Australian companies lead wealth creation
(7 May 2010 – Australia) Australian companies have again topped the developed world in creating wealth for shareholders.
Leading the way was the resources sector, which dominated the list of top value creators for investors.
A study by Boston Consulting Group (BCG) showed that over the five years to December 2009, Australian companies delivered an average 8 per cent total shareholder return (TSR), sharing equal ranking with Canada but ahead of Europe at 5 per cent, the US at just 1 per cent and Japan at negative 3 per cent.
Resources companies dominated the list. The BCG report tracks wealth creation by Australia's top 100 companies based on cash flow.
Fortescue Metals Group topped the list of sustainable value creators over the five years to the end of December, with a TSR of 79 per cent, followed by Arrow Energy at 64 per cent, Paladin Energy at 55 per cent and JB Hi-Fi at 45 per cent.
BCG’s chief of the corporate development practice in Australia and New Zealand, and co-author of the report, Nicholas Glenning, said the improvement in TSR in 2009 masked some important trends in fundamental value -- valuation of a company based on its underlying cash flow, and expectation premiums -- two of the three drivers of value creation.
'Last year was a turning point in the growth of fundamental value,' he said. 'For the first time in over five years . . . underlying value fell by around 15 per cent.'
A study by Boston Consulting Group (BCG) showed that over the five years to December 2009, Australian companies delivered an average 8 per cent total shareholder return (TSR), sharing equal ranking with Canada but ahead of Europe at 5 per cent, the US at just 1 per cent and Japan at negative 3 per cent.
Resources companies dominated the list. The BCG report tracks wealth creation by Australia's top 100 companies based on cash flow.
Fortescue Metals Group topped the list of sustainable value creators over the five years to the end of December, with a TSR of 79 per cent, followed by Arrow Energy at 64 per cent, Paladin Energy at 55 per cent and JB Hi-Fi at 45 per cent.
BCG’s chief of the corporate development practice in Australia and New Zealand, and co-author of the report, Nicholas Glenning, said the improvement in TSR in 2009 masked some important trends in fundamental value -- valuation of a company based on its underlying cash flow, and expectation premiums -- two of the three drivers of value creation.
'Last year was a turning point in the growth of fundamental value,' he said. 'For the first time in over five years . . . underlying value fell by around 15 per cent.'
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