20 vehicles per day in 1993 to 240 units daily now. IMC’s investments and operations have helped make the Corolla brand one of the top-selling models in Pakistan.
IMC balances the values of Toyota with its domestic focus. It has been led by Toyota’s dedication to constant improvement, an essential strategy in a changing world.
The company has an eye on the future, looking toward the next generation of automobiles that will use renewable energy and greater computing power. IMC and Toyota have also been innovative in their approach to car sales, using the Toyota Mobile app in Pakistan to help customers do things like find a dealership or book an appointment.
Through its plant and dealerships, IMC has made a concerted effort to be a leader in the Pakistani economy. The company has endeavoured to increase the percentage of local parts that it uses in its vehicles. For instance, the number of localized parts found in the Corolla has increased from 752 to 777, while more hi-tech parts have been sourced from Pakistan.
IMC reported revenues of PRs112.3 billion ($918 million) in 2017, up from PRs108.8 billion in 2016. This came despite a slight drop in production, to 59,945 units in 2017 from 64,096 in 2016, and a slide in vehicle sales to 60,586 units in 2017 from 64,584 in 2016.
Pakistan: The Searle Company (joint first)
Tied for the most outstanding company in Pakistan is The Searle Company, a pharmaceutical firm that specializes in drugs used to treat cancer, diabetes and cardiovascular disease. Some of Searle’s better-known brands in Pakistan include Hydrallin, Sustac and Peditral.
True to form for our winners, Searle and its chief executive Syed Nadeem Ahmed have an ambitious outlook. The potential in the $3.1 billion market is evident, given an annual growth rate of around 15%. As it stands, there are more than 700 pharmaceutical manufacturing units in Pakistan, exporting more than $200 million-worth of products.
Searle has seen considerable growth. For the financial year ending June 30, 2017, the company’s net sales grew 12.5% to PRs10.75 billion ($87.9 million). Profit after tax rose 26.3% to a record PRs2.64 billion.
Outside its core business, Searle is increasingly focused on the long-term potential in stem cells, bio-engineering medical devices, nutraceuticals and genome sciences – key areas for a pharmaceutical company hoping to stay relevant in the future.
Last year, the company signed an exclusive agreement with the only genome research centre in the country. It also acquired biosciences facility Nextar. In addition, Searle submitted a drug master file to the US Food and Drug Administration for approval. Such approval will allow the company to grow exponentially in both the domestic and global market.
The Philippines: Ayala Land (joint first)
In the Philippines, we have a three-way tie for most outstanding company, demonstrating the competitive entrepreneurship that is fuelling economic growth in the country. In alphabetical order, the first is the country’s largest property developer, Ayala Land.
The company, which has a land bank of 10,285 hectares, develops a mix of residential properties, shopping centres, hotels, offices and other businesses. In 2017, it established three new estates in key growth centres in the Philippines. It reported annual revenues of P142.3 billion ($2.7 billion), up 14% year on year, and net income of P25.3 billion, helped in part by the company’s hotel and resort brands, which benefit from economic growth and tourism.
As proof of its foresight, Ayala Land, led by chief executive Bernard Dy, has demonstrated its leadership in the creation of large-scale, mixed-use estates in the Philippines. The company’s properties are multi-functional in the community, incorporating aspects like green islands (or urban patios) and public transit terminals.
Ayala Land also takes a broad approach to its property development, with brands catering to different tiers of residential property. The company has luxury brand Ayala Land Premier, upscale Alveo, mid-level Avida, entry-level Amaia and low-cost BellaVita.
While the company is an established presence in the Philippines, it is also building a footprint in southeast Asia. In 2015, Ayala Land acquired Malaysia-based real estate company MCT.
Like many of our winners, Ayala Land looks to the United Nations Sustainable Development Goals for inspiration. The company aims to reach net-zero carbon emissions in its operating properties by 2022. For a country like the Philippines, which is a direct target for climate change-related activity, a sustainable approach to property development will be a saving grace, and characteristic of a standout company in the years to come.
The Philippines: Jollibee Foods Corp (joint first)
Jollibee Foods Corp (JFC) stood out in our list of outstanding Asian companies as the only food-related business to be voted a country favourite. JFC is most famous for its Jollibee restaurants, represented by the mascot of a cheerful red bee, but the multinational restaurant company, which is celebrating its 40th anniversary this year, has become so much more.
JFC began with its Jollibee restaurants, one of the most beloved brands in the Philippines. With a desire for growth and the diaspora of native Filipinos around the world, JFC decided to bring its restaurants to Filipinos living abroad. Tapping into expatriate Filipino communities proved lucrative for JFC, especially once locals in the restaurants’ new home markets began embracing the brand. For instance, JFC found that about half of its Jollibee consumers in Hong Kong are not Filipino.
“We see the potential for the Jollibee brand to be developed into a global brand,” says the company’s chief executive, Ernesto Tanmantiong. “We always want to dream big. When we started, we wanted to be number one in the Philippines. When we did that, we said we want to be number one in Asia. That dream has always been our guiding North Star.”
One of Jollibee’s primary growth targets is the US, where it first opened a store in California in 1998. Since catering to the Filipino community there, the company has expanded to include 34 locations. The first Chicago location opened less than two years ago. Furthering its growth in Western markets, JFC opened its first European Jollibee in Italy this year.
JFC reported revenues of P131.6 billion ($2.47 billion) last year, up 15.6%.
While promoting its core business, JFC also took a unique approach to its global expansion, breaking into foreign markets by acquiring local brands to establish itself as a trusted player. For example, JFC owns a majority stake in US hamburger chain Smashburger, Vietnamese coffee chain Highlands Coffee and Chinese noodle-maker Yonghe King.
JFC is ambitious in its plans for continued expansion, hoping to double its business in the next five years. The Philippines still makes up more than 70% of the company’s business, but JFC hopes to one day have a 50-50 split between the Philippines and the international market. JFC could well achieve that; the firm opened 328 new stories in the Philippines and 137 new stores abroad last year.
The Philippines: SM Prime Holdings (joint first)
Like Jollibee, property developer SM Prime Holdings sees itself as a household name in the Philippines. It started life as a shoe store, set up by a Chinese immigrant in 1958, but SM Prime has become one of the largest property developers in the region, making it our third joint winner for most outstanding company in the Philippines.
|John Nai Ong
“In the Philippines, we would say that if you look at the first three words that a child would blurt out, first would be ‘mum,’ second would be ‘pop,’ and the third would be…SM,” says chief financial officer John Nai Ong. “That’s the brand value that makes us stand out in the local market.”
Like many of our other winners, SM Prime has demonstrated flexibility in its business model, allowing the company to pivot when necessary to new endeavours. After its humble beginning, SM Prime became a mall developer and operator; it now owns 67 malls in the Philippines and seven shopping malls in China. Last year, the company’s malls accounted for 51% of Philippine mall revenues.
But about five years ago the business started adding more residential buildings, hotels and convention centres to its portfolio. SM Prime hoped at the time to be able to double its business in five years, something it is on the track to achieve in 2018. Now, the company identifies as an integrated property developer, allowing it to make the most use of the land it owns. It sees its hotels and residential buildings as complements to its malls.
SM Prime reported total assets of P538.42 billion ($10.1 billion) in 2017, showing steady growth from P465.56 billion in 2016. It recorded revenues of P90.92 billion last year. The Philippine Stock Exchange recognized SM Prime as the first Philippine company to reach a P1 trillion market value in June 2017.
Singapore: Bumitama Agri
Leading this year’s list of most outstanding Singapore-listed companies is palm oil producer Bumitama Agri. The company, which began planting palm trees in 1998, comes from a long history of family businesses. When Bumitama Agri was formed, the founding Lim family had no experience in palm oil, making it a small player among giants. Just 20 years later, the company has grown substantially, with a land bank of 233,000 hectares at the end of 2017. About 182,675 hectares, or 78%, of the total is planted.
Led by executive chair Gunawan Lim, Bumitama Agri reported revenue of Rp8.13 trillion ($557.61 million) in 2017, up 22.6% from 2016, thanks to an increase in sales volume and selling prices.
Part of Bumitama Agri’s success has come from an aggressive planting strategy. The average age for the company’s trees is about nine years, and the prime age for palm oil is between seven and 18 years, putting Bumitama Agri in prime position for production today. The company continues to focus on upstream palm oil production, selling to refineries in Indonesia.
But planting is more regulated in Indonesia than it once was, and the country has attempted to restrict new permits.
The palm oil industry has been under fire for its effects on climate change, deforestation, animal cruelty, and other issues. As a result, Bumitama Agri has had to adjust its business model, looking more at acquisitions rather than buying land for planting.
About five years ago, the company made a concerted effort to incorporate sustainability into its business model.
“We believe as a company that sustainability is really a part of life,” says the company’s executive director, Christina Lim. “As a company, we want to be a good citizen.”
In 2015, Bumitama Agri became one of the earliest palm growers in the region to adopt a ‘no deforestation, no peat and no exploitation’ policy. The company, which is a member of the Roundtable on Sustainable Palm Oil, has been working in conservation and reforestation projects. The sustainability efforts serve dual purposes, helping to attract buyers as well as consumers, who pay more attention to the sourcing of their goods.
South Korea: Samsung Electronics
It is little surprise that in a country full of both strong local and global brands, Samsung Electronics still stands out among its peers as the outstanding company in the country.
A name synonymous with technology, Samsung has been at the forefront of mobile devices, computers, televisions and more, for nearly 50 years. After beginning with black-and-white TVs in 1970, Samsung has blossomed into a Korean and global leader. The company’s continued success stems from its focus on innovation, partnered with its status as a quality and trusted brand.
|Ki Nam Kim
This year has been a fresh start of sorts for the firm, as three of its presidents, Ki Nam Kim, Hyun Suk Kim and Dong Jin Koh, were promoted to co-CEO positions after a corruption and bribery scandal that purged Samsung of its old leadership late last year. The new team has an opportunity to move Samsung forward as a cutting-edge brand.
Doing so will not come easily. To stay at the forefront of innovation today, Samsung faces fierce competition, including the rise of cheap Chinese alternatives to its products.
In the second quarter, Samsung reported disappointing profit growth after its Galaxy S9 smartphone missed sales targets. Net profit was W11.04 trillion ($9.9 billion), versus W11.05 trillion a year earlier. The company is now pinning its hopes on the Galaxy Note9, which launched in August. Samsung will undoubtedly continue to be one of the world’s tech leaders for many years to come.
Taiwan: Taiwan Semiconductor Manufacturing
Topping our poll as the outstanding company in Taiwan is Taiwan Semiconductor Manufacturing (TSMC), a company that has managed to carve a successful niche for itself as the world’s largest dedicated semiconductor foundry.
TSMC has been a pioneer in the manufacture of semiconductor products for more than 30 years, with a market share of 56% for the semiconductor foundry industry in 2017. Semiconductors are materials with electrical conductivity, often used in electronic circuits.
Led by chief executive CC Wei, TSMC uses a foundry model that separates the semiconductor fabrication from the circuit design. Under this structure, TSMC does not design, manufacture or market any products under its own name. But last year, it manufactured nearly 10,000 different products, using 258 distinct technologies for 465 different customers, including Apple. Such an approach allows TSMC to diversify the use of its semiconductors across industries, helping the company reach its maximum potential for profitability as demand from different industries ebbs and flows. As the company says, it is “everyone’s foundry”.
As a technology leader, TSMC has been on the cutting edge of innovation. Last year, the company experienced increased demand in automotive semiconductors for smarter, greener cars. Likewise, the growth of the internet of things and artificial intelligence has provided TSMC with a new realm of products with potential, as computer and consumer unit shipments have declined. TSMC estimates that by 2025, demand from the internet of things – including technology like smart wearables, robots, and self-driving cars – will be 10 times larger than for smartphones.
In 2017, TSMC reported a consolidated revenue of NT$977.45 billion ($31.8 billion), an increase of 3.1% from NT$947.94 billion in 2016. Net income was NT$343.1 billion, also up 3% from the previous year.
The global semiconductor market is growing as well. TSMC estimates that the whole market in 2017 had $434 billion in revenue, up 22% after a flat year in 2016.
But with the growth of the industry come challenges. In early August, a computer virus hit TSMC’s plants, halting production in some factories. While the attack seems to have had a limited effect on TSMC, cyber-crime will continue to be a challenge.
Thailand: Thai Union Group
Thai Union Group is no small fish. The large seafood producer has made a name for itself globally, associated with popular brands, including Chicken of the Sea and Red Lobster, while staying true to its Thai roots. The company’s dedication to quality food, while maintaining an innovative attitude, is what makes it the most outstanding company in Thailand.
The beauty of Thai Union’s approach to its business is its simplicity. The company began in 1977 as a modest processor and exporter of canned tuna.
As the world has changed, so has Thai Union, under president and chief executive Thiraphong Chansiri. Consumers have gone from looking for tuna in a can to wanting the option of multiple kinds of tuna. And millennials, with increased purchasing power, are looking for different products from the ones they grew up on. Thai Union has responded with products such as yellowfin tuna slices, which it launched last year. The changes have been global, as growth for the company has stagnated in the West and new opportunities are popping up in Asia, linked to increased household incomes.
“The industry used to have – five, 10 years ago – very large growth rates in new markets,” says chief financial officer Joerg Ayrle. “Some of those growth opportunities have averaged out.”
He adds: “The only way to address this is innovation [and by] understanding consumers,”
Now, Thai Union is combating the shifting market with new endeavours, including acquiring a minority stake in seafood casual dining chain Red Lobster. Thai Union has also indicated that it is comfortable cutting unprofitable businesses, while looking at more opportunities to sell seafood by-products, like fish oil. It has similarly turned to pet food production as another supplement to the business.
Importantly, Thai Union has responded to concerns regarding sustainability and social issues in the seafood industry. The company committed $90 million to initiatives linked to the supply of sustainable tuna. It is also keeping a conscious eye on the sourcing of products to ensure that there are no human rights violations linked to the company.
The company has had some recent hiccups, and high tuna prices have weighed on margins. Recently, Thai Union reported a 99% drop in second-quarter group net profit after it was forced to set aside $44 million related to possible costs stemming from US litigation over alleged price fixing. The company says that the effects on its profits are a one-off, and that after setting aside the cash, it is ready to move on.
Thai Union reported net profit of Bt6.02 billion ($184.3 million) in 2017, up 14.6%, while consolidated sales reached a record Bt136.5 billion last year. The US makes up the bulk of Thai Union’s total sales at 40%, while Europe contributed 32%, Thailand 10% and Japan 6%.
Vietnam: FPT Corporation
Many of the chosen winners of our outstanding companies in the region are businesses that work in or around technology. Vietnam’s winner, FPT, is no exception.
Celebrating its 30th anniversary this year, FPT is a standout presence in IT and telecommunications. It has been consistently recognized as an outstanding brand in Vietnam, reporting steady annual growth, both domestically and internationally. In July, FPT reported profit before tax of D1.99 trillion ($855 million), up 32% year on year. About 94% of total revenue comes from technology and telecom.
The company, which reported revenue of $1.93 billion in 2017, operates in 33 countries today. While FPT’s business is rooted in Vietnam, where it is the biggest IT service company in the country, its growth is dependent on the company’s presence overseas. In the first seven months of this year, FPT’s overseas earnings before tax were up 34% to D726 billion ($31.2 million) and revenue up 27% to D4.65 trillion.
|Bui Quang Ngoc
Like many of our other award winners, FPT realized early on that global growth would be vital to its success. The company has expanded internationally in part by making strategic investments. For instance, in July, FPT announced that it would become a large shareholder of US technology services firm Intellinet, helping boost FPT’s presence in the US. FPT already has working relationships with companies including GE, Microsoft and Siemens.
As befits a cutting-edge technology company, FPT has a young workforce: 88% of its managers are under the age of 40. Its chief executive is Bui Quang Ngoc.
The company sees itself as a pioneer in the digital revolution, as digitization affects lifestyle, work and communication. Earlier this year, FPT signed a memorandum of understanding with the city of Da Nang to turn it into a smart city in the next two years. FPT plans to help the Vietnamese metropolis develop smart solutions in areas including traffic, English language training and healthcare. FPT will invest D15 billion in pilot projects in 2018 and 2019.
Such forward-thinking is what makes FPT stand out as a leader in Vietnam, but also in the region. Continued investment in projects such as Da Nang, as well as an eye toward global growth, will serve FPT well into the future.