Key Takeaways
- The latest edition of the Top 1,000 covers companies operating across 308 industries and 20 sectors.
- BHP surpassed Rio Tinto to claim the top spot, with revenue just shy of $100 billion.
- Rising interest rates pose a challenge for banks.
- The number of mining companies in the Top 1,000 grew by 12, reflecting strong demand for mining commodities.
- The Coal Mining industry had an outstanding performance in 2022, whereas superannuation funds are consolidating to remain competitive.
IBISWorld’s annual Top 1,000 list of Australian and New Zealand companies features the highest-grossing companies in 2022. The list spans 308 industries and 20 sectors, with over 75% of companies on the list reporting revenue growth for the year. The top-ranking companies include industry giants like BHP, Rio Tinto, Woolworths, Coles, and Wesfarmers. Glencore and Ampol Limited have also claimed spots among the top performers, while the lower regions of the list showcase many promising newcomers.
With the ongoing Russia-Ukraine conflict affecting energy prices globally, companies in the energy sector are bracing for their revenue to take a hit. Rising interest rates are another concern for businesses, with some fearing a potential slowdown in the economy. Meanwhile, the retail sector is resurging as customers return after COVID-19 lockdowns.
The top 1,000 companies generated a total $2.3 trillion in revenue in 2022 – covering both the private and public sectors, and excluding not-for-profit and government entities. Financial reporting dates span from 1 January 2021 to 31 March 2023, accounting for variable balance dates and financial report release schedules. All amounts listed in the report are in Australian dollars.
Strong performing divisions
The Mining division was the largest contributor to the top 1,000 companies’ total revenue, generating an impressive $416.5 billion – or 18.0% – between just 87 companies. This strong performance was largely due to strong demand for commodities like iron ore and coal, particularly from developing countries with ambitious infrastructure development plans. The rise of electric vehicles and renewable energy sources also spurred demand for metals like lithium and copper, which are key components in batteries and renewable energy infrastructure.
The Manufacturing division was a close second, accounting for 17.1% of the Top 1,000’s total revenue. The Retail Trade and Wholesale Trade divisions also made noteworthy contributions, each representing 11.8%. Ecommerce and direct-to-consumer sales models grew strongly in 2022, and this trend will continue in the coming years.
Top 10 companies of 2022
Mining, retail and banking firms have dominated the top 10 companies in 2022. Despite experiencing mixed fortunes, the Mining division has topped the list. Moreover, mounting interest rates have stimulated revenue hikes for the big banks.
The Australian banking sector has grappled with low interest rates, intense competition, and increased regulatory scrutiny in recent years. Revenue from Commonwealth Bank of Australia fell by 2.0% in 2022. Despite its hurdles, Australia and New Zealand Banking Group (ANZ) saw a significant 21.9% increase in revenue, now standing in 10th place. Interest rate hikes – which began in New Zealand in early 2022 and in Australia in May of the same year – were the primary drivers of ANZ’s revenue growth. These hikes enabled ANZ to increase its lending rates and boost its revenue.
The Russia-Ukraine conflict has had a notable impact on global coal and fuel prices, creating challenges and opportunities for companies in the Mining and Manufacturing divisions. Glencore, capitalising on the surge in demand for coal, has made a comeback with a substantial 54.9% increase in revenue – jumping six ranks on the list. Ampol Limited (previously known as Caltex) also benefited from high fuel prices and emerged as a new player in the top 10, with 84.1% revenue growth.
Last year’s frontrunner Rio Tinto encountered significant challenges due to a drop in the global price of iron ore. With nearly half of its revenue generated from iron sales, the company's financial performance suffered. Despite these headwinds, Rio Tinto remains a dominant player among mining companies. Similarly, BHP's growth rate also showed signs of slowing down due to prevailing market conditions. However, the company's revenue from coal sales tripled, as demand for electricity generation and domestic coal prices surged. This hike offset the effect of declining iron sales.
Revenue from Fortescue Metal Group Limited declined by 21.7%, pushing the company out of the top 10. The company is repositioning itself to a more sustainable business model, with a focus on early-stage green projects worldwide.
Industry highlights
Coal mining
The ongoing Russia-Ukraine conflict has caused energy markets to become volatile and prompted a leap in energy prices, including for coal. The Australian Coal Mining industry saw a surge in demand, prices, and government support initiatives in the past year. The recently signed Australia-India Economic Cooperation Treaty Agreement (ECTA) aims to increase the two countries’ economic cooperation in various sectors, including coal mining. ECTA is expected to help Australian coal companies access the vast Indian market.
Coal prices will likely remain high in the short term until the supply-demand balance stabilises and global energy markets become more predictable. Additionally, many mining companies are shifting their focus towards future-facing commodities, taking cues from BHP and leaving coal behind.
Superannuation
The COVID-19 pandemic has substantially affected superannuation fund revenue. The economic uncertainty caused by the pandemic induced market volatility, which affected investment returns. Many superannuation funds have reported negative results. Moreover, the Federal Government allowing people to access their superannuation early at the height of the pandemic led to sizeable withdrawals from funds. This policy further affected these companies’ revenue. Notably, AustralianSuper and Spirit Super have seen their revenue plummet, recording -74.8% and -66.5% respective declines in 2022.
Changes in the regulatory environment also affected superannuation fund revenue. The Federal Government’s Your Future, Your Super reforms placed greater scrutiny on the fees charged by funds, leading some to consolidate or reduce their fees to remain competitive. The mergers resulted in a decline in revenue for some funds as they reduced their fees and streamlined their operations. Consolidation in the industry caused the number of superannuation entities in the Top 1,000 to shrink from 49 to 17.
Tourism
The Australian tourism sector has found itself in a challenging period, facing travel restrictions and border closures since the pandemic hit in early 2020. Restrictions on international tourism pushed domestic tourism to be the key driver of growth in the sector. State governments provided considerable financial aid to airlines that fly to regional destinations. Restrictions have eased since 2021 alongside the country's rising vaccination rates. In June 2021, Virgin Australia – the second-largest airline in the country – announced its relisting on the ASX, followed by a successful initial public offering. This move marked a strong recovery from the industry’s lows, but the international market has yet to fully rebound.
The tourism sector is also shifting to online business models – for example, by adopting contactless check-ins, payments, and other measures to ensure visitor safety. Luxury tourism also presents new opportunities for enterprises. Qantas has invested in its business lounges, opening greater capacity to service the luxury segment. As the sector continues to navigate through the pandemic's effects, it will need to adapt to remain competitive and attract tourists from both domestic and international markets.
Notable newcomers
Three firms have notably emerged in the Top 1,000, boasting impressive revenue growth in 2022. Plasia Holdco, Allkem and Alstom Transport have thrived off gains in the retail, mining and transport sectors, respectively.
Plasia Holdco, holding the 320th spot, provides global logistics services to both retail and wholesale customers. Increased demand for goods and services following a pandemic-induced slump has led to a surge in demand for logistics services. Significant increases in international freight costs have also driven the 667.3% jump in revenue for Plasia.
Lithium exploration and mining company Allkem made headlines in August 2021 when it acquired Galaxy Resources Limited for a staggering $1.9 billion. The acquisition, combined with the company's commitment to sustainable mining practices and operational excellence, has resulted in a remarkable revenue performance. Allkem's revenue has quietly grown by 747.6%, thanks to the surge in production and high lithium prices.
Alstom Transport, a foreign-owned rail transport solutions provider, has benefited from a rise in demand for rail transport. Alstom acquired Bombardier Transportation Australia Pty Limited and its subsidiaries in January 2021, and has since become one of the largest railway equipment manufacturers in Australia and New Zealand. The company stands at 622nd place in the Top 1,000.
Final Word
With superannuation funds falling off the list and tourism rebounding, the 2022 Top 1,000 list saw significant changes in rankings. The Russia-Ukraine conflict has created geopolitical tensions that disrupted trade and investment. Meanwhile, interest rate hikes have increased borrowing costs for businesses and consumers, reduced spending and slowed economic growth.
On a positive note, Australia has recently signed the Australia-United Kingdom Free Trade Agreement and Australia-India Economic Cooperation and Trade Agreement. These agreements are expected to create new opportunities for businesses that are looking to expand their global reach. Furthermore, a trend towards sustainable practices is growing, indicating a shift in consumer preferences for environmentally and socially responsible businesses. Although uncertainty remains, businesses can embrace these changes and thrive in the current economic climate.
