R&D spending by two thousand of the world’s largest companies grew 6.2% in fiscal 2012 to more than €538.8 billion ($690.8 billion = €0.78 = $1), with 70% of the companies increasing R&D expenditures, according to the recently published The 2012 EU Industrial R&D Investment Scoreboard. This compares to 6.2% growth for these companies in fiscal 2011. The three-year compound average growth rate for the companies was 6.4%. The Scoreboard is based on companies’ fiscal 2012 financial results or the latest annual results published prior to June 30.

R&D spending grew faster than sales last fiscal year for Scoreboard companies. Revenues for the companies rose 4.2% in fiscal 2012 to €16,845.8 billion ($21,597.2 billion). As a result, R&D intensity, the ratio of R&D to sales, was 3.2%. Sales growth slowed last fiscal year, down from a 9.9% increase in fiscal 2011. Operating profits for Scoreboard companies declined 10.1% to €1,549.3 billion ($1,986.3 billion) in fiscal 2012, as 18% of the companies reported operating losses. Average profitability was 9.2%.

Capital spending by Scoreboard companies increased 9.6% to €1,109.1 billion ($1,398.8 million). This was down from the 12.7% increase in fiscal 2011. However, as a percentage of net sales, capital expenditures was 7.1%, compared with 6.6% in fiscal 2011.

The Scoreboard consists of 658 US companies, 527 EU companies, 353 Japanese firms, and 462 companies from 25 other countries. The top three EU countries represented in the Scoreboard are Germany with 130 firms, the UK with 107 companies, and France with 75 companies. Spending by the EU companies in the Scoreboard rose 6.3% last year to account for 29% of the Scoreboard total. R&D spending by the US firms grew 8.2% to make up 35%. The Japanese firms’ R&D spending rose 0.4% to represent 19%.

For the countries outside of these three regions, the greatest number of Scoreboard firms are located in China, with 93 companies, Taiwan with 82 companies, and South Korea with 56 firms. Among these three countries, the Chinese companies showed the highest growth rate for R&D spending. R&D spending for the Chinese firms increased 12.2% last fiscal year to €16.1 billion ($20.6 billion). However, the Chinese firms’ R&D intensity was the lowest among the three countries at 1.4%. R&D spending by the Taiwanese and South Korean firms grew 8.9% and 8.2%, to €9.3 billion ($11.9 billion) and €17.5 billion ($22.4 billion), respectively. R&D intensity was 2.2% for each country.

Companies in the Scoreboard are categorized according to 40 industry sectors. The Scoreboard includes 214 Pharmaceuticals and Biotechnology companies, 126 Automobile and Parts companies, 118 Chemicals firms, 92 Health Care Equipment and Services firms, and 46 Aerospace and Defense firms. Among these sectors, R&D spending by the Automobiles and Parts companies grew the fastest last fiscal year, rising 8.9%.

R&D spending by the Health Care Equipment and Services, Aerospace and Defense, Chemicals, and Pharmaceuticals and Biotechnology firms increased 8.3%, 7.0%, 6.9% and 4.1%, respectively. In fact, R&D spending by the Pharmaceuticals and Biotechnologys, Technology Hardware and Equipment, and Automobiles and Parts companies accounted for 50% of Scoreboard companies’ total R&D expenditures.

In fiscal 2012, the Pharmaceuticals and Biotechnology firms accounted for the greatest share of R&D spending among Scoreboard companies at 18%. These companies also had the highest R&D intensity at 14.4%. Fiscal 2012 R&D intensities for the Aerospace and Defense, Automobiles and Parts, Health Care Equipment and Services, and Chemical companies were 4.5%, 4.2%, 4.1% and 2.7%, respectively.

The Pharmaceuticals and Biotechnology companies had the slowest sales growth last fiscal year among the five sectors listed above. Sales for the Pharmaceuticals and Biotechnology companies grew 1.9% last year. The Automobile and Parts firms had the fastest revenue growth among the five sectors, with sales rising 8.8%. Sales for the Aerospace and Defense, Health Care and Equipment, and Chemicals firms increased 6.4%, 3.5% and 2.2%, respectively.

The Scoreboard also examined the foreign direct investments (FDI) of 1,500 firms in the 2012 Scoreboard (see IBO 12/15/12). Between fiscal 2003 and fiscal 2012, these companies invested in 3,342 FDI R&D projects, which accounted for 60% of a total of €97.0 billion ($124.4 billion) in capital investments. These R&D projects represented 12% of all FDI projects undertaken by the companies during the period and 5% of the total value of all FDI projects. Among five selected sectors, the Pharmaceuticals and Biotechnology firms had the highest FDI in R&D, followed by the Automobiles and Parts, Chemicals, Aerospace and Defense, and Health firms.