A two-edged tale for Spanish corporations: they flee home, but succeed abroad

By Fernando Barciela, in Madrid >> a reportage published in Revista Consejeros | During the first half of this year, Inditex’s turnover rose by 12%, 25.9% Gamesa’s, 45.9% Tubacex’, Prosegur’s by 7.2%, Repsol’s by 11.2%, 6.3% Telefónica’s, Abengoa’s by 37.5%, Gas Natural’s by 8.2% …Can it be that things are turning awry for Spain while our large companies look buoyant? Yes, it can.

In fact, that’s exactly what is happening to most people’s amazement. The fact that the unemployment rate in Spain has not ceased to gallop farther and farther over the latest years, from 20.4% in January to 22.6% in September (according to Eurostat data) has not been an obstacle for Spanish multinationals to achieve the impossible: a healthy increase in sales figures, in some cases of such magnitude that they have recovered (when not surpassed) 2007 levels.

When we compare 2010 sales to 2007 numbers, we find equally dramatic increases of 30% or 40% in many cases like in Técnicas Reunidas, OHL, Grifols, not the least Gas Natural and Iberdrola, these ones due to acquisitions such the FENOSA and Scottish Power operations.

Most of the companies listed on the Ibex 35 show progressions of 10% or 15%, which is not bad either in these troubled days.

The secret? Their growing international presence, especially in markets like Latin America, which has been growing at above 4% during the crisis years (much more in Colombia, Peru and Brazil), not to mention Europe, which also has sort of behaved itself throughout 2010 and into 2011, with growth exceeding 4% in some Northern countries. And the increased exposure to Asia, where GDP growth is soaring. This has allowed Spain Corp. to compensate for the low generation of business in Spain.

As a proof, beyond the known triumphs of the two financial giants Banco Santander and BBVA, let’s take the international business performance of our multinationals, which has jumped by more than fivefold between 2005 and 2010 against the recession. For example, FCC, which during that period grew by a mere 2.6% in Spain, saw its foreign business spike by 691%.

More examples? Abengoa’s external trade rose by 321.6%, by 247.6% Gamesa’s, Iberdrola’s by 678%, Inditex’ by 138.8%, by 245.9% OHL’s, Técnicas Reunidas’ by 469.1%, Telefónica’s 131.4% … The combined result of a fall in activity in Spain and a dramatic progression beyond our borders is that our companies are much more multinationals than ever before.

Nearly 80% of the Ibex 35 companies already get more than 50% of its business from outside of Spain. Some have had enough time during just the last five years to transform themselves into true multinationals. The weight of international business in Gamesa, for example, has grown in that period from 40% to 89%, from 10% to 46% in FCC, from 17% to 52% in Iberdrola…

And this is just the beginning, given that investments abroad seem to gain strength again. Some analysts believe that in five years, 80% of the large companies on the Ibex 35 will register more than 80% of their sales outside Spain.

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