Australian companies don?t have a great track record expanding offshore, and any announcement of international expansion has been viewed in the past as the best way to destroy shareholder value.
National Australia Bank (NAB.AX) has had disastrous expansions into the US and the UK, and is still struggling with what to do with its UK banks. Insurance Australia Group (IAG.AX) also tried expanding into the UK, but was forced to limp back home with its tail between its legs. There are many more examples where international expansion has ended in tears – too many to list all of them.
But that appears to be changing with a raft of Australian companies successfully heading overseas.
We now have several world class companies with international operations. QBE Insurance (QBE.AX) is ranked one of the world?s best insurers (even ahead of Warren Buffett?s Berkshire Hathaway), based on its combined operating ratio (COR), which measures operating costs against revenue from insurance premiums. Computershare Limited (CPU.AX) is ranked as the largest share registry company on Earth while Westfield Holdings (WDC.AX) is one of the largest shopping mall owners, and continues to expand overseas.
Brambles Limited (BXB.AX) is the world?s largest supplier of wooden pallets, and has recently seen its major competitor iGPS seek bankruptcy protection, proving that Brambles? business model has the competitive edge.
Healthcare companies CSL Limited (CSL.AX), Cochlear Limited (COH.AX), Sirtex Medical (SRX.AX) are leaders in their respective fields and continue to grow internationally. Flight Centre (FLT.AX) and Seek Limited (SEK.AX) have successfully taken steps offshore and could end up as global leaders. Likewise, Carsales.com (CRZ.AX) and REA Group (REA.AX) have taken their Australian experience and applied it in a number of offshore markets.
We still have a long way to go to achieve global competitiveness in some industries, but the evidence suggests that more and more Australian companies are taking on the world and winning.
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Motley Fool writer/analyst Mike King owns shares in Flight Centre, Computershare, CSL, Cochlear, Carsales.com, Seek and QBE.