Business

Despite the Russia-Ukraine war, globalization is still paying off for multinational companies in the S&P 500

Despite the Russia-Ukraine war and the strong US dollar, globalization, the integration of world markets, is still paying off for US multinationals.

According to a recent study by FactSet Geographic Revenue Exposure, S&P 500 members with more than half of their overseas sales outperformed those with less than half of their sales presence.

“The composite earnings growth rate (combining actual results for companies that have reported and estimated results for companies that have yet to report) for the S&P 500 for Q2 2022 is 4.8%,” said John Butters, vice president and senior earnings Analyst at FactSet. “For companies that generate more than 50% of sales in the US, the composite earnings growth rate is 1.2%. For companies that generate more than 50% of sales outside the US, the composite earnings growth rate is 10.2%.”

Earnings growth comparisons show a similar pattern. “The composite revenue growth rate for the S&P 500 for Q2 2022 is 10.9%,” Butters said. “For companies that generate more than 50% of sales within the US, the composite sales growth rate is 9.4%. For companies that generate more than 50% of sales outside the US, the composite sales growth rate is 14.6%.”

This is the second quarter that earnings and revenue growth have followed this pattern, suggesting it’s a sustained trend rather than an anomaly.

Globalization brings many benefits to US companies. It enables them to expand business opportunities abroad and achieve economies of scale and scope, thereby increasing sales and profits.

Added to this is the reduction in cross-border transaction costs, which further increases the profits of these companies.

And there is diversification of operations. According to SpanishVIP co-founder Connor Ondriska, diversification has helped US multinationals dilute the adverse effects of domestic inflation and political uncertainties. “Diversification is key to avoiding the severe impact of a country suffering from a harsh political climate or inflation,” he said International business hours in an email.

Nonetheless, Kunal Sawhney, CEO of Kalkine Group, is concerned about the future of globalization and its impact on US multinationals. “Because of the parallels between the first wave of globalization towards the end of the 19th century and the current scenario, it can be argued that globalization is retreating,” he told IBT. “Globalization slowed in the years surrounding World War I and World War II amid various geopolitical and economic tensions. On the other hand, factors such as the Spanish flu pandemic, the Great Depression and the rise of Joseph Stalin also contributed to the retreat.”

He believes the world is facing a similar situation these days. “Many economies continue to struggle with the many variants of the COVID-19 pandemic,” he adds. “The war between Russia and Ukraine has also had an impact on global markets, particularly with the sharp increase in fuel prices. “Storming commodity prices, rising inflation and continued interest rate hikes around the world are also having a significant impact on globalization.”

Despite the obvious similarities, Sawhney thinks it’s too early to say that deglobalization is the new regime for the world’s multinational corporations.


stock markets nyse nasdaq s&p 500 news biggest winners

Photo: Reuters

https://www.ibtimes.com.au/globalization-still-paying-sp-500-multinationals-despite-russianukraine-war-1837853?utm_source=Public&utm_medium=Feed&utm_campaign=Distribution Despite the Russia-Ukraine war, globalization is still paying off for multinational companies in the S&P 500

Fry Electronics Team

Fry Electronics.com is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – admin@fry-electronics.com. The content will be deleted within 24 hours.

Related Articles

Back to top button