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Family business roundup: Profits may drop, but revenues grow

By Rashmi Kumar

A number of family businesses from around the world have gone against the trend of slowed growth, by posting rises in revenues.

Among these is German carmaker BMW, controlled by the Quandt family. On 3 May, the group said it had its “best first-quarter figures ever” in its 100-plus-year history. Revenues rose by 14% to €18.3 billion, up from around €16 billion for the same period last year.

The Munich-based company also saw net profits increase by 18.1% to €1.35 billion. The growth was thanks to “strong demand worldwide” for the group’s vehicles, as well as improved efficiency, the automaker said.

Fellow German family business Metro, the retail and wholesale group jointly controlled by the Haniel and Schmidt-Ruthenbeck families, further reported rise in sales. Revenues for the first quarter grew 2.2% to €15.6 billion from €15.3 billion for the same period last year, the group said today.

But earnings before tax dropped significantly to a negative €134 million from a profit of €22 million in the first quarter of 2011. The group attributed the fall to high costs incurred for “expansion and expenses to improve customer value”.

Across the Atlantic, two Canadian family-run groups also saw sales increase slightly, but profits drop.

Ontario-based Loblaws, the supermarket chain controlled by the Weston family, said on May 2 that revenue for the first quarter of 2012 rose by 0.9% over last year’s first quarter to CAD$6.94 billion (€5.37 billion).

But net earnings at the company fell by around 20% to CAD$126 million. “[This] was primarily due to the decrease in operating income partially offset by a decline in the company’s effective income tax rate,” Loblaws said in a statement.

Fellow Canadian Maple Leaf Foods, the food processing company controlled by the McCain family, said sales rose by 1% in the first quarter to CAD$1.16 billion, while operating earnings declined by 20% to CAD$40.5 million, mainly due to poor performance of the bakery division.

Unlike its North American counterparts, Thomson Reuters saw revenues grow by 4% to $3.2 billion (€2.44 billion) and its operating profits rise by 2% to $545 million. James Smith, non-family chief executive, said the performance was “consistent with full-year expectations”.

In India, motorcycle maker Hero MotoCorp, controlled by the Munjal family, said sales for the full fiscal year 2012 increased by 21.6% to 23,579 crore Indian rupees (€3.36 billion).

Profits after tax at the New Delhi-based group also rose significantly to 2,378 crore rupees from 1,927 crore rupees the previous year.