|By Marketwired .||
|July 15, 2014 12:01 AM EDT||
BOSTON, MA -- (Marketwired) -- 07/15/14 -- Some of the most successful value creators since the 2008 global financial crisis are companies that have figured out how to achieve a comprehensive TSR turnaround, according to a recent report by The Boston Consulting Group (BCG).
One in 5 companies that delivered below-average TSR during the previous five-year period made it into the BCG top-ten industry rankings for 2009-2013. By contrast, companies that delivered above-average TSR in the previous five-year period had only a 1 in 12 chance of making the rankings.
These are some of the findings released today in the sixteenth annual BCG Value Creators report, Turnaround: Transforming Value Creation.
The 2014 Value Creators Rankings
The 2014 Value Creators rankings are based on an analysis of total shareholder return (TSR) at 1,620 global companies for the five-year period from 2009 through 2013. The rankings list the top ten value creators for the entire sample, for all large-cap companies (defined as those with a market valuation of more than $50 billion), and for companies in 26 separate industrial sectors.
Among the key findings:
- The average annual TSR of the 1,620 companies in the sample was approximately 20 percent. The average annual TSR in the 26 industry sectors ranged from a low of 9 percent (in power and gas utilities) to a high of 35 percent (in fashion and luxury).
- The overall level of value creation by companies across industries and around the world is by far the highest in any five-year period covered by BCG's Value Creators report in its 16-year history.
- The average annual TSR of the top ten companies in each industry outpaced their industry averages by between 12 percentage points (in power and gas utilities) and 51 percentage points (in travel and tourism).
- A company had to deliver an average annual TSR of at least 31 percent to be in the top quartile of the global sample and of at least 94.6 percent to make the global top ten. That is, the most successful companies delivered TSR above 100 percent per year. And this year's top value creator -- for the second year in a row, the U.S. biopharma company Pharmacyclics -- had an average annual TSR greater than 165 percent.
- Unlike recent years, when companies from emerging markets dominated the global top ten, this year developed countries won the prize, with seven of the ten coming from the U.S., France, Japan, Ireland, and Sweden.
- When it comes to the world's largest companies, six of the top ten are located in the U.S. -- and a seventh, the Chinese Internet-search provider Baidu, is listed on a U.S. stock market. Leading U.S. large-cap value creators include Priceline.com and Las Vegas Sands, at number one and number two, respectively; retailers Starbucks and Amazon.com at numbers six and seven, auto company Ford Motor at number eight, and Apple (by far, the company with the largest market valuation on BCG's top-ten list) at number nine.
The Dynamics of TSR Turnarounds
The results of this year's report are influenced by the fact that the starting point of the five-year holding period occurred at the depths of the market downturn associated with the global financial crisis.
"Because the holding period of this year's report starts in 2009, we thought it was important to ask, How much of the value creation performance of this year's top value creators is due to these companies having been especially hard hit by the 2008 downturn, rather than to anything that they have done in the period since?" said Gerry Hansell, a senior partner in BCG's Chicago office and a coauthor of the report.
"We estimate that about a fifth of the shareholder value that the companies in our top-ten rankings generated was a function of their depressed starting point compared to the market average. The rest, however, was due to superior performance. So although these companies benefited from an outsized market rebound, they obviously did a lot more than simply rise with the market."
In fact, many of the winners in this year's Value Creators rankings are what BCG calls TSR turnarounds. "TSR turnarounds are companies that deliver superior value creation after an extended period of below-average TSR performance and below-average valuation multiples," said Frank Plaschke, a partner and managing director in BCG's Munich office and a coauthor of the report. "Our research shows that companies with this starting position not only deliver more TSR, on average, than the other companies in our sample. They are also overrepresented in our industry top-ten rankings."
Among the TSR turnarounds profiled in the report are the Mexican conglomerate Alfa, number one in the multibusiness top-ten ranking; disk drive maker Seagate Technology, number two in the technology top-ten ranking; and U.S. media company Gannett, which since March 2012 has tripled its share price and been one of the top value creators in the S&P 500.
The Advantage of a TSR Focus
The report also describes the value of using TSR as a lens to orchestrate such a turnaround. "Seagate's consistent focus on the impact on TSR of its business and financial decisions helped the company and its senior executives navigate an extremely turbulent business environment, while still delivering industry-leading TSR," said BCG senior partner and study coauthor Jeffrey Kotzen. "It has also led the company's senior executives to reinvent their mind-set about the business and how best to drive value."
In the future, TSR turnarounds will not just be leading value creators. Focusing on TSR and its drivers can also be a recipe for successful companies to maintain strong value-creation momentum or for mediocre ones to become top performers.
A copy of the report can be downloaded at www.bcgperspectives.com.
To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or [email protected].
About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 81 offices in 45 countries. For more information, please visit bcg.com.
Bcgperspectives.com features the latest thinking from BCG experts as well as from CEOs, academics, and other leaders. It covers issues at the top of senior management's agenda. It also provides unprecedented access to BCG's extensive archive of thought leadership stretching back 50 years to the days of Bruce Henderson, the firm's founder and one of the architects of modern management consulting. All of our content -- including videos, podcasts, commentaries, and reports -- can be accessed by PC, mobile, iPad, Facebook, Twitter, and LinkedIn.
The Boston Consulting Group
Global Media Relations Manager
Tel +1 617 850 3783
Fax +1 617 850 3701
Any Ops team trying to support a company in today’s cloud-connected world knows that a new way of thinking is required – one just as dramatic than the shift from Ops to DevOps. The diversity of modern operations requires teams to focus their impact on breadth vs. depth. In his session at DevOps Summit, Adam Serediuk, Director of Operations at xMatters, Inc., will discuss the strategic requirements of evolving from Ops to DevOps, and why modern Operations has begun leveraging the “NoOps” approa...
Aug. 30, 2015 06:45 PM EDT Reads: 364
While many app developers are comfortable building apps for the smartphone, there is a whole new world out there. In his session at @ThingsExpo, Narayan Sainaney, Co-founder and CTO of Mojio, will discuss how the business case for connected car apps is growing and, with open platform companies having already done the heavy lifting, there really is no barrier to entry.
Aug. 30, 2015 05:00 PM EDT Reads: 130
SYS-CON Events announced today that G2G3 will exhibit at SYS-CON's @DevOpsSummit Silicon Valley, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Based on a collective appreciation for user experience, design, and technology, G2G3 is uniquely qualified and motivated to redefine how organizations and people engage in an increasingly digital world.
Aug. 30, 2015 05:00 PM EDT Reads: 460
As more intelligent IoT applications shift into gear, they’re merging into the ever-increasing traffic flow of the Internet. It won’t be long before we experience bottlenecks, as IoT traffic peaks during rush hours. Organizations that are unprepared will find themselves by the side of the road unable to cross back into the fast lane. As billions of new devices begin to communicate and exchange data – will your infrastructure be scalable enough to handle this new interconnected world?
Aug. 30, 2015 04:00 PM EDT Reads: 148
This Enterprise Strategy Group lab validation report of the NEC Express5800/R320 server with Intel® Xeon® processor presents the benefits of 99.999% uptime NEC fault-tolerant servers that lower overall virtualized server total cost of ownership. This report also includes survey data on the significant costs associated with system outages impacting enterprise and web applications. Click Here to Download Report Now!
Aug. 30, 2015 01:30 PM EDT Reads: 184
SYS-CON Events announced today that Micron Technology, Inc., a global leader in advanced semiconductor systems, will exhibit at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Micron’s broad portfolio of high-performance memory technologies – including DRAM, NAND and NOR Flash – is the basis for solid state drives, modules, multichip packages and other system solutions. Backed by more than 35 years of tech...
Aug. 30, 2015 01:30 PM EDT Reads: 215
SYS-CON Events announced today that Pythian, a global IT services company specializing in helping companies leverage disruptive technologies to optimize revenue-generating systems, has been named “Bronze Sponsor” of SYS-CON's 17th Cloud Expo, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Founded in 1997, Pythian is a global IT services company that helps companies compete by adopting disruptive technologies such as cloud, Big Data, advance...
Aug. 30, 2015 01:00 PM EDT Reads: 277
SYS-CON Events announced today the Containers & Microservices Bootcamp, being held November 3-4, 2015, in conjunction with 17th Cloud Expo, @ThingsExpo, and @DevOpsSummit at the Santa Clara Convention Center in Santa Clara, CA. This is your chance to get started with the latest technology in the industry. Combined with real-world scenarios and use cases, the Containers and Microservices Bootcamp, led by Janakiram MSV, a Microsoft Regional Director, will include presentations as well as hands-on...
Aug. 30, 2015 12:00 PM EDT Reads: 265
Cloud and datacenter migration innovator AppZero has joined the Microsoft Enterprise Cloud Alliance Program. AppZero is a fast, flexible way to move Windows Server applications from any source machine – physical or virtual – to any destination server, in any cloud or datacenter, using its patented container technology. AppZero’s container is also called a Virtual Application Appliance (VAA). To facilitate Microsoft Azure onboarding, AppZero has two purpose-built offerings: AppZero SP for Azure,...
Aug. 30, 2015 11:00 AM EDT Reads: 170
Organizations from small to large are increasingly adopting cloud solutions to deliver essential business services at a much lower cost. According to cyber security experts, the frequency and severity of cyber-attacks are on the rise, causing alarm to businesses and customers across a variety of industries. To defend against exploits like these, a company must adopt a comprehensive security defense strategy that is designed for their business. In 2015, organizations such as United Airlines, Sony...
Aug. 30, 2015 10:30 AM EDT Reads: 433
SYS-CON Events announced today that HPM Networks will exhibit at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. For 20 years, HPM Networks has been integrating technology solutions that solve complex business challenges. HPM Networks has designed solutions for both SMB and enterprise customers throughout the San Francisco Bay Area.
Aug. 30, 2015 10:30 AM EDT Reads: 872
Consumer IoT applications provide data about the user that just doesn’t exist in traditional PC or mobile web applications. This rich data, or “context,” enables the highly personalized consumer experiences that characterize many consumer IoT apps. This same data is also providing brands with unprecedented insight into how their connected products are being used, while, at the same time, powering highly targeted engagement and marketing opportunities. In his session at @ThingsExpo, Nathan Trel...
Aug. 30, 2015 10:15 AM EDT Reads: 223
IBM’s Blue Box Cloud, powered by OpenStack, is now available in any of IBM’s globally integrated cloud data centers running SoftLayer infrastructure. Less than 90 days after its acquisition of Blue Box, IBM has integrated its Blue Box Cloud Dedicated private-cloud-as-a-service into its broader portfolio of OpenStack® based solutions. The announcement, made today at the OpenStack Silicon Valley event, further highlights IBM’s continued support to deliver OpenStack solutions across all cloud depl...
Aug. 30, 2015 10:00 AM EDT Reads: 225
Red Hat is investing in Tesora, the number one contributor to OpenStack Trove Database as a Service (DBaaS) also ranked among the top 20 companies contributing to OpenStack overall. Tesora, the company bringing OpenStack Trove Database as a Service (DBaaS) to the enterprise, has announced that Red Hat and others have invested in the company as a part of Tesora's latest funding round. The funding agreement expands on the ongoing collaboration between Tesora and Red Hat, which dates back to Febr...
Aug. 30, 2015 10:00 AM EDT Reads: 337
Everyone talks about continuous integration and continuous delivery but those are just two ends of the pipeline. In the middle of DevOps is continuous testing (CT), and many organizations are struggling to implement continuous testing effectively. After all, without continuous testing there is no delivery. And Lab-As-A-Service (LaaS) enhances the CT with dynamic on-demand self-serve test topologies. CT together with LAAS make a powerful combination that perfectly serves complex software developm...
Aug. 30, 2015 09:45 AM EDT Reads: 191