Transcript GII Presentation Template

Global Insight’s Industry Outlook
Worldwide: Winners and Losers
Mark Killion, CFA
Managing Director
World Industry Service
Global Insight
April 2005
Copyright ® 2005 Global Insight, Inc.
Agenda – Global Outlook for Sector Activity
 World Industry Service (WIS) provides sector data and
benchmark forecasts for sales, growth, returns and risks
 Globally consistent views, harmonized sector indicators
 Flexible benchmarks for each company’s own sector “peer group”, as well
as all the sectors that represent key markets for each company
 Comparative sector performances, industry forecasts


Which sectors enjoy the fastest growth?
What geographies are driving sector activity?
 Global Benchmarks of Production, Trade and Capital


Sales Patterns, Profits Growth, Profit Margin
Exports, Imports, Fixed Capital Expenditures
Copyright ® 2005 Global Insight, Inc.
2
Introduction to the World Industry Service (WIS)
 Unique set of global sector fundamental data, financial
benchmarks, written reports, sector experts
 Harmonized set of industries and indicators allow comparisons
and aggregations across sectors and geography
 71 industries and sub sectors that together comprise the entire
economy; available for each of 70 countries/economies
 Sales, Profits, Demand, Exports, Imports, CapEx, Prices
 History since 1980 with forecasts 10+ years out
 User friendly interface for navigation through choice of
sector, country, indicator, time frame; all delivered via Web
 Flexible metrics and reports for use in sales forecasting,
credit risk management, corporate strategy, research
Copyright ® 2005 Global Insight, Inc.
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Sector Forecasts
WIS sector forecasts incorporate both the
country and industry perspectives
Global Sector
Expertise


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
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Autos
Energy
Chemicals
Construction
Tourism
Health Care
Transport
Communications
Financial
World Industry
Service
• All Countries
• All Sectors
• Harmonized to
Common Standard
Global Sectors Analysts interact
with Country Macroeconomic Experts
Copyright ® 2005 Global Insight, Inc.
West and East
Europe Macro
Economics
Asia,
Latin America,
Rest of World
Macro Economics
Global Macroeconomic Expertise
U.S. Macro
Economics
4
Translating Economic Events into
Implications for Global Sector Markets
Common Applications of WIS Available for Review
1)
Custom Market Indexes
Follow key customer performances, calculate market share, forecast sales for
business segments and geography
http://www.globalinsight.com/Highlight/HighlightDetail133.htm
2)
Sector Risk Rating
Manage risk exposure by tracking industry level changes in credit and operating
risk, stress test portfolios with simulations and alternate “house view” scenarios
http://www.globalinsight.com/Highlights/HighlightDetail1103.htm
3)
Key Drivers for Technology
Use Global Sector Activity and Spending as Key Drivers for technology sector
forecasts, or research into industry structure
http://www.globalinsight.com/Highlight/HighlightDetail133.htm
4)
Stock Sector Navigator
Sector earnings and capital expenditures are used to value financial securities
such as stocks, bonds, loans, for investment research and portfolio management
http://www.globalinsight.com/Highlight/HighlightDetail1104.htm
Copyright ® 2005 Global Insight, Inc.
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Outlook for Global Sector Markets
Global Sector Growth Performances
Percent Annual Growth of Real Value Added - World
8

Strong economic
recovery since the downturn in 2001, but slower
relative growth in 2005-07
compared to 2004

Manufacturing sector
played key role in both
the down-turn and in the
subsequent recovery

Service sector growth
rates are more resilient in
the face of economic
volatility

Strong re-bound and
steady forecast for
construction
4
2
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
0
1995
Annual Growth (%)
6
-2
Manufacturing
Construction
Services
-4
Copyright ® 2005 Global Insight, Inc.
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Outlook for Global Sector Markets
Manufacturing Leads the Current Expansion
(%Growth in Inflation Adjusted Sector Sales for World Total)
Key Manufacturing Sectors
Key Services Sectors
25
25
Transport Equip.
Chem icals &
Refineries
Com puters &
Electronics
20
-5
-5
-10
-10
Copyright ® 2005 Global Insight, Inc.
2005
2004
2003
2002
2001
2000
1999
1998
1995
2005
2004
2003
2002
0
2001
0
2000
5
1999
5
1998
10
1997
10
1996
15
1995
15
1997
Wholsale & Retail
1996
20
Banking &
Insurance
Com m unications
7
Outlook for Global Sector Markets
Transportation Equipment
(%Growth in Inflation Adjusted Sector Sales for World Total)
Transportation Equipment Sales
Motor Vehicle Sales by Region
20
20
Motor Vehicles
Asia-Pacific
Air Craft
-5
-5
-10
-10
Copyright ® 2005 Global Insight, Inc.
2005
2004
2003
2002
2001
2000
1999
1998
1997
Western Europe
1995
2005
2004
2003
2002
2001
0
2000
0
1999
5
1998
5
1997
10
1996
10
1995
NAFTA
15
Ships & Rail
Equipm ent
1996
15
8
Strongest Volume Growth in Computers and Electronics
Top-Ten Real Growth Performers
By Worldwide Growth Rate in Value Added (Real)
% in Aggregate
Sales
Growth 2005
(%)
1
Office & Computing Machinery
1.16
10.94
2
Communications Equipment incl. Semiconductors
3.24
9.06
3
Computer Support and Software Services
1.86
6.43
4
Motor Cycles & Bicycles
0.11
6.29
5
Electrical Apparatus & Supplies
0.50
5.84
6
Synthetic Resins
0.60
5.69
7
Metal & Woodworking Machinery
0.21
5.01
8
Electrical Industrial Machinery
0.57
5.00
9
Small Electrical Appliances & Housewares
0.26
4.86
10
Drugs & Medicines
0.79
4.74
Copyright ® 2005 Global Insight, Inc.
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Strongest Revenue Gains in Health Care and Services
Top-Ten Revenue Performers
By Growth Rate in Sales (Nominal US$)
Share in Total
Sales (%)
Average Growth
2005-07 (%)
1
Drugs and Medicines
0.81
11.17
2
Aircraft and Aerospace
0.45
9.60
3
Educational Services
2.27
9.22
4
Health Services
4.45
8.93
5
Transport & Storage
4.31
8.43
6
Small Electrical Appliances and Housewares
0.21
8.36
7
Financial Institutions
3.75
8.18
8
Communication Equipment incl. Semiconductors
1.33
8.06
9
Computer Support and Software Services
1.96
8.03
10
Electrical Machinery
2.57
7.93
Copyright ® 2005 Global Insight, Inc.
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Ranking Sectors by the Outlook for Sales Growth
Most Modest Performers
By Growth Rate in Sales (Nominal US$)
Share in Total
Sales (%)
Average Growth
2005-07 (%)
10
Furniture and Fixtures
0.43
5.45
9
Paper and Products
0.86
4.68
8
Wholesale Trade
5.20
4.05
7
Agriculture, Hunting, Forestry & Fishing
3.21
3.29
6
Industrial Chemicals
1.64
3.09
5
Footwear (Excluding Rubber or Plastic)
0.10
3.06
4
Retail Trade
4.31
2.14
3
Petroleum Refineries
1.65
1.36
2
Primary Metals
1.93
-0.69
1
Mining and Quarrying
1.90
-2.09
Copyright ® 2005 Global Insight, Inc.
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How Big Are Sector Markets in the Global Economy?
Sector Percent Shares of Total World Sales
Utilities
2%
Construction
5%
Manuf.
20%
Trade
16%
Com m unicatio
n,
Transportatio
n
7%

Goods sector
accounts for 32% of
total world sales,
manufacturing
accounts for 20%

Financials’ 25% share
dominate Services
Sector

Community (public)
services account for
20%

“Distributive Sectors”
of Wholesale, Retail
Trade account for 16%
s
Mining & Quar.
2%
Agric.
4%
Financials
24%
Public &
Com m unity Svs.
20%
Copyright ® 2005 Global Insight, Inc.
12
OECD Countries’ Shares in Sector and Sector Growth
Based on Value Added in ’97 US$
100
Aggregate
By ISIC One-Digit Sectors
80
60
40
20
Public Serv.
Finan.&Busi.
Com.&Tran.
Trade
Construc.
Utilities
Manuf.
Mining
Agric.
Goods
Service
0
OECD Share in World Total (Avg. 2000 - '05)
OECD Share of Growth (from 2000 to '05)
Copyright ® 2005 Global Insight, Inc.
13
Rest of the World (Non OECD) Shares in Sector and Sector Growth
Based on Value Added in ’97 US$
100
80
Aggregate
By ISIC One-Digit Sectors
60
40
20
Public Serv.
Finan.&Busi.
Com.&Tran.
Trade
Construc.
Utilities
Manuf.
Mining
Agric.
Goods
Service
0
Sector Share (Avg. 2000 - '05)
Share of Growth (from 2000 to '05)
Copyright ® 2005 Global Insight, Inc.
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Role of Chinese Manufacturing in the World Economy
Regional Shares of Global
Manufacturing Sector Sales
($2.9 Trillion Year 2005)
Regional Shares of Growth in Global
Manufacturing Sector Sales
45
40
O the r
17%
C hina
13%
35
Kore a
3%
30
Taiwan
2%
U.S.
20%
Japan
13%
25
20
15
10
5
.
U.
S
dia
In
e
op
W
.E
ur
Ja
pa
n
Ta
iw
an
Ko
r
ea
0
na
W. Europe
30%
Ch
i
India
2%
Share in Global Manufaturing Sector Sales
Regional Share of Global Growth in Manufacturing from 2000 to 2005
Copyright ® 2005 Global Insight, Inc.
Source: GII World Industry Service
15
Role of Manufacturing Sector in the Chinese Economy
China Manufacturing Sector
Sales
($2.9 Trillion Year 2005)
Machine r
y&
Equipme n
t
37%
Food &
Tobacco
10%
Te xtile s
10%
Wood,
Pape r &
Printing
4%
Regional Shares of Manufacturing VA in GDP
and Growth in GDP
70
60
50
40
30
20
10
.
U.
S
ia
I nd
e
op
W.
Eu
r
Ja
pa
n
ea
Ta
iw
an
0
Ko
r
C he mical
s
23%
a
Mine rals
4%
Ch
in
Basic
Me tals
12%
Manufacturing Value Added as Share of GDP, 2003
Manufacturing's Share of Total GDP Growth -- 2000 to 2005
Copyright ® 2005 Global Insight, Inc.
Source: GII World Industry Service
16
Growth in Goods Imports in Selected Countries
Change in Imports Since 2000
300
20
200
15
150
10
100
5
50
0
.S
.
U
ce
Fr
an
m
an
y
G
er
or
ea
K
ia
In
d
a
0
hi
n
C
Bil. US$ - Δ from 2000
250
% Annual Change since 2000
25

China recorded the
largest growth in
Goods imports for any
country during 2000 to
2004

Growth in imports of
US$ 245 Bill. Amounts
to 23.6% annual
average growth

Although increase in
India’s imports were
smaller in value, it was
also very strong at 16%
percent annual growth
Increase during 2000 to 2004, $ Bil.(left)
% annual growth (right)
Copyright ® 2005 Global Insight, Inc.
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What is Role of Chinese Exports in World Trade?
Greater China Manufacturing Exports
Percent Share of Total World Manufacturing Exports
14
12
10
8
6
4
2
0
1980
China*
1990
1995
Hong Kong*
2000
Taiwan*
2005
Intra-Regional
* Export totals from China, Hong Kong and Taiwan exclude trade with each other. These are included in Intra-Regional.
Copyright ® 2005 Global Insight, Inc.
Source: World Industry Service
18
What is Role of EU 15 Exports in World Trade?
EU 15 Manufacturing Exports
Percent Share of Total World Manufacturing Exports
60
50
40
30
20
10
0
1980
1990
1995
2000
EU 15 Rest of World*
2005
Intra-Regional
* Export totals from EU 15 Rest of World exclude trade with each other. These are included in Intra-Regional.
Copyright ® 2005 Global Insight, Inc.
Source: World Industry Service
19
What is the Chinese Competitive Threat?
Change in World Manufacturing Export Shares
(Delta on the Shares: Share at End of Period less Share at Start of Period)
5
4.5
2005--2009: +2.0%
Change in Share
4
3.5
3
2.5
2
2000--2004: +2.9%
1.5
1
0.5
0
Taiwan
1980-1989
South Korea
1990-1999
Copyright ® 2005 Global Insight, Inc.
China
2000-2009
Source: World Industry Service
20
Cross Border Trade Still Growing
in Importance for Sector Production
Global Exports of All Goods (Tril. US$)

Manufacturing accounts for
the largest share of
merchandise exports

Of the $ 8.34 Trill. anticipated
trade value, $7.54 Trill. Will
be from the manufacturing
sector

Agriculture and Mining
provide $230 and $575 Bill.
respectively

Rising trade intensity: While
volume of Global exports
continued to grow, share of
exports in global production
also continued to expand
12
35
10
30
25
8
20
6
15
4
Share in %
Tril. US$
Exports as Share of Production (All Goods)
10
2
5
0
0
1990
1995
2000
2005
2010
Copyright ® 2005 Global Insight, Inc.
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North Asia: High Technology Sector
Trade Intensity in High-Tech in China
Did the trade intensity increase over the past decade in China?
Trade Intensity = (Export+Import)/Production
120
100
80
60
40
20
0
1995
2000
China
2005
North Asia
Copyright ® 2005 Global Insight, Inc.
Source: World Industry Service
22
SAARC: High Technology Sector
Trade Intensity in High-Tech in India
Did the trade intensity increase over the past decade in India?
Trade Intensity = (Export+Import)/Production
100
80
60
40
20
0
1995
2000
India
2005
SAARC
Copyright ® 2005 Global Insight, Inc.
Source: World Industry Service
23
Latin America: High Technology Sector
Trade Intensity in High-Tech in Brazil
Did the trade intensity increase over the past decade in Brazil?
Trade Intensity = (Export+Import)/Production
140
120
100
80
60
40
20
0
1995
Brazil
2000
2005
Latin and Central America
Copyright ® 2005 Global Insight, Inc.
Source: World Industry Service
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Comparing China’s Trade Shares with Other Countries
Trade Shares of Industrial Chemicals
(World Production US$ 1.3 Trill. in 2005)
50
45
40
35
30
25
20
15
10
5
0
Trade Shares of Metals & Construction Materials
(World Production US$ 1.5 Trill. in 2005)
60
50
40
30
20
10
0
ic
a
or
ld
rld
W
Wo
A
fr
a
fric
S. A
S.
l
or
ea
ra
zi
l
zi
Bra
B
a
ore
an
K
S. K
S.
n
iw a
na
ai
w
Ta
T
ina
Ch
C
hi
Share of Export in Production (Sales)
Share of Imports in Consumption
Share of Export in Production (Sales)
Share of Imports in Consumption
Copyright ® 2005 Global Insight, Inc.
Source: World Industry Service
25
Comparing China’s Trade Shares with Other Countries
Trade Shares of Communication Equip.
(World Production US$ 1.04 Trill. in 2005)
Trade Shares of Motor Vehicles
(World Production US$ 2.1 Trill. in 2005)
100
90
80
70
60
50
40
30
20
10
0
60
50
40
30
20
10
0
rld
ica
ic
a
or
ld
Wo
W
Afr
A
fr
S.
S.
rea
or
ea
ra
zi
l
l
azi
Br
B
Ko
an
K
S.
S.
n
na
ai
w
iwa
Ta
T
i na
Ch
C
hi
Share of Export in Production (Sales)
Share of Imports in Consumption
Share of Export in Production (Sales)
Share of Imports in Consumption
Copyright ® 2005 Global Insight, Inc.
Source: World Industry Service
26
What Is the Role of Capital Expenditures in Sector Activity?
US CapEx Spending as % of Total Sales
CapEx Spending as % of Total Sales
United States Vs Europe, (2003)
Total for 446 US Corporations in the GICS
Sector Classification
5
9
14
4.5
8
4
7
3.5
12
10
8
3
6
2.5
5
2
6
4
US
Non Financial (RHS)
Utilities
Telecoms
Technology
Health Care
Cons. Staples
Industrials
Materials
Cons. Discr.
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1993
1994
Financial (LHS)
2
Energy
3
0.5
0
Financials
1
Non Financial
4
TOTAL
2
1.5
0
16
West Europe
Source: Worldscope Company Financial Statements & WIS Calculations
Copyright ® 2005 Global Insight, Inc.
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Ratio of Fixed CapEx to Sales
(CapEx / Total Sales)
Service Sector (ISIC 6-9)
Goods Sector (ISIC 1-3)
12
40
35
10
30
8
25
6
20
15
4
10
2
5
0
0
U.S.
EU-15
1995
Brazil
2000
India
China
U.S.
EU-15
1995
2005
Copyright ® 2005 Global Insight, Inc.
Brazil
2000
India
China
2005
28
What is the Return on Fixed CapEx Spending?
(ROFIC)
US Corporate Sector: Return from
Investment in Fixed Capital
Company Net Income / 3-year sum of Fixed
Investments
US Macro Economy: Marginal Efficiency
of Private Fixed Investment
15
80
20
60
15
40
10
20
5
0
0
Financial
30
25
10
5
∆
2004
2003
25
2002
100
2001
20
2000
30
1999
120
1998
35
1997
140
1996
40
1995
160
1994
45
1993
180
∆ in GDP / 3-year sum of Fixed
Investments
∆
Non Financial
Source: US BEA, Worldscope Company Financial Statements &
WIS Calculations
Copyright ® 2005 Global Insight, Inc.
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Marginal Efficiency of Investment
(∆ in GDP / Three-year sum of CapEx)
OECD and LDC’s
U.S. and China
25
25
20
20
15
15
10
10
5
5
0
0
'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06
'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06
-5
US
OECD
China
LDC's
Copyright ® 2005 Global Insight, Inc.
30
Sector Return on Fixed Capital Spending
(Operating Profits / Three-year sum of CapEx)
Aggregate ISIC: 1 to 9
China, by Sector
60
140
120
50
100
40
80
30
60
40
20
20
10
1995
Copyright ® 2005 Global Insight, Inc.
2000
Med. Tch
Financials
All
China
India
2005
Services
2000
0
Goods
1995
Brazil
EU-15
U.S.
0
2005
31
More Information?
Please Contact Us for a Personal Demonstration!

Mark Killion, CFA
Managing Director, World Industry Service
1-610-490-2547
[email protected]

Prem Premakumar
Applications Manager, World Industry Service
1-610-490-2525
[email protected]
Copyright ® 2005 Global Insight, Inc.
32