$443 Trillion in Global Corporate Profits Lost to Geopolitical and Economic Uncertainty

It has been analyzed that major global companies have lost $320 billion (approximately 443 trillion won) in profits since 2017 due to geopolitical and economic uncertainty.

According to the British daily Financial Times (FT) on the 21st (local time), consulting firm EY-Parthenon found that approximately 3,500 publicly listed companies worldwide with annual revenues exceeding $1 billion (about 1.4 trillion won) suffered such losses during periods of significant geopolitical or macroeconomic volatility.

Mats Persson, Head of UK Macro-Geopolitical Strategy at EY-Parthenon, explained, "We are seeing continued waves of macro volatility, such as trade conflicts and global wars," adding, "This means that government policies and global events are having a greater impact on (corporate) value and profits than in previous decades."

The research team also analyzed fluctuations in the London Stock Exchange over the past three years, a period marked by global inflation, Russia's invasion of Ukraine, turmoil in the UK government bond market, the Gaza war, and the re-election campaign of US President Donald Trump. They found that about 40% of the total value fluctuation in the FTSE 100 index occurred within just a few days of major economic or geopolitical events. In addition, it was found that one out of every four of the 3,500 listed companies saw their EBITDA margin drop by more than 5 percentage points over the past three years.

Only one out of ten global companies that ranked in the top 25% for profitability in 2014 managed to maintain that performance in 2024. In the United States, Caterpillar, UPS, Pfizer, Merck, and Johnson & Johnson were evaluated as having performed well in terms of profitability, while in the United Kingdom, Next, Rio Tinto, and Croda were recognized for their strong results.

The research team pointed out that companies that succeeded in diversifying their portfolios, managing costs, adapting well to policy changes, and improving corporate governance were able to maintain high profit margins.