The up-and-down world of retail

Business analysts at IBISWorld have revealed the 2017 list of Australia’s Top 1,000 companies, providing a comprehensive and thorough insight into the corporate landscape in Australia, including the largest firms, growing and declining sectors, and new businesses to watch in 2018 and beyond.
“The firms on IBISWorld’s 2017 Top 1,000 list account for $1.94 trillion in revenue, or approximately 28% of all trade in Australia,” IBISWorld senior industry analyst Jason Aravanis said. “Approximately one-third of companies on the list reported lower revenue for the year, with total revenue for the list declining by 2.0% since IBISWorld’s 2016 Top 1000 companies list.”
Although total revenue across the 2017 list has fallen, this loss has been concentrated amongst a small number of large firms. Notable companies that generated lower revenue include Westpac, Rio Tinto, ANZ, NAB, and Caltex Australia.
In contrast, JB Hi-Fi, BHP, CIMIC Group and other major companies expanded revenue over the year. Overall, the 2017 top 1,000 companies’ performance was mixed. For example, 52% of companies on the 2017 list improved profitability.
Top 10 Company Performers:

2017 Rank2016 RankCompany (Balance date)Total Revenue ($m)
11Wesfarmers (6/17)68,732
22Woolworths (6/17)55,921
33Commonwealth Bank of Australia (6/17)44,949
48BHP (6/17)39,164
54Westpac Banking Corporation (9/17)37,518
66Rio Tinto (12/16)35,132
77ANZ Banking Group (9/17)34,221
85NAB (9/17)32,245
99Telstra (6/17)28,345
1010NSW Health (6/17)21,296

 
Five newcomers
New entrants in the 2017 Top 1,000 came from a variety of industries. Scentre Group generated significant revenue through the sale of its Westfield shopping centre in New Zealand. Lion expanded its revenue after acquiring New Zealand craft brewing company, Brew Strong Limited. Fulton Hogan created two separate joint ventures with Seymour Whyte and Laing O’Rourke Australia, ramping up its revenue base. Ingham’s generated greater revenue due to rising poultry consumption. WesTrac secured additional construction contracts, delivering strong revenue growth. New entrants and their revenue include the following:

RankCompany (Balance Date)Total Revenue ($m)Main Activity
60Scentre Group (12/17)5,536Real Estate Services
76Lion Pty (9/16)4,902Beverage manufacturing
94Fulton Hogan Limited (6/17)3,648Construction
148Inghams Group Limited (6/17)
 
2,438Poultry Processing
171WesTrac Pty Ltd (6/17)2,218Construction

 
Top performing industries
Superannuation funds in Australia
The superannuation funds industry was one of the fastest growing industries in 2016-17. Revenue in this industry is made up of the investment income of various funds, which are highly exposed to equity markets, interest rates and property yields. The All Ordinaries index, which comprises the 500 largest companies listed on the Australian Securities Exchange, appreciated strongly in 2016-17. This has contributed to greater revenue amongst several superannuation funds in the Top 1000, including AustralianSuper, Q Super, and the Commonwealth Bank.
Mining in Australia
The mining sector posted significant growth in 2016-17, as rising output volumes and higher commodity prices boosted revenue. Curtailment of Chinese commodity production since 2016 has benefited Australian mineral producers, as lower supply has led to higher global prices. As a result, BHP Billiton increased revenue and returned to profitability in 2016-17, after posting a massive loss in 2015-16.
“BHP Billiton’s recovery has been driven by strong performances in the Oil and Gas Extraction, Black Coal Mining, and Iron Ore Mining industries. Rio Tinto posted lower revenue over the year through December 2016, but recent results have shown a strong recovery over the year through December 2017,” said Mr Aravanis.
Electricity retailing
Revenue across the electricity supply chain increased sharply in 2016-17, as higher purchase costs were passed on to customers.
Rising gas costs, the closure of power stations, and uncertainty regarding investment in replacement power plants has led to a significant increase in wholesale electricity prices in eastern and southern Australia. Electricity retailers such as Origin and AGL increased revenue in 2016-17 due to this trend. EnergyAustralia posted lower revenue over the year through December 2016 due to the shutdown of aging power stations, but generated greater revenue over the year through December 2017 due to higher power prices.
Petroleum product wholesaling
The petroleum product wholesaling industry posted a strong recovery in 2016-17, as the world price of crude oil surged. The increased crude oil price fed through to higher local wholesale and pump retail prices for petroleum and diesel. The industry is dominated by four major players, Caltex, Viva, BP Australia and ExxonMobil. Revenue declined for all of these companies over the year through December 2016. However, these players are expected to post a significant turnaround over the year through December 2017.
Weaker performers
Consumer goods retailing
The growing trend towards bargain hunting has negatively affected the consumer goods retailing industry. Consumers have become more informed about purchases and the value of the products they buy. The industry’s revenue declined in 2016-17, as lower household discretionary income led to a cutback in household expenditure.
“Despite the overall decline in industry revenue, the industry’s major players, Wesfarmers and Woolworths, were able to grow their revenue as consumers sought out cheap prices at these large establishments. These large firms have been able to succeed in a difficult operating environment due to their economies of scale, which have enabled them to gain market share from smaller competitors,” said Mr Aravanis.
Telecommunications services
The telecommunications services industry posted lower revenue in 2016-17, as intensifying price competition among wireless telecommunications service providers and declining revenue from fixed-line businesses hindered the industry’s performance. Both Singtel Optus and Vodafone posted significant revenue declines due to lower equipment sales (as customers increasingly shift towards SIM-only plans), and strong price competition from the mobile telecommunications resellers market. Telstra’s retail segment has also been affected by these trends. However, Telstra’s overall revenue increased in 2016-17 due to rising revenue from leasing infrastructure to NBN Co.
IBISWorld’s Top 1,000 company listing was compiled using IBISWorld’s Company Database, covering the Top 2,000 companies in Australia.

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