KPMG Financial Performance Index (KPMG FPI)

Chemicals and Manufacturing were the top performing sectors in the quarter, driven by strong performance in certain subsectors including Specialty Chemicals, Diversified Chemicals, Industrial Manufacturing, and Electrical Equipment.

Raw Materials & Natural Resources and Healthcare experienced strong recovery in 1Q23, rising by 3.54 percent and 1.02 percent (quarter-over-quarter) respectively.

Over the past year, Travel & Hospitality witnessed the strongest growth of any sector, driven primarily by solid performances in the Casinos & Gaming and Hotels & Lodging subsectors. During the same period, Raw Materials & Natural Resources experienced the greatest decline, falling by 4.81 percent year-over-year in 1Q23.

Zombies are companies close to default (scoring 0 on the KPMG FPI) for three or more consecutive quarters.

The number of zombies increased by 6.83 percent this quarter (from 937 in 4Q22 to 1001 in 1Q23). Year-over-year, the zombies have been multiplying – more than doubling from the 468 recorded in 1Q22. Many of these companies may already be experiencing distress or working through restructuring strategies.

In 1Q23, sectors with the highest proportion of zombies included Biotechnology (with 12.9 percent zombies), Pharmaceuticals (9 percent), Healthcare (6.85 percent), and Raw Material & Natural Resources (6.14 percent). Technology & Telecommunication, Business Services, and Infrastructure & Real Estate saw significant quarter-over-quarter increases in the number of zombies in the quarter.

The KPMG FPI distills a range of market and financial performance indicators into a single index covering nearly 40,000 public companies around the world.

The index scores companies on a scale of zero to 100, with zero indicating serious distress and 100 being best-performing.

Since many companies tend to perform well for most of their lifespans, there is a natural bias towards a higher quartile score. As such, around 80 percent of the companies in our index score between 85 and 99.

As the KPMG FPI is a logit² model, a drop below the average can very quickly lead to an index score of zero.

When exploring this data, therefore, readers should consider:

• The absolute score (0 to 100)
• Comparisons across geographies
• Comparisons across sectors
• Relative performance against peers
• Trends over time
• Macro events which are driving trends
• Expected macro events which may affect future scores

Read more about our methodology

North America witnessed strong growth, rising by 2.41 basis points, driven by an upsurge in the performance of Canadian-headquartered companies (from 51.43 to 68.15 quarter-over-quarter). However, companies headquartered in North America also accounted for about 60 percent of the total number of distressed companies² in 1Q23.

Oceania and Africa experienced the largest dips, falling by 3.45 basis points and 0.92 basis points respectively – largely influenced by the declining performance of companies headquartered in Australia and Egypt.

An analysis of the KPMG FPI country data indicates that, over the year ending 1Q23, companies headquartered in Poland, China, Italy, and Japan experienced the largest gains in KPMG FPI, rising by 9.72 percent, 3.70 percent, 3.02 percent, and 2.73 percent respectively.

Those headquartered in Canada and Australia saw a decline in average KPMG FPI scores over the year, falling by 12.50 percent and 9.93 percent respectively. Interestingly, while Canada returned strong performance in the quarter, year-over-year performance remains low.