The Star Tribune 100: Weathering the storm

  • Article by: JOHN J. OSLUND and PATRICK KENNEDY , Star Tribune
  • Updated: April 6, 2002 - 10:00 PM

The storms of 2001 seemed overwhelming. Layoffs, recession and war took their toll on people and profits.

Yet now that the books have closed on the year that everyone just wanted to be over, it's clear that Minnesota's biggest companies weathered the storms.

Many of Minnesota's biggest firms not only survived but gained ground on their not-so-fortunate competitors. As a result, many Star Tribune 100 companies are poised to take advantage of more favorable economic conditions than we have seen in the past two years. Those are the main conclusions of the 11th annual Star Tribune 100 survey of the largest publicly held Minnesota-based companies.

Collectively in the past year, the ST100 companies:

• Managed a modest 5.5 percent gain in sales,

• Suffered a 39 percent cut in profits,

• Gained 23 percent in market value through March 20, or twice the gain for the Dow Jones industrial average. Minnesota's diversified portfolio of large companies significantly outperformed major market measures for the second year in a row.

A longer view mirrors the one-year trend. Minnesota's top corporate landscape has remained steady since 1997, despite five years that included feverish speculation in the technology sector, the demise of Wall Street's longest bull market and, last year, an international war on terrorism.

Among the Top 10 ST100 companies in 1997, both Norwest Corp. (now Wells Fargo & Co.) and Honeywell Inc. have relocated their headquarters, although both still have large operations in Minnesota. Those two have been replaced in this year's Top 10 by Xcel Energy Inc. and General Mills Inc.

Yet with the exception of Northwest Airlines Corp., where sales fell below 1997 levels after the Sept. 11 terrorist attacks, the big have gotten bigger. And in most cases, much bigger. Target Corp., UnitedHealth Group Inc., Best Buy Co. Inc., Supervalu Inc., U.S. Bancorp, Xcel, the St. Paul Companies and General Mills have grown sales by 29 percent or more since 1997.

The market value of our Top 10 companies grew 52 percent during the same period, compared with 16 percent for the once-high-flying Nasdaq. These consistently strong comparisons during extraordinary swings in economic fortunes underscore the benefits of Minnesota's diversified portfolio of large public companies.

"This is just another example of the benefits of diversification," said Tom Stinson, Minnesota state economist.

This year's Top 10 includes two national retailers (Target, Best Buy), a global manufacturer (3M Co.), a global food company (General Mills), a national wholesaler (Supervalu), two national financial services firms (U.S. Bancorp and the St. Paul), a big airline (Northwest), a national utility (Xcel) and the nation's most profitable managed-care provider (UnitedHealth Group).

All have enough economic mass and management resilience to survive -- and even to prosper -- in tough times. Their strong growth has made the ST100 more top-heavy.

Today, nearly 70 percent of sales and 68 percent of profits for all 100 companies come from the Top 10, compared with 63 and 64 percent, respectively, five years ago.

'Survivor bias'

That's not surprising, said Sally Anderson, senior vice president of Kopp Investment Advisors, an Edina-based money management firm. "Survivor bias becomes more apparent in a down economy," she said.

The more-balanced Minnesota economy "probably hurt us in 1998 and 1999" when the markets favored technology stocks. "But it's helping us now," she said.

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