Global corporates tiptoe cautiously into 2010

After the actions that many were forced to take earlier in the year it was not surprising companies were seeing progress with fewer still focused on improving the performance of their current assets, down from 39% to 27%, and the proportion still restructuring their business also declined from 37% to 27%.

“A pick up in confidence is not surprising, given the massive global government stimulus working its way through the economy and the larger developing and emerging economies beginning to rebound. Companies may be less worried about survival over the next 12 months, but the return to a healthy operating environment is still some way off,” said John Murphy, Global Managing Partner, Markets, Ernst & Young.

Surprisingly, for a significant minority, 2009 was a year when earnings improved. Remarkably in the context of a global recession, 7% of all businesses had seen a more than 20% increase in earnings.

More than one third of companies surveyed reported that earnings before interest, depreciation and amortization (EBITDA) had grown by over 5% in the last 12 months.

One-third of the very largest organizations surveyed (turnover exceeding US$ 10 billion) also reported EBITDA growth exceeding 5%.

Forty-five per cent of the companies based in Asia-Pacific and with a turnover between $100 million and $500 million reported in excess of 5% EBITDA growth.

In Latin America (26%), Western Europe (28%) and Eastern Europe (29%), the proportion reporting 5% EBITDA growth or more was lower.

By sector, more than 40% of pharmaceutical, aerospace and defense and banking companies exceeded the 5% growth threshold.