A Look at the Leaders

Here are 15 of the best companies in Europe, selected to offer a representative sampling by industry and country

A Look at the Leaders

Ranking No. 1: HBOS

Industry: Financial

Sales: € 30.3 billion

Net Income: € 2.9 billion

James Crosby, 46

CEO since 2001

Sometimes you win by losing. In 2000, Bank of Scotland came in second to rival Royal Bank of Scotland in a bitter takeover battle for National Westminster Bank. In what seemed like a consolation prize after that defeat, BOS joined forces with Halifax Group, a mortgage specialist. But the deal with Halifax proved a shrewd move for BOS. The product of that merger, Halifax Bank of Scotland PLC, stands at the pinnacle of the BW Europe 50. Heading the new bank, which is now Britain's biggest mortgage lender, is Halifax CEO James Crosby, a former fund manager who's one of the few financiers credited with successfully cross-selling retail banking products, asset management tools such as mutual funds, and insurance policies. Prior to merging, the two banks were considered undersize. But HBOS now competes with traditional British banking titans Lloyds TSB and Barclays.

A Look at the Leaders


Industry: Health Care

Sales: € 31.9 billion

Net Income: € 5.9 billion

Jean-Pierre Garnier, 55

CEO since 2000

What's in the pipeline? That's the question investors always ask of drug companies, which need those fresh blockbuster drugs to keep the cash flowing. For GlaxoSmithKline, the answer is: plenty. GSK is working on more than 61 new compounds and 23 vaccines in its labs. GSK boss Jean-Pierre Garnier hopes to introduce 12 new products and improved versions of existing ones over the next year. GSK's strong outlook puts to rest any lingering skepticism that the 2000 merger of British rivals Glaxo and SmithKline was a surefire way to create a stumbling giant. The world's No.2 pharma company now has more than 7% of the global prescription drug market, and it's growing. An innovative plan to create six individual research centers for various therapeutic areas is paying off in faster drug development. Next up: an ambitious program to automate drug-discovery efforts with three massive new facilities in the U.S., Spain, and England. GSK will need all the innovation it can muster, as two of its best-selling anti-depressants, Paxil and Welbutrin, face imminent generic competition. A new version of Paxil debuted in 2002, and a Welbutrin successor is due out by yearend. GSK had better keep that pipeline humming.

A Look at the Leaders

Ranking No. 5: ALTADIS

Industry: Consumer Staples

Sales: € 9.0 billion

Net Income: € 435.2 million

Pablo Isla, 39 and Jean-Dominique Comolli, 54

Co-Chairmen & Co-CEOs since 2000

Big cross-border marriages often end in tears. But not for Altadis. It's the product of a 1999 merger between two underperformers: Spanish tobacco company Tabacalera and French counterpart Seita. Co-CEOs Pablo Isla and Jean-Dominique Comolli used the 3.5 billion euro deal as an opportunity to boost productivity. Over the past three years, they've laid off 9% of the workforce, shuttered 8 of 17 factories, and opened two new state-of-the-art plants. At the same time, Altadis has made a big push into new markets. Savvy marketing helped increase overseas sales of its well-known Gauloises brand of cigarettes by 9.5% last year. That came despite tax hikes and curbs on cigarette advertising in many countries. Isla and Comolli have even managed to push through price increases for many labels to position them as premium brands. The company is already Europe's third-largest cigarette manufacturer and the world's largest producer of cigars, including Montecristo and Romeo y Julieta 1875. In June, it beat out archrivals British American Tobacco and Altria Group for a majority stake in Régie des Tabacs of Morocco, one of Africa's fastest-growing tobacco markets. This is one tobacco seller that's acting like a growth company.

A Look at the Leaders

Ranking No. 6: RAS

Industry: Financial

Sales: € 15.4 billion

Net Income: € 910.8 million

Mario Greco, 43

CEO since 2000

War, floods, terrorist attacks, stagnant equity markets. It's enough to make an insurance man run for cover. Yet Italy's Riunione Adriatica di Sicurtà has gone from strength to strength. While other underwriters have seen declines in premiums, profits, and market share, Milan-headquartered RAS has racked up gains in all three areas. RAS's success is due in part to its formidable sales network: It boasts more than 2,000 agents and thousands more indirect distribution outlets, such as bank branches, mostly in Italy. A reputation for innovative savings products gives RAS strong brand-name recognition. And the company, majority-owned by German financial-services giant Allianz Group, has profited handsomely by selling private retirement plans amid nagging worries about Italy's chronically underfunded state pension system. Analysts credit CEO Mario Greco for RAS's solid performance. The former McKinsey & Co. strategist is the brains behind a three-year strategic plan launched in 2000 to sell off assets such as real estate and focus on core financial businesses like its fast-growing RasBank. Greco also has made staff motivational training a priority. Whatever disasters befall the rest of us, RAS looks poised to thrive.

A Look at the Leaders

Ranking No. 8: H&M

Industry: Consumer Discretionary

Sales: € 5.0 billion

Net Income: € 621.1 million

Rolf Eriksen, 58

CEO since 2000

Consumer spending is sluggish and retailers are suffering. But not H&M Hennes & Mauritz. The Stockholm-based leader in cheap chic boosted net income by an amazing 49% last year. What began as a small women's clothing store in Sweden in 1947 is now the hottest clothing chain on the planet, with 893 stores in 17 countries. True, Rolf Eriksen, the staid and reserved Dane who heads H&M, doesn't exactly fit the image of a trend-spotting fashion maverick. But under his leadership, H&M has become the destination of choice for young, style-conscious, and thrifty consumers around the world. The retailer's secret weapon is its quick turnaround time: H&M's in-house team of 95 designers can move a garment from design board to shop floor in as little as three weeks. Quick reflexes enable H&M to stay on the cutting edge of trends and minimize the impact of fashion disasters. Costs are kept low by outsourcing manufacturing to a network of more than 900 apparel contractors in low-wage countries such as Bangladesh, China, and Turkey. What's next? The opening of 110 new H&M stores around the world this year alone. Fast fashion, fast expansion: This Swedish company knows how to stay nimble.

A Look at the Leaders


Industry: Consumer Discretionary

Sales: € 54.6 billion

Net Income: € 1.7 billion

Jean-Martin Folz, 56

CEO since 1997

From the time of his arrival at PSA Peugeot-Citroën from French aluminum maker Pechiney six years ago, Chief Executive Jean-Martin Folz has turbocharged growth and profits at the French carmaker. Group sales are up 55% in that period, and the combined European market share of Peugeot and Citroën has risen from 11.4% in 1997 to 15.9% as of June, closing the gap with German rival Volkswagen, which leads Europe with 17.7%. What has powered PSA's success is a smart restructuring plan and well-designed little cars, including the seductive Peugeot 206. That subcompact zipped past the VW Golf last year to become the most popular car in Europe. The Alsatian-born Folz's latest plan: go east. PSA is building an assembly plant in Slovakia and has inked a deal with Toyota Motor Corp. to make cars in the Czech Republic. Even as Europe's auto market contracts, Peugeot maneuvers to stay in the fast lane.

A Look at the Leaders

Ranking No. 17: IBERDROLA

Industry: Utilities

Sales: € 9.6 billion

Net Income: € 962.6 million

Ignacio Sánchez Galán, 53

CEO since 2001

The rain in Spain falls mainly on the plain. It also pours straight to the bottom line of Iberdrola, Spain's No.2 electric utility. Iberdrola's investments in cheap, nonpolluting hydroelectricity have given it an edge over local rivals like Endesa and Unión Fenosa, which rely more heavily on fossil fuels to power their plants. And because the past 12 months have been among the wettest on record, Iberdrola has been able to produce more electricity at a lower cost. But it's not just a smart bet on hydropower that makes this one of Europe's best-performing utilities. Because Spain deregulated its electricity market faster than most other Continental European countries, its utilities were able to get in fighting trim earlier. That and a healthy balance sheet have helped Iberdrola expand into Latin America, where it now manages 25 utilities in 6 countries. Success, however, breeds its own challenges. CEO Ignacio Sánchez Galán had to fend off a 15 billion euro hostile takeover bid from compatriot Gas Natural earlier this year. Despite such distractions, Sánchez Galán is already halfway to the goal he set in 2001: doubling Iberdrola's size in five years through growth and acquisitions.

A Look at the Leaders

Ranking No. 18: NESTLE

Industry: Consumer Staples

Sales: € 60.0 billion

Net Income: € 5.1 billion

Peter Brabeck-Letmathe, 58

CEO since 1997

Nestlé didn't get much respect during the bull market of the 1990s. Even if it was the world's biggest food company, nobody expected mouthwatering returns from an outfit that sold instant coffee and baby formula. Nowadays, Nestlé is getting a second look. CEO Peter Brabeck-Letmathe has embarked on an unprecedented shopping spree, with acquisitions ranging from Ralston Purina Co. pet food to Dreyer's Grand Ice Cream Holdings Inc., while stepping up investment in fast-growing markets from Russia to China. Brabeck-Letmathe, who started at Nestlé in 1968 as an ice-cream truck driver, has more changes in mind. He wants to shift the company's focus from simple food processing to the creation of higher-value-added products, such as a tooth-whitening toothpaste, now under development with Colgate-Palmolive. The Nestlé boss has proven himself a disciplined cost-cutter, shuttering outdated factories and selling off low-margin businesses while investing in more-profitable product lines such as snack foods and premium bottled water. Amid pervasive economic gloom last year, profits were up 13.2%. Return on equity was a solid 22.7%. That should whet investors' appetites.

A Look at the Leaders

Ranking No. 21: BMW

Industry: Consumer Discretionary

Sales: € 42.3 billion

Net Income: € 2.0 billion

Helmut Panke, 56

CEO since 2002

The Bavarian maker of wundercars has defied the global auto slump, pushing 2002 profits up 8%. The big reason: the almost insatiable appetite in the U.S. for BMWs, whether it's the roomy X5 sport-utility vehicle, the superluxury 7 Series sedan, or that ultimate toy on wheels, the Mini. BMW has even outsold Lexus in the U.S. as the biggest luxury import for the first half of 2003. The next big challenge is the relaunch of the 5 Series, the source of 30% of BMW's sales. What could spoil the ride? Any disconnect between BMW's huge ambitions and its ability to deliver. Boss Helmut Panke wants to boost vehicle sales 40% over the next five years by launching a host of new models, including an entry-level 1 Series and a baby SUV. Margins are already under pressure, thanks to a big runup in marketing and capital spending. But if BMW's challenges are big, so are its strengths. Its factories are among the most flexible in Germany, and its engineering is always top-notch. The company has reacted quickly to complaints about its iDrive, which controls digital features in the 7 Series. The next-generation iDrive will be simpler and easier to use. And the next-generation BMWs? They'll still be fun to drive.

A Look at the Leaders

Ranking No. 23: TOTAL

Industry: Energy

Sales: € 102.5 billion

Net Income: € 5.9 million

Thierry Desmarest, 58

CEO since 1995

Few people think of Paris as an oil town. But the French capital is home to what may be the most adventurous of the international oil giants. Whether it's the exotic jungles of Myanmar, the sands of Libya, or the murky political landscape of Iran, Total is there. CEO Thierry Desmarest has engineered the company's growth through mergers and a strategy of investing big money wherever the company can find oil deposits. Total has kept profits high by focusing on the high-risk but high-return "upstream" in exploration and development. Total won't sink a pipe unless it expects to make good money at $17 per barrel, well below current market prices. Desmarest also explores in the wilds of mergers and acquisitions. In the late 1990s, he bagged Paris rival Elf Aquitaine, which brought Middle Eastern and African properties and then added Belgium's PetroFina to beef up its refining and marketing prowess. But a steady increase in output is still the main plan. The company boosted production 10% in 2002, to 2.4 million barrels per day, and expects to pass 3 million by 2007. Who says the only liquid the French can make money on is wine?

A Look at the Leaders

Ranking No. 26: DEUTSCHE POST

Industry: Industrials

Sales: € 39.3 billion

Net Income: € 1.6 billion

Klaus Zumwinkel, 59

CEO since 1990

Lots of chief executives dialed back on acquisitions after the stock bubble burst in 2000. Not Deutsche Post CEO Klaus Zumwinkel. He has shelled out some 10 billion euros since 1995 to buy trucking and delivery firms. In the process, he has turned the German postal service into the world's biggest express and logistics company. His biggest coup this year: a $1 billion agreement to acquire Airborne Express, the No.3 overnight package service in the U.S. The plan is to merge Airborne with Deutsche Post's DHL. Competitors United Parcel Service and FedEx, which between them have 80% of the market, are trying to block the deal. But don't expect Zumwinkel to give up easily. He joined the company in 1990 when it was still state-owned, oversaw its privatization in 1995, and has since made it highly profitable. Call Zumwinkel an empire builder, but it's clear he is making his buying spree pay.

A Look at the Leaders

Ranking No. 30: NOKIA

Industry: Info Tech

Sales: € 30 billion

Net Income: € 3.4 billion

Jorma Ollila, 53

Chairman and CEO since 1992

Being at the top of the heap isn't always an advantage. For one thing, everybody else is out to get you. Worse, the only direction to go is down. All of which makes Nokia Corp.'s continued dominance of the cell-phone business the more remarkable. The Finnish giant has managed to eke out market-share gains in the face of ever-more-determined competitors -- without resorting to profit- crushing discounts. There are plenty of mines still in its path: weakness in CDMA handsets, the fastest-growing standard worldwide; an up-and-coming Samsung Group; and emerging Chinese rivals. But none has yet hurt Nokia, whose global market share hovers near an all-time high of 40%. Indeed, the company might be ranked higher if it weren't for the disappointing performance of its stock -- off 75% from its 2000 peak. Weighing it down are halting take-up of wireless-data services and slow deployment of third-generation mobile networks in Europe, where Nokia earns 60% of its revenues. Even so, analysts consider Nokia fully valued, which means investors can expect it to turn in continued good financials but ho-hum shareholder returns for the foreseeable future.

A Look at the Leaders

Ranking No. 32: PERNOD RICARD

Industry: Consumer Staples

Sales: € 4.8 billion

Net Income: € 412.8 million

Patrick Ricard, 58

CEO since 1975

Pernod Ricard has plenty of success to toast these days. Two years ago, the French spirits maker raided Seagram Co.'s liquor cabinet, walking away with some choice brands, such as Chivas Regal whisky and Martell cognac. The 3.7 billion euro acquisition catapulted Pernod to the No.3 spot in the industry, with profits jumping 15% in 2002. CEO Patrick Ricard, the son of one of the company's founders, has engineered a major strategic shift. Besides the Seagram brands, he has picked up a pair of Eastern European vodka and bitters distillers. At the same time, he has been shedding ancillary beverage lines, such as Yoo-Hoo and Orangina. Ricard's goal is to refocus the family business on liquor and wine, which will make up 98% of sales this year, up from 40% in 2000. Under his watch, the company has slimmed down to nine drink divisions, ruled by the whiskies, which account for more than a third of total sales. Pernod's eponymous anise aperitif remains the company's best-seller, with nearly seven million cases shipped last year. And Pernod can drink to this: On July 11, the company was officially inducted into the CAC40, the blue-chip index of the Paris Stock Exchange.

A Look at the Leaders

Ranking No. 33: CARREFOUR

Industry: Consumer Staples

Sales: € 68.7 billion

Net Income: € 1.4 billion

Daniel Bernard, 57

CEO since 1992

Carrefour means "crossroads" in French, but for a time it looked as if the world's No.2 retailer had taken a wrong turn. After buying French rival Promodès in 1999, Carrefour lost ground to competitors as it was overwhelmed by the logistics of absorbing hundreds of additional stores around the globe. Aggressive discounters began wooing away shoppers in France. Meanwhile, economic problems in Brazil and Argentina were hammering operations there. Now, however, it looks as if CEO Daniel Bernard has Carrefour back on track. Currency-adjusted sales rose 4.6% last year, while profits surged 15%. At home, Carrefour has slashed prices to safeguard its dominant market share against the assault of the discounters. And because there is little room to grow in saturated Western Europe, the retailer is driving hard into new markets -- especially China, where it has 40 hypermarkets and is now adding smaller discount stores. Indeed, while Carrefour's annual revenues are still less than one-third those of Wal-Mart Stores Inc., the French retailer has a stronger record in adapting its operations to foreign markets. For Carrefour, the road ahead looks smoother.

A Look at the Leaders


Industry: Telecom Services

Sales: € 10.9 billion

Net Income: € 1.2 billion

Marco De Benedetti, 40

CEO since 1999

Telecom Italia Mobile (TIM) has long been Europe's cellular darling, with a dominant 46% market share at home and high margins. Italians fell in love with mobile phones at first sight; mobile handset penetration, at 95% as of the end of 2002, is one of the highest in the European Union. And Italians have been among the fastest on the Continent to embrace new features, such as multimedia phones. Italy's love affair with cell phones has helped TIM ring up steady growth in revenues and profits. Net income jumped 22.6% in 2002 despite TIM's writedowns of stakes in several international mobile operators. Yet the giddy days of fast growth in basic mobile voice service are drawing to an end. As new cellular subscribers become scarcer, existing players will have to ramp up marketing -- and sacrifice margins -- to steal customers from rivals. In the first quarter of 2003, average revenue per customer actually declined for the first time since 2000 on a combination of tariff cuts and increased competition. TIM Chief Executive Marco De Benedetti is counting on slick new data services, including video messaging, to juice growth. This investor favorite will have to prove its staying power.

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