According to research by EY-Parthenon, global companies have faced losses totaling $320 billion since 2017 due to economic instability and political conflicts.
Causes of Financial Loss
EY-Parthenon attributes these financial losses to dramatic shifts in the macroeconomic landscape, including rising inflation, wars, and financial crises. Mats Persson, the UK lead for macro and geostrategy at EY-Parthenon, noted that the days of easy money and stable geopolitics are over. 'A wave of macro shifts is having a significant impact on company profits,' he said.
Most Affected Regions and Sectors
Chinese companies took the hardest hit, with 40% of the 833 companies analyzed suffering significant losses. The total hit reached $73 billion, particularly affecting the real estate, steel, and construction sectors. In the UK, 14 out of 100 companies experienced losses, with a total EBITDA drop of $2.5 billion.
Successful Companies Amidst Crisis
Despite economic turmoil, some companies managed to grow. In the UK, firms like Next, Croda, and Rio Tinto stood out, while in the US, Caterpillar, UPS, Pfizer, and Merck increased their earnings, demonstrating effective management and portfolio diversification.
The losses faced by global companies highlight the need for adaptation to new market realities. Companies that implemented management changes and diversification continue to show positive results even in challenging economic environments.
