News Column

Taking Root in Rocky Soil

June 2003, HISPANIC BUSINESS Magazine

Joel Russell

View the 2003 Hispanic Business 500
Revenues for the 500 largest Hispanic-owned companies in the nation fell 1.7 percent in 2002 to a total of $23.1 billion. Although the loss rate is minimal - last year revenues for the Fortune 500 dipped 6 percent, or nearly four times as much - it represents the first down year in the 19-year history of the Hispanic Business 500®.

Unstable macro-economic conditions provided rocky soil for the emerging U.S. Hispanic economy in 2002. According to the Bureau of Economic Analysis, GDP grew 5.0 percent in the first quarter, a mere 1.3 percent in the second, 4.0 percent in the third, and 1.4 percent in the fourth. For the Hispanic Business 500, on-and-off growth created a few big winners, particularly in the technology and exporting sectors.

Revenues for Brightstar Inc. of Miami, a cellular equipment exporter, grew 36.6 percent to $848.7 million, placing the company second on the directory. Alamo Travel, number 74 on the list, more than doubled its revenues, from $25 million the previous year to $59.4 million in 2002. Information technology firm SC&A Inc., ranked number 438, had the highest growth rate, with revenues jumping from $14,000 in 2001 to $7 million in 2002 - a one-year spike of 49,900 percent (see table, "Top 10 Companies by Percent Revenue Growth"). Sector reports following this directory detail how Hispanic CEOs have turned to technology and foreign markets during the slowdown at home.

Only two industrial sectors - retail and service - posted losses, while the construction, automotive sales, and finance sectors showed the strongest growth (see table, "Sector Composition & Performance"), in keeping with prevailing economic trends. For the second straight year, nearly half the CEOs cited "market conditions" as their main obstacle to growth, and data on sectors and profits confirm their concern.

A profit profile of the entire Hispanic Business 500 shows that more than 60 percent of all revenues came from companies with thin profit margins (see graph, "Profit Profile: HB 500"). The profit profile of the beleaguered service sector shows a more concentrated clustering of revenues around the break-even point. In contrast, the healthy construction sector generated nearly half its revenues at companies with margins in the 6 to 10 percent range. Even as revenues at these companies grew or held steady, profit margins felt the pressure in those sectors hard hit by the slow economy. (For additional data on the Hispanic Business 500, visit www.HispanicBusiness.com/go/more500. Specialized analysis from HispanTelligence, the magazine's research arm, also is available at the site.)

Employment, the other key measure of economic health besides revenue, increased
2.9 percent (see table, "Employment in the Hispanic Business 500"). The 500 companies now employ 98,185 people. One year ago, a survey found that 57.2 percent of CEOs on the Hispanic Business 500 planned to add to their payrolls, a goal many of them reached. Looking forward, 51.8 percent of CEOs say they plan to hire more in 2003, and only 2.6 percent plan layoffs.

On the map, California again leads this year's 500 in number of companies. Florida is home to fewer companies, but total revenues for Florida-based companies are nearly double those of California-based companies. Both California and Florida contributed fewer companies to the list than in the previous three years. Compensatory growth came from states along the Atlantic corridor (especially New York and New Jersey) and Georgia in the South. Other "exit states" included Colorado and Michigan (see table, "Top 10 States").

Looking ahead, CEOs expect better sales figures for 2003. Only 3.8 percent predict their revenues will decline for next year's directory, while more than a quarter (25.6 percent) expect a 6 to 11 percent increase, and nearly as many (24 percent) expect an increase of 12 percent or more. To get a better handle on CEO sentiment, Hispanic Business asked entrepreneurs on the 500 to offer their "on-the-ground" forecasts for the U.S. economy in 2003. Some of their responses appear on the following pages within the directory, and many point toward a rocky road for the rest of the year.

Hispanic Business 500 directory research by Research Supervisor J. Tabin Cosio and Research Assistants Cynthia Marquez and Michael Caplinger. Analysis by Business Economist Juan Solana and Business Analyst Veronica Spadoni.

METHODOLOGY

Hispanic Business research staff gathered data for the 19th annual listing of the 500 largest Hispanic-owned companies in the United States from the Hispanic Business Company Profile form, which appeared in the magazine's December 2002 issue. Also, Company Profile forms were mailed to more than 14,000 Hispanic-owned companies in the United States.

Companies included in the Hispanic Business 500 must show at least 51 percent ownership by Hispanic U.S. citizens and must have headquarters in one of the 50 states or Washington, D.C. Companies must submit revenue figures based on their report to the IRS on line 1c of the corporate/partnership tax return. The revenue figure must be submitted on a signed form verified by the CEO, CFO, or a CPA representing the company. Nonprofit organizations, advertising and public relations agencies, and companies based in Puerto Rico are not eligible.

While Hispanic Business makes every attempt to locate and include the largest Hispanic-owned companies in the country, we cannot list companies that do not submit the required information by our deadline.

To ensure that your company is considered for future Hispanic Business directories, please send your name, company name, mailing address, phone number, fax number, and e-mail address to our Research Department via fax at (805) 964-6139 or via e-mail at research@hbinc.com. Indicate that you would like to have a Company Profile form sent to you.



Source: HISPANIC BUSINESS Magazine


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