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    World population and multinational companies

    The world population is expected to reach 7 billion by the end of 2011 or into 2012 according to estimates. The “Day of 7 billion” has been targeted by the United States Census Bureau to be in July 2012, while the population division of the United of the United Nations suggests later this year.

    The 6 billion mark was reached in 1999, taking an estimated 12 years from 1987. Another 12 years and the world population will be close to 7 billion with the estimate of 8 billion by 2025.

    Going back there are no exact numbers and dates, but the milestone numbers and dates according to census bureau are as follows:


    Source: Wikipedia

    This on-going growth in world population combined with strong economic growth in many emerging markets – which support the quickest growing populations, is, according to Sarasin, allowing companies like Procter and Gamble to boast that they will aim to add a massive 1 billion new customers by 2015.

    This is in addition to the four billion customers that it already serves.

    Procter and Gamble is a branded goods company operating across 80 countries around the world and selling into 180 countries. It markets brands such as pampers, Gillette, Pantene and Duracell, etc

    This is but one example of a global multinational company that is looking to expand into the global markets and take advantage of higher growth rates.

    Some statistics on Procter and Gamble

    • 2010 annual revenues were $78,9 billion, with net earnings at $12,7 billion.

    • Operating cash flow is strong and ahead of net earnings

    • The company spends 3% or $2,5 billion on research and development and 10% on marketing, i.e. $8 billion on brand awareness.

    • In terms of their expansion plans, P&G is looking to introduce all product lines to all countries, and focus on a two-tier product range, one for affluent markets and one for emerging or “starter markets”

    • the company has a history of 54 years of growing its dividend at a compound average growth rate of 9,5%

    Bigger margins in foreign markets

    Data from Legg Mason of the US domiciled companies in the S&P500 index, reflects that between 1995 and 2009 pre-tax margins on foreign business for these companies from the US grew significantly in absolute terms and when compared to the pre-tax margins on their domestic business.

    P&G is just one multinational company that is well placed to grow its business into emerging markets and which investors should be looking to take advantage of in their global portfolios

    Kind regards

    Ian de Lange
    info@seedinvestments.co.za
    www.seedinvestments.co.za

    Permalink2011-01-20, 17:00:54, by ian Email , Leave a comment
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