An index of corporate financial performance
Corporate financial performance decreased slightly in every region globally in the second quarter of 2024. However, the index also shows a notable decrease in the number of ‘zombie companies’ and strong performance from many markets in the Middle East and Asia.
Discover which countries and territories are performing among the best. Assess financial performance across sectors. Identify distressed companies. Compare your company’s financial performance against tens of thousands of public companies around the world. The KPMG Financial Performance Index (FPI) is designed to be one of the clearest indices of corporate financial performance.
For investors, financiers, regulators and governments, the KPMG FPI seeks to provide insights into the relative strength and health of key markets and sectors. With millions of datapoints going back to 2017, these long-term trends can help you spot signs of improvement or impending distress.
Updated quarterly, this webpage allows you to interact with the data to analyze shifts, trends, and related opportunities. You will also find key highlights from the most recent quarter and a spotlight on fast-moving industry sectors.
In 2Q24, the global business climate faced uncertainty from a political and economic standpoint. With elections looming, the US experienced an uptick in inflation due to delayed monetary policy normalization. On the other hand, Canada, along with a few European economies, eased their monetary policies slightly. Central banks across emerging markets are exercising caution amid uncertainty around interest rate cuts.
Corporate financial performance remained fairly steady, recording a slight decrease of 0.3 points in the second quarter of 2024. Once again, Saudi Arabia led the global rankings with a score of 95.5, closely followed by the Netherlands, which scored 94.8 points.
The top performing countries were largely based in Asia and the Middle East, with Taiwan, Japan, South Korea, the UAE and India all displaying positive momentum. Some European markets also performed well.
While all regions recorded slight decreases in overall scores, Oceania experienced the most significant decrease (down 7.9 points) followed by South America (down 1.1 points). Asia recorded the smallest decline.
At an overall country level, around 80 percent of the markets in our research recorded FPI scores of more than 85 points. Australia and Indonesia, however, suffered the greatest declines in FPI scores, dropping 8 and 5 points respectively.
All sectors reported FPI scores above 85 points in the second quarter of 2024 with Equity Real Estate Investment Trusts (93.9 points) emerging as the top performing sector in the second quarter of 2024, along with Food & Beverages (93.6 points) and Manufacturing (93.1 points).
Encouragingly, there was also a notable reduction in the number of Zombie companies, declining from 1,061 to 992. These companies, scoring an FPI of zero for more than three quarters, accounted for approximately 2.4 percent of the total companies analyzed.
Global economic growth in 1Q24 showed mixed regional performance. Asian markets supported consumption, thereby driving overall stability, while developed economies (led by Japan and the US) faced unexpected slowdowns due to moderate consumption and supply chain disruptions, resulting in a convergence of economic output globally.
Our FPI index showed consistent financial performance results across various global regions in the first quarter of 2024. Saudi Arabia led the rankings with an impressive FPI score of 96.0. It was closely followed by the Netherlands, which scored 95.5.
Countries and jurisdictions from Asia and the Middle East dominated the top 10. However, Oceania struggled in the first quarter of 2024, leading to a drop of 5.1 points.
While positioned in the bottom quartile, Sweden delivered the greatest growth in FPI score, increasing 2.2 points to 79.0 in 1Q24. Australian and Canadian markets declined significantly in the first quarter of 2024, dropping 5.3 points and 1.7 points respectively.
Equity Real Estate Investment Trusts (REITs) topped the sector charts, while Raw Materials & Natural Resources saw the biggest decline, dropping by 5.5 points.
There was a notable reduction in the number of Zombie companies, declining from 1,162 to 1,061. These companies, scoring an FPI of zero for more than three quarters, accounted for approximately 2.6 percent of the total companies analyzed.
Global economic growth suffered a slowdown on the back of persistent inflation levels, geopolitical tensions and supply chain disruptions, necessitating monetary policy normalizations as well as international collaboration to address fiscal challenges for sustained growth plans.
Corporate financial performance saw a minor decline in 4Q23 as compared to 3Q23. South America was one of the best performing regions with a KPMG FPI score of 91.9. However, the largest drop was experienced in Asia region, where scores declined from 92.0 to 91.1 quarter-over-quarter.
Companies headquartered in Türkiye, Singapore and Indonesia saw significant declines in FPI scores, while those with headquarters in Canada, Romania, UK, South Africa and Germany observed significant increase in their FPI score. Canada, in particular, witnessed a significant increase of FPI scores increasing from 46.5 to 54.1.
Chemicals and Transportation & Logistics emerged as the top scoring sectors. While Raw Materials & Natural Resources and Biotechnology witnessed growth in FPI quarter-over-quarter, they were among the weakest performing sectors in 4Q23.
Sector performance
Packaging Products experienced the strongest growth, propelled by the Paper Container & Boxes sub-sector. The Industrials Conglomerates sector followed the same growth trajectory, along with the Travel & Hospitality sector (driven by the Gaming & Casinos sub-sector).
Despite maintaining a healthy FPI score, the Life Sciences Tools & Services sector suffered the greatest decline, dropping 2.3 points to 90.0 in 2Q24. Likewise, while Equity Real Estate Investment Trusts (REITs) sector topped the charts overall, the sector saw a slight decrease in scores due to minor setbacks observed in Office REITs and Specialized REITs.
Sector performance across regions
In the first quarter of 2024, different regions experienced varying performance in their sectors. Here is a breakdown of the regional comparisons:
Africa: The Business Services sector showed strong momentum, increasing their index score by approximately 6.2 points. The Food & Beverages sector experienced headwinds and declined by around 3 points.
Asia: The Infrastructure & Real Estate sector increased their index score by around 1 point, while the Industrial Conglomerates sector experienced a decline of around 1 point.
South America: The Travel & Hospitality sector enjoyed massive growth of 34.2 points on the index. However, the Healthcare and Consumer Markets sector delivered the weakest performance, declining by roughly 3 points in 2Q24.
Europe: Europe’s Travel & Hospitality sector also performed well, along with the Raw Materials & Natural Resources sector, both of which saw an increased FPI score of around 2 points. The Aerospace & Defense and the Media & Entertainment sector dropped by approximately 2 points with a few other sectors experiencing less significant declines.
North America: The Industrial Conglomerates and Raw Materials & Natural Resources sectors enjoyed an increase of approximately 4 and 1.3 FPI points respectively, while Agriculture & Husbandry witnessed a massive index decrease of 35 index points, along with Life Sciences Tools & Services which dropped 10 index points.
Oceania: Aerospace & Defense enjoyed significant growth of 4 points. Yet the region also saw multiple sectors slide backwards including Food & Beverages, Pharmaceuticals and Energy.
Zombies
Zombies are companies close to default (scoring 0 on the KPMG FPI) for three or more consecutive quarters.
The number of zombies decreased by 6.5 percent in the most recent quarter (from 1061 in 1Q24 to 992 in 2Q24). The Raw Materials & Natural Resources sector, as well as Technology & Telecommunication sector, contributed the highest share of zombies with around 19.6 and 14.7 percent respectively, followed by Biotechnology with around 11 percent.
What is the KPMG FPI?
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 logit model, a drop below the average for a specific company can very quickly lead to an index score of zero.
When exploring this data, therefore, readers should consider:
- The absolute score (zero to 100)
- Comparisons across geographies
- Comparisons across sectors
- Relative performance against peers
- Trends over time
- Macro events which are driving trends and
- Expected macro events which may affect future scores.
Read more about our methodology
Want to see your company’s score?
To understand your company’s current index score, or to uncover deeper insights about specific markets or segments, contact your local KPMG member firm. KPMG’s global network of professionals have the data, sector, and geographic expertise to help you understand your score and tie it back to your business needs. Whether it is benchmarking, identifying targets, comparing sectors, or looking for trends over time, KPMG professionals can connect you to the information you need to capitalize on your opportunities. That is our business. Please contact us at in-fmkpmgfpi@kpmg.com to find out more.
Regional performance
With the exception of Africa, where FPI scores increased by 0.4 points overall, every region suffered a decline in scores. Oceania dropped by almost 8 index points. Many, however, remain healthy. For example, while South America saw overall FPI scores decrease by 1.1 index points, the region still returned an overall score of 90.7 points.
Country and territory performance: Year-over-year biggest gainers and losers
An analysis of the KPMG FPI country data shows that year-on-year, the largest gains in KPMG FPI scores were experienced by companies headquartered in Canada (12.4 points), Malaysia (5.48 points) and Singapore (2.66 points).
Year-over-year declines in FPI scores were experienced by companies headquartered in Indonesia (down 7 points), Australia (down 5.3 points), China (down 4.3 points) and Romania (down 3.9 points).
Distressed countries and territories
Given the natural bias for the KPMG FPI to score well-performing companies at high levels (typically between 85 and 99), this index provides significant opportunity to spot distressed companies that fall outside of the normal range.
KPMG FPI is a unique index in that it combines, into a single result, both traditional market performance indicators together with company, country, and industry specific financial performance indicators. This allows KPMG FPI to identify why markets are behaving in a particular way and support its findings with data backed insights into what is causing the movement. It has also proven to identify insights earlier than traditional market indicators.
In 2Q24, the KPMG FPI found 3,552 companies with a KPMG FPI score of zero. The largest concentrations of zero indexed companies were headquartered across USA (1011), Canada (835), Australia (385) and Sweden (180).
Please visit the Zombie section to know more about significant underperforming companies.
Methodology
The KPMG Financial Performance Index measures the financial health of individual companies. Based on an initial pool of more than 40,000 companies globally, KPMG FPI identifies those companies, sectors, regions, countries, and territories that are performing well and those that are underperforming. A higher score on the KPMG FPI represents strong performance.
The KPMG FPI model draws from the Logit Probability to Financial Default model (developed by John Campbell, Jens Hilscher and Jan Szilagyi), which is based on eight explanatory variables encompassing financial and market variables, to arrive at the overall financial health of a company. The KPMG FPI is based on raw data from S&P Capital IQ database.
We release our insights publicly every quarter. However, the model can be run on any given day to reflect live market changes, so please reach out to your local KPMG member firm, or contact us at in-fmkpmgfpi@kpmg.com if you would like additional information.
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1A distressed company is one having a KPMG FPI score of 0.