Large companies depend largely on foreign participation

29/01/2008 15:00

In the last ten years the net yearly profit of the largest non-financial companies in the Netherlands has varied between 10 billion euro in 2002, to over 70 billion euro in 2006. The correlation with international economic developments is very strong.

Net profits of large companies

Net profits of large companies

Relation with international economy

The net operating result rose gradually from 1997 peaking in 2000. In that year the net result topped 50 billion euro for the first time. In 2001 the result dropped to around 10 billion euro.
 
The weak international economy, strengthened by events of 9/11, played a major part in this fall. Two of the largest Dutch companies, KPN and Philips Electronics, faced serious problems. KPN had to write off substantial amounts of goodwill and had serious financing setbacks and reorganisation costs. Philips suffered substantial losses as a result of the crisis in the semiconductor and components industries. The net result for these two companies fell by 20 billion euro as a result of these setbacks. This served to underline the dependence of Dutch multinational companies on international economic developments.

Since 2003, a clear recovery has been observed, and 2005 and 2006 were top years. In 2006, the total operating result was at its highest in ten years (72.5 billion euro).

Foreign participation diminishing

The net operating result is the result from domestic operations, result from domestic participations, result from foreign participations, plus net financial results, minus taxes. 
In 2001 and 2002 the strong decrease in the result from foreign participations was mainly responsible for the meagre overall results in 2001 and 2002.

Operating result and participation, large companies

Operating result and participation, large companies

Frank Bonger