According to the latest EU R&D Scoreboard, produced by the EU’s Joint Research Centre, R&D spending by 1,500 of the world’s largest companies grew 7.6% to €510.7 billion ($709.3 billion = €0.72 = $1) in fiscal 2011 (FY11) (results included FY12 information for some companies). In FY10, Scoreboard companies showed a 4.0% increase in R&D spending; however, the results are for a different sample set. The Scoreboard is based on FY11 R&D spending by 1,500 of the world’s largest companies, including 503 US firms, 405 EU companies and 296 Japanese companies.

The rise in R&D spending mirrors an increase in sales and profit growth. FY11 revenues for the 1,500 companies increased 7.1%, compared to 9.6% in the previous fiscal year. Operating profits rose 9.7%. Capital expenditures by Scoreboard companies rose 11.3% in FY11, compared to a 1.2% decline in FY10. Capital expenditure as a percentage of sales increased also increased, rising from 6.5% in FY10 to 6.6% in FY11. The 100 companies with the highest R&D spending accounted for 58% of the Scoreboard’s total R&D figure.

R&D investments by EU companies increased 8.9%, up from 6.1% growth last fiscal year. However, growth in R&D expenditures by US companies slowed, climbing 9.0% this fiscal year, compared to 10.0% in FY10. US and European companies’ sales rose 12.3% and 4.9%, respectively, in FY11. According to the Scoreboard, the difference in EU and US R&D performance is the result of the US’s higher share of firms in R&D intensive sectors, such as pharmaceuticals/biotechnology.

R&D spending by Japanese companies rose 1.7%, with sales up 2.1%. R&D spending by companies in “Other” countries grew the fastest, rising 11.3%, with sales growing 9.4%. Indian (15 companies) and Chinese companies’ (56 companies) R&D spending increased 35.1% and 28.1%, respectively. South Korean (35), Taiwanese (47) and Swiss 40) companies in the Scoreboard increased R&D expenditures 8.3%, 2.5% and 1.4%, respectively. As a percentage of the Scoreboard’s total R&D spending, the US, EU, Japan and “Other” country companies comprised 35%, 28%, 22% and 15%, respectively.

As the graph above illustrates, companies in “Other” countries accounted for the highest share of Scoreboard companies’ capital expenditures last year. “Other” country companies’ capital expenditure intensity was also the highest at 9.2, compared to 6.3, 5.9 and 5.3 for the EU, Japan and the US, respectively. However, capital expenditure spending grew the fastest in FY11 for the US, rising 29.4%, compared to 15.6% and 4.8% for “Other” countries and Japan, and a 0.9% decline for the EU.

By industrial sector, industrial engineering companies in the Scoreboard recorded a 16.5% increase in R&D spending in FY11. Also showing double-digit R&D spending increases in FY11 were automobiles and parts firms, oil and gas producers, and electronic and electrical equipment companies, for which R&D spending rose 13.1%, 10.4% and 10.0%, respectively. Health care equipment and services firms, chemicals companies, food producers, and pharmaceutical and biotech firms in the Scoreboard raised R&D expenditures 7.0%, 4.0%, 4.0% and 1.5%, respectively, in FY11.

Released at the same time, a survey of EU companies’ plans for FY12 R&D spending revealed plans for continuing growth. The survey was based on 187 responses from large EU companies that collectively contributed nearly €56 billion ($78 billion) to R&D spending in FY11. Fifty-eight percent of the companies are in high R&D intensity sectors. The surveyed companies expect their R&D expenditures to increase an average of 4.2% per year between FY12 and FY14. The average increase for medium, high and low R&D intensity companies was 5.1%, 3.7%, and 3.0% increase per year, respectively.

Among the industries that expect faster R&D spending growth per year over the three-year period compared to prior surveys are general industrials (6.8% growth), automobiles and parts (6.0%), chemicals (5.5%), oil and gas producers (4.6%), aerospace and defense (4.1%), and construction and materials (3.8%). Expectations for slower R&D growth were indicated by pharmaceuticals/biotechnology companies (3.2%).

 FY11 Capital Expenditures by Location of EU Scoreboard Company

 EU               236.5

 US               209.9

 Japan            173.6

 Other Countries  273.0