In this article, we will be taking a look at the 25 biggest companies by net income in the world. To skip our detailed analysis, you can go directly to see the 5 biggest companies by net income in the world.
Profit is one of the most important metrics to judge a company by, when considering whether it's investable or not. At the same time, this also depends on what stage a company is at. For example, a startup is very rarely profitable in the first few years since there is significant initial expenditure. Hence, when investors bet on a startup, they look more at future profitability rather than the current situation, and the focus lies more on growth. This can also result in inaccurate valuation, as seen in the case of WeWork. WeWork is a company which was the largest tenant of New York office space, providing space for self-employed and freelance specialists. At its peak, WeWork was worth an astonishing $47 billion but skeptics believed for several years that the company's value was inflated and didn't represent its actual value. A combination of a business model not suited for the business and Covid-19 resulting in a huge increase in working from home resulted in the company's value plummeting to just $50 million, and filing for bankruptcy.
WeWork isn't the only company which has been impacted by the pandemic and the economic situation ever since; overall profitability and margins have declined across the world amid rising inflation and hiking interest rates to curb inflation, including in the biggest companies by net income in the world. These companies are said to be the backbone of the global economy, but even though global GDP has risen steadily across decades (barring a slowdown in 2021 and 2022), global profits have actually declined. According to McKinsey, a study of the 4,000 largest companies in the world, which includes some of the top companies by net income, showed that their share of global profits is declining. One of the reasons behind this is that some of these companies, especially those outside the top 500 companies, have struggled to innovate and come up with new ideas to generate additional profit. Some ideas which could benefit these companies include additional investment in digital and analytics, professional-management best practices and focusing more on retaining talent.
In 2005, global profits from the top 4,000 companies were $612 billion, which fell to under $400 billion in 2019, before improving during the pandemic led by tech stocks. This trend has been bucked by North American companies, as corporations which are headquartered in the region have actually seen profits increase significantly, with Asia and Europe in particular lagging significantly behind. For example, while the most profitable pharmaceutical companies in the world include both European and American companies, American companies have contributed a lot more to the sector's global profits. Unfortunately, companies not in the top 500 companies in the world have seen their profits erode in this time period.
The strengthening of the U.S. dollar has helped U.S. companies disproportionately as imports and outsourced labor became cheaper. The exact opposite has impacted companies in other countries especially those where most of their costs are denominated in the U.S. dollar. On the other hand, U.S. companies have also achieved major margin expansion from period 1 (2005 - 2009) to period 2 (2015 to 2019), while also delivering on growth, though European companies have failed to deliver on both accounts. In fact, from period 1 to period 2, North American companies' share of global profits increased from 50% to 77%, as the remaining regions saw their profits cut in half.
Perhaps the biggest contribution from the U.S. is from its tech sector, unsurprising as it's the most advanced country in the world, and home to some of the biggest companies by net income in the world. The U.S. tech sector has dominated the world and accounts for around 40% of the profit increase in North America from period 1 to period 2. This is only likely to increase even further as global focus on AI continues to increase and is likely to drive growth not just in the tech sector, but across industries. Tech companies are also some of the companies with the highest net margins in the U.S., though surprisingly, the company with the highest profit margin is Visa, a financial services giant.
One of the biggest impacts on global profit deterioration is because of the energy and materials sector. Many might have been misled into thinking that the industry has recovered due to leading recovery after the pandemic, the truth is that for several years now, the sector has been shrinking significantly as low investments in the industry and low commodity prices have hampered growth. Excluding the energy and materials sector, profits actually increased remarkably when comparing period 1 to period 2, while profit from the energy and materials sector has fallen by nearly $250 billion when comparing the same periods.
One industry that you won't find anywhere near the biggest companies by net income in the world is the airline industry. The travel sector was severely hampered by the Covid-19 pandemic and even in 2021, most of the most profitable airlines in the world struggled to avoid losses. The industry does seem to be turning a corner though as pent-up demand has resulted in higher prices and hence, greater profit. United Airlines Holdings, Inc. (NASDAQ:UAL), one of the largest airlines in the world, has finally returned to profitability, and mentioned in its Q3 2023 earnings call "The third quarter was another solid milestone to demonstrate that United Next is working as we expected, and the growth we are adding is profitable. Though fuel spiked this quarter, we’re very encouraged about our results. It’s clear to see why from the numbers. Our top line revenue grew 12.5% to $14.5 billion, making it the highest third quarter in our history. Our costs were also on track with our plans as we delivered strong operations in both August and September. United’s diverse revenue streams have also allowed us to handle variations in demand and produce solid, absolute, and even better relative results. It’s evident in the numbers. United and one other airline expected to count for 98% of the total industry revenue growth this quarter, and over 90% of the industry’s total pre-tax profitability. Even in a tough industry environment, United’s diverse model is building strong, absolute, and even more impressive relative margins." United Airlines Holdings, Inc.'s (NASDAQ:UAL) better margins and growth has seen its share price increase by nearly 5% YTD.
Methodology
To determine the biggest companies by net income in the world, we sorted the top global Fortune 500 companies by profit and then determined updated net income from Yahoo Finance. For companies based outside the U.S., we have converted their profits to USD based on the latest exchange rates.
TotalEnergies SE (NYSE:TTE) recently saw its CEO admit that volatility in the gas market will continue till new supply arrives in the market.
Aristotle Capital Global Equity Strategy made the following comment about TotalEnergies SE (NYSE:TTE) in its Q3 2023 investor letter:
“TotalEnergies SE (NYSE:TTE), one of the world’s largest energy companies, was also a primary contributor for the quarter. The company continues to execute on its strategic plan to reach net‐zero emissions by 2050 which, in contrast to many European energy providers, it looks to achieve through expanding ownership of renewable power and low‐carbon assets rather than purely divestment. The company expects to more than double its gross renewable generation capacity by 2025 (primarily in solar) and invest over 30% of its total spending in low‐carbon businesses through 2030. As such, we believe TotalEnergies is uniquely positioned to benefit from the increase in global demand for clean energy. In recent years, TotalEnergies’ reduction in capex and operating expenses has improved its FREE cash flow generation, now further aided by the favorable energy environment. This has supported its continued ability to return cash to shareholders, one of our catalysts, as demonstrated by the $3.8 billion returned through share buybacks and dividends during the second quarter.”
TTM Net Income (in millions): $20,102
The property crisis in China has impacted China Merchants Bank, with the rate of bad loans increasing significantly.
TTM Net Income (in millions): $20,896
One of the biggest companies by net income in the world, Verizon Communications Inc. (NYSE:VZ) has focused on its 5G deployment, with the latest deployment taking place at the Port of Virginia.
Ariel Global Fund made the following comment about Verizon Communications Inc. (NYSE:VZ) in its Q2 2023 investor letter:
“Global communications and technology leader, Verizon Communications Inc. (NYSE:VZ), also weighed on performance in the period on mixed earnings results. Consolidated revenues came in slightly below expectations, EBITDA was in-line and management reiterated full year 2023 guidance. Although share price action has been weak, we find the company valuation to be compelling and the approximately 7% dividend yield to be both stable and secure. We view Verizon as one of the best positioned telecoms in the world. Looking forward, we expect the free cash flow to grow significantly in the years ahead as Verizon moves past the secular peak in 5G capital spending.”
TTM Net Income (in millions): $21,080
China National Petroleum has been involved in discussions with Russian companies for development of oil and gas fields.
TTM Net Income (in millions): $21,473
The most profitable pharmaceutical company in the world, Pfizer Inc. (NYSE:PFE) has had a torrid year, with its share price falling by more than 40%. This has been driven by declining revenue from its top brands Comirnaty and Paxlovid, with its Q3 2023 revenue falling by 42% to $13.2 billion and a quarterly loss of $2.4 billion.
TTM Net Income (in millions): $21,687
One of the most valuable healthcare companies in the world, UnitedHealth Group Incorporated (NYSE:UNH) was sued in November 2023 with the allegation that its AI algorithm wrongly denies patient care. While its share price has remained stagnant this year, UnitedHealth Group Incorporated (NYSE:UNH) is among David Shaw's Quant Model picks.
TTM Net Income (in millions): $24,657
Samsung Electronics is the most profitable company in South Korea, and is among the largest phone and TV manufacturers in the world.
TTM Net Income (in millions): $25,463
There are several oil companies in our list, including Chevron Corporation (NYSE:CVX). In October 2023, Chevron Corporation (NYSE:CVX) agreed an all-stock deal for the purchase of Hess, for a total of $53 billion.
TTM Net Income (in millions): $26,870
Petróleo Brasileiro S.A. - Petrobras (NYSE:PBR) may be one of the biggest companies by net income in the world, but Brazil's energy minister said price cuts from the company are overdue, which could have an impact on future profits.
TTM Net Income (in millions): $26,963
One of the biggest Chinese conglomerates, Tencent Holdings recently demonstrated huge growth as its advertising and games sales, resulting in it beating estimates despite China's economic downturn and maintaining its grip among the biggest companies by net income in the world.
TTM Net Income (in millions): $28,996
While Shell plc (NYSE:SHEL) recorded its highest ever profits last year amid an increase in oil prices, its profits haven't kept up in 2023. This was always bound to happen after the one-off surge most oil companies experienced in the previous years and oil prices falling comparatively.
TTM Net Income (in millions): $29,198
Easily among the largest shipping countries in the world, Maersk had to cut around 10,000 jobs as the shipping industry is recovering from the end of a boom in the industry.
TTM Net Income (in millions): $29,651
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is one of the biggest semiconductor companies in the world. Currently, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is considering building a 10 billion euros in Dresden, Germany.
TTM Net Income (in millions): $29,734
After its share price plunged in 2022, Meta Platforms, Inc. (NASDAQ:META) recovered really well in 2023, with its share price increasing by nearly 170% YTD 2023.
Here is what Davis Funds, an investment management firm, said about Meta Platforms, Inc. (NASDAQ:META) in its Q3 2023 investor letter:
“In big technology, the huge price volatility of leaders like Meta Platforms can come with opportunity—trimming when prices are high and adding when they are low. For example, we added significantly to Meta last year at less than half of today’s price and have recently trimmed our position in Alphabet as its shares swung back into favor. For many years, we have referred to the leading online platforms such as Alphabet as the blue chips of tomorrow. Their economies of scale, network effects, strong competitive positions and profitable business models combine to make them some of the best businesses we have ever seen. Because of this success, these juggernauts have attracted waves of regulatory scrutiny and relentless negative press coverage. As a result of the ebb and flow of these controversies, investor sentiment can swing precipitously from euphoria to disgust, which can provide opportunities for price-conscious investors. While we are not short-term traders, the enormous price volatility of these online tech leaders has led us to be opportunistic, trimming when prices are high and adding when they are low. Recently, as these companies have swung back into favor, we have trimmed our holdings in Meta Platforms.”
TTM Net Income (in millions): $30,503
Bank of America Corporation (NYSE:BAC) beat forecasts in its Q3 2023 results, primarily as a result of higher interest rates and bond trading.
TTM Net Income (in millions): $31,907
The Bank of China is among China's big four banks, and the second-largest lender in the country. The Bank of China injected more cash in the economy to support what has been a stagnating economy.
TTM Net Income (in millions): $37,292
The Agricultural Bank of China is one of the biggest banks in the world by assets and its stock recently rallied after the state wealth fund increased its stake in the bank.
TTM Net Income (in millions): $41,130
Exxon Mobil Corporation (NYSE:XOM) is the most profitable oil companies in the world. Exxon Mobil Corporation (NYSE:XOM) recently announced that it would invest up to $15 billion in Indonesia. “Natural gas use is projected to increase by more than 20% by 2050 given its utility as a reliable and lower-emissions source of fuel for electricity generation, hydrogen production, and heating for both industrial processes and buildings,” ExxonMobil added in its Global Outlook report for 2050.
TTM Net Income (in millions): $45,960
Chinese companies are second only to the U.S. in our list, with China Construction Bank being one of the biggest companies by net income in the world.
TTM Net Income (in millions): $50,261
The Industrial & Commercial Bank of China is one of the biggest lenders in the world, and was the victim of a major hack, with the impact being felt across the world.
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Disclosure: None. 25 biggest companies by net income in the world is originally published at Insider Monkey.
