S&P 500 Foreign Sales at 44.3%, Lowest Level Since 2006

NEW YORK, July 27, 2016 /PRNewswire/-- S&P Dow Jones Indices ("S&P DJI"), one of the world's leading index providers, announced today that, for S&P 500® companies with full reporting information for 2015, the percentage of sales from foreign countries decreased to levels last seen in 2006.

According to S&P DJI's annual S&P 500 Foreign Sales Report, the percentage of products and services produced or sold by S&P 500 companies outside the U.S. equated to 44.3% in 2015, down from 47.8% in 2014 and the 46% average from 2009-2013; in 2006, it was 43.6%.

Additional findings from the report include:

Geographic Breakdown

• European sales continued to increase in 2015, with Europe becoming the dominant region and accounting for 7.79% of all S&P 500 sales, up from 7.46% in 2014 and 6.80% in 2013. After declining four years in a row, U.K. sales increased to 1.86% from 0.89% in 2014. 

• Asian sales reversed their course and decreased, representing 6.77% of S&P 500 sales, down from 7.80% in 2014 and 7.71% in 2013.

• Canadian sales decreased to 1.17% from 3.51% in 2014, partially due to declines in oil and commodity prices and less demand for the industry's related services and equipment.

• African sales decreased to 3.16% from 4.09% in 2014 and 3.55% in 2013.

Sector Analysis

• Energy, which held the most exposure to foreign sales, reported 57.88% of its sales as foreign, up from 56.23% in 2014.

• Information Technology's exposure declined to 57.78%, down from 59.39% in 2014. In terms of its sector-level representation of total sales, however, Information Technology represented 21.93% of all foreign sales, up from 18.34% in 2014. Energy represented 15.46%, down from 21.54% in 2014. 

• Both Consumer Discretionary and Consumer Staples posted lower foreign exposure, down to 37.43% and 34.95% respectively, from 41.36% and 39.14%, respectively, in 2014.

Corporate Payments

• In 2015, S&P 500 companies continued paying more for income taxes in the U.S. than overseas. 66.8% of payments went to the U.S., up from 61.8% in 2014 and 54.9% in 2013.  Meanwhile, 33.2% of taxes were sent to foreign governments in 2015, down from 38.2% in 2014 and 45.1% in 2013. Actual payments to Washington decreased 0.4% in 2015 to $184.4 billion, down from $185.2 billion in 2014. 

• Payments abroad again decreased at a double-digit rate, declining 19.9% to $91.4 billion, from $114.2 billion in 2014. The 2014 figure is 11.8% lower than the $129.5 billion paid in 2013.

Quality of Reporting

• Just over one-half of S&P 500 issues (255) reported sufficient information to facilitate producing a complete report on global sales for 2015. Of the issues that did declare foreign sales, 49.2% of them used a term similar to "foreign country", giving little breakdown of the area or country of the sales.

• Given the ongoing debate and discussion of corporate domestic and foreign tax rates and policies, as well as inversions, S&P 500 constituents have the ability to provide more specific and a higher quantity of data.

"European sales, as a percentage of all S&P 500 sales, increased in 2015 for the third consecutive year and displaced Asia as the leading sales region," says Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices, and author of the report. "While sales in Asia declined after four years of gains, U.K. reported sales increased from 2014."

If sales are relatively close at 56% from the U.S. and 44% foreign, why are the taxes more lopsided at 67% and 33%, respectively? S&P DJI's Silverblatt believes the initial answer could be that U.S. tax rates are much higher than foreign tax rates. As a result, the taxes due on nearly comparable incomes are greater in the U.S.

For more information about S&P Dow Jones Indices, please visit www.spdji.com.

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SOURCE S&P Dow Jones Indices

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