The giant companies that make the least money

By Katharina Buchholz

Big companies with billions of dollars in revenue create wealth for investors and their shareholders. Sometimes, however, the opposite happens and the “giants” turn into black holes where huge sums are lost.

An analysis of companies with revenues of more than $ 12 billion – included in the Forbes Global 2000 list of the largest companies in the world – sheds light on this phenomenon. There are many cases where a large business is kept alive despite the enormous losses it presents, especially if they are considered temporary – or even if that hope is sustained.

According to annual updates released in April, several companies on the list of “biggest losers” have been disadvantaged by the pandemic. A prime example is Air France-KLM, which lost $ 3.9 billion a year, equivalent to 23% of the Group’s annual revenue of nearly $ 17 billion. Another company that has been “damned” by the pandemic is the Eastern Japan Railways, which suffered losses equal to 19% of their revenues.

If we look at the entire Forbes Global 2000 list, the biggest losses in the last year were seen by the companies operating in the field of cruising. Royal Caribbean Group RCL and Carnival Corporation lost 344% and 268%, respectively, of their annual revenues of $ 1.5 billion and $ 3.5 billion. Other airlines, such as British Airways, Iberia, Lufthansa or China Eastern Airlines, also lost significant sums, including those that lost significant sums.

Government support programs against covid-19 have helped technology companies survive and hope for a better future. Technology companies have seen a huge “hole” in their revenues and have been forced to turn to new sources of funding – mostly investors betting that technology companies will return to strong profitability in the future. The biggest losses were accumulated by the Chinese technology giants. Kuaishou, a video-sharing platform, lost about $ 12.6 billion in revenue last year, while Didi, a transportation service provider, and food delivery company Meituan reported smaller but smaller losses this year. Beijing’s tightening of regulatory rules was another setback for Chinese tech players on the road to profit.

Historic companies such as the French IT company Atos, Texas-based Cheniere Energy or Gruppo Tim – formerly Telecom Italia – are among the biggest losers. In their cases, the cause of the losses is mainly based on the same company and not on the overall picture of the industry. Atos cited the disappointing financial figures as the higher-than-expected operating costs associated with a contract in the UK, “slips” in project delivery and delays in customer payments. Gruppo Tim had problems due to a case of impairment of goodwill and a large write-off of deferred tax assets. Finally, Cheniere Energy suffered heavy losses even though its liquefied natural gas business went well in 2021. According to industry sources, the company sells LNG at constant prices, but buys gas at fluctuating prices. The gas rally in 2021 brought losses to the company for a specific period of time.