In the last six years, highly international Northeast-based companies earned robust profits while companies here with low levels of internationalization garnered considerably lower profits, according to a new report commissioned by HSBC Bank USA, N.A.
HSBC runs 10 branches in Westchester County and three in Fairfield County.
The report, titled “HSBC Spotlight on U.S. Trade: Northeast” shows the average profit margin in the Northeast for highly international companies was 7.7 percent over the period 2007-2012, while companies here with low levels of internationalization were, on average, unprofitable during the same time.
The HSBC report analyzed the level of overseas sales and operations at top U.S. publicly listed companies based in the Northeast and across the nation to understand the impact of international sales and operations on business profit margins by region and select sectors.
Northeast companies with high levels of internationalization had the widest profit margin spread of all regions, at 10 percent. The average national profit margin spread was 5 percent.
Sector was not a factor. Internationalized companies targeting consumer goods, health care, industrials, and information and communication technologies followed the trend.
Between 2007 and 2009, “highly internationalized companies” in the Northeast earned a 9 percent profit margin, while less international enterprises averaged 6.5 percent, HSBC reported.
“The findings underscore the impact a diversified geographic customer base can have on the profitability of a business,” said Paul Cronin, executive vice president, Northeast Corporate Banking for HSBC Commercial Banking in the U.S. “With sluggish domestic growth expected and increased global competition, more Northeast companies might want to consider global trade opportunities to grow.”
The Business Journal reported recently that HSBC initiated a $1 billion, 18-month dedicated loan program for small- and medium-sized U.S. businesses looking to export or expand internationally. The fund also would help companies find global growth opportunities and further accelerate global growth.
