Six of the best

Out of the gloom overshadowing the European economy an army of superbrands have emerged victorious, with glowing financial results despite the downturn. Here we profile six credit crunch survivors and reveal why their customers keep coming back for more.

Intro: In today's economic climate bad news dominates the business headlines - with companies more likely to go bust than boom. It's a case of survival of the fittest where only the companies with the strongest foundations, the most loyal customer followings and the best marketing campaigns will pull through.

The fate of companies is also dictated by changing consumer spending habits during a recession.  According to the latest 100 Most Valuable Global Brands survey certain credit crunch related retail trends have emerged including a rise in the popularity of brands claiming to offer value for money. Meanwhile consumers are also increasingly turning to "tempting treats" such as fast food, cigarettes or alcohol. Products that offer consumers the opportunity to enjoy treats at home are also booming, with computer games, video rental and takeaway pizza bucking the trend.   However, according to Joanna Seddon of Millward Brown Optimor, which compiled the survey, the biggest weapon a company can have in its arsenal is brand strength. She said: "In the current environment where the value of many businesses has fallen, brand has become even more important because it can help to sustain companies in tough times."

Here we analyse the secret behind the success of six of the brands that are prospering despite the downturn. And we list some of the less fortunate companies that have fallen victim to the credit crunch curse.

Carlsberg
European consumers may have cut down on unnecessary spending but one indulgence they are determined not to give up is beer. Indeed it seems they regard it as a necessity not a luxury, judging by Carlsberg's latest figures. The Danish beer maker reported net profits for the first half of this year of €427million- up more than a third from the same period last year despite the recession.  Meanwhile its net sales rose by nine percent. Carlsberg is one of the world's largest brewery groups and its portfolio includes the likes of Carlsberg, Pilsner and Holsten.  Over 45,000 people work for the group and in 2008 the company sold over 120 million hectolitres of beer, which is about 100 million bottles of beer a day. It is involved in several high profile sponsorship deals, including sponsoring the Danish, England, Ireland, Serbia-Montenegro and Swiss football teams as well as the UEFA European Football Championship, UEFA Cup and the Champions League.
Carlsberg's beers are currently sold in 150 countries worldwide and in the first half of this year it gained market share in most markets in Asia and Europe, with particularly strong gains in Russia. It continues to dominate the beer markets of Northern and Western Europe. Despite its continuing success this year however, Carlsberg released a statement saying it expected to encounter tough market conditions, particularly in Russia where it predicts the beer market will drop by five to six percent. As a result it has reduced its net revenue outlook to €8.1 billion Kroger from the previously stated €8.4 billion Kroger.
Carlsberg CEO Jorgen Buhl Rasmussen, said: "We entered this year with a strong focus on sustainable efficiency improvements on challenging markets. Numerous actions have been taken and we are pleased with the strong earnings and cash flow performance for the first six months."

McDonald's
Fast food chains are one of the few businesses to profit from an economic downturn and none more so than McDonald's, which continues to dominate the European fast food market.  In the second quarter of this year the company's sales increased 6.9 percent in Europe, 3.5 percent in the US and 4.4 percent in Asia Pacific, the Middle East and Africa. Globally its sales grew 4.98 percent. And it seems that arguably the least discerning diners are in the UK, France and Russia where McDonald's experienced the strongest sales performances. Jim Skinner, CEO of McDonald's said he believed the chain was attracting a larger volume of customers as incomes fall in the wake of the economic recession: "As consumers find themselves more cash strapped and time-challenged, they continue to count on McDonald's for value, convenience and variety across our menu. I am pleased with the McDonald's' results and remain confident in our outlook for the year."
The strong McDonald's performance in Europe reflects the US chain's focus on strengthening its international presence.  Today over half of the company's total sales come from outside the US and last year they accounted for 60 percent of its €1.66 billion revenue.
The company's aggressive marketing strategy, combined with cash strapped consumers switching from bistros to burger joints has seen the McDonald's brand increase in value by 34 percent this year according to the annual Brandz top 100 Most Valuable Global Brands survey.

Cadbury

Chocolate has always been considered a pick-me-up for those feeling down in the dumps. It is therefore little surprise that with the lingering gloom and doom of the recession permeating most people's lives, more and more of us are reaching for the confectionary. This sweet-toothed craving has been Cadbury's gain, with net profits tripling in the first half of 2009 to €362 million compared to €130 during the same period last year. On the back of these bigger than expected profits, Cadbury, whose products include Halls sweets and Trident gum, confirmed that chocolate sales climbed 10 percent with a market share gain the UK and healthy growth in South Africa and India. "Our growth in the UK is particularly strong, driven by consumers pulling back to buy affordable indulgences," said Todd Stitzer, Cadbury's CEO. The company's strong performance was also boosted by record sales of Easter eggs as well as Wispa bars and Giant Buttons. Advertising plays a key role in enticing consumers to purchase their sugary favourites so the fall in advertising rates due to the recession has been to Cadbury's benefit too. However, Cadbury's good fortune can't all be attributed to chocolate and sweets; the demerger of its Americas Beverages business last year and the offloading of its Australia beverages business to Japan's Asahi Breweries make a significant difference to the bottom line. Stitzer said his company expects full-year costs to fall by €17.5 million after two years of factory closures and job culls.

Apple

When times are tough you would think new shiny new gadgets are the first thing consumers would choose to do without as they choose to hold onto their existing computers, MP3 devices and mobile phones. Try telling that to tech giant Apple who has bucked that philosophy with a 15 percent jump in profit in the three months to June. Despite a reported three to five percent dip in the overall PC market worldwide, the Seattle-based firm sold 13 percent more laptops than a year ago. Sales for the whole company grew by 12 percent to €5.8 million. The Seattle-based firm has also been buoyed by the phenomenal success of its iPhone. Launched in 2007, the featured-packed device has taken the mobile telecoms market by storm with 5.2 million units flying off the shelves in the second quarter alone - seven times more than what was sold in 2008's second quarter. The release of the latest version, the iPhone 3GS, along with price cuts, is expected to swell figures further. "In a better economy I think we would have sold even more," Apple Chief Financial Officer Peter Oppenheimer said in an interview when discussing overall sales. One downside has been the fall in iPod sales but the company says this is to be expected as devices like the iPhone include integrated MP3 players.

Tesco

As the world's third largest retailer behind Walmart and Carrefour, Tesco has retained a vice-like grip over the UK grocery market. However the store had humble beginnings, having originated as a stall in the East End of London where founder Jack Cohen sold excess groceries. Today it employs 468,508 staff worldwide and has 4,308 stores around the world, including 2,282 in the UK. It operates in 14 markets outside its home market including China, the Czech Republic, Hungary, India, Japan, Malaysia, Poland, Ireland, Slovakia, South Korea, Thailand, Turkey, the UK and the USA.

Rising food prices and the economic downturn have not so far harmed Tesco. Last year it achieved record profits of €3.4 billion a rise of 10 percent.  Its sales increased by 15.1 percent in 2009 and group profit before tax grew 5.5 percent. In the first quarter of this financial year it announced that its likes for like retail sales had increased by 4.3 percent with new stores contributing 4.3 percent and Tesco Personal Finance contributing a further 2.2 percent. The retail giants' international sales increased by 20.1 percent including particularly successful growth in Asia, where sales rose by 43.8 percent. Tesco also proved it is successfully edging into Walmart's territory by a growth in sales of a massive 174 percent. As well international expansion and aggressive marketing campaigns - including those targeted against its main UK rival Asda - Tesco also attaches a high priority to technology as a business enabler and recently carried out an application modernisation exercise to help strengthen its US presence.  The project focused on its Continuous Replacement system, which assures stores are always fully stocked with the products, which customers want. Analysts believe that Tesco's success rests on the fact that it appeals to all sectors of society. Citibank retail analyst David McCarthy, told the BBC: "They've pulled off a trick that I'm not aware of any other retailer achieving. That is to appeal to all segments of the market." He went on to say that this is because if offers three distinct ranges of own brand products - from Value to Finest - that are priced to attract all types of shoppers to its stores.

GlaxoSmithKline (GSK)

When your company' business is the pharmaceuticals sector any disease or virus outbreak can send your profits through the roof as governments clamour to get their hands on a potentially life-saving (and moneyspinning) vaccine. At pharma giant GSK bosses have been accused of profiteering from the H1N1 (swine flu) outbreak by charging the UK's National Health Service (NHS) €7 for the vaccine that costs little more than €1 to produce. Several politicians want an inquiry into whether UK government is being ripped off. Others have suggested introducing a windfall tax on pharma firms profiteering from swine flu. Despite the furore, GSK's Relenza inhaler, which is an alternative to Tamiflu, is expected to produce sales of €700 million, according to media reports. GSK also manufactures antiviral masks. Deliveries of the swine flu vaccine are expected in September just before a potentially bug-ridden winter arrives. This will swell the company's profits further. Amid accusations that it was cashing in on the crisis, GSK recently reported profits of €2.45 billion (up 11 percent) in the second quarter, while CEO Andrew Witty described the swine flu outbreak as a "significant financial event for the company". The company also points to the fact that it has spent billions on R&D into vaccine development. Apart from the swine flu bonanza, the London-based company also reported strong sales in emerging markets, offsetting falling sales in the US - down 15 percent due to generic drug competition.

The other side of the coin: the blue chip companies faring not so well...

Can we get small cut outs of each company's products please

British Airways

We all know the airline industry is experiencing some bumpy turbulence after last year's spike in fuel prices alongside plummeting passenger numbers. BA, however, is in freefall. The UK carrier openly admits that business travellers provide the bulk of its profits but the downturn has seen corporate travel slashed. And the emergence of next generation videoconferencing technologies means executives can hold meetings over the internet rather than shelling out to travel half way around the world. The slump in business travel contributed to BA reporting a pre-tax loss of  €172 million for the second quarter. Passenger numbers fell 12.5 percent. In June, CEO Willie Walsh asked thousands of employees to work for free for up to one month in a bid to keep BA in the skies. The airline has also taking a leaf out of the book of its low-cost rivals by scrapping sandwiches on short-haul flights, a decision forecast to save €25 million a year. Despite the gloomy outlook, BA does expect its fuel bill to be between €525 and €580 lower this year compared to 2008.

Nokia

At one time the Finnish mobile phone manufacturer was sitting pretty at the top of the telecoms tree, outstripping the likes of Motorola and Ericsson. It's still the market leader, however, producing around 40 percent of all the handsets on the market today, but the recession has battered it's bottom line - second-quarter profits nosedived by a whopping 66 percent to €380 million. In the three months to end of June, Nokia shipped 103.2 million phones, down 15 percent year on year and 11 percent on the first quarter. As well as the economic climate hurting sales, the much-coveted Apple iPhone ruffled the feathers of traditional phone manufacturers to become the smartphone of choice for today's Twenty Somethings. Nokia has counter punched with its rival to the iPhone with the all singing, all dancing N97, although this flagship device has received mixed reviews. However, Nokia can take some comfort in the fact that rival Sony Ericsson is feeling the pinch too, racking up second quarter losses of €213 million.

Royal Dutch Shell

What a difference 18 months makes. At the start of 2008 oil supermajor Shell announced record annual profits of around €17 billion - about €1.2 million every hour. Fast forward to last month (July) and second quarter profits sunk 70 percent to €1.6 billion and sales fell 51 percent compared to the same period a year earlier. "There is ample supply [of oil] and not enough to go around," Shell's CEO Peter Voser was quoted as saying. This is in stark contrast to just over 12 months ago when the price of crude rocketed to stratospheric heights of US$147 a barrel as demand soared and speculators jumped on the wagon. But with the recession continuing to put a squeeze on finances, demand has dropped. Shell has said it will continue with cost-cutting measures after notching up savings of €500 million in the first half of the year, and has axed 20 percent of senior management positions. "Conditions are likely to remain challenging for some time and we are not banking on a quick recovery," Voser remarked.