After the economic struggles of recent years, 2010 offered Georgia's largest companies some measure of recovery and hope for the future as profitability returned or grew for most.
This year could be even better for those corporations, executives and market analysts said, but fundamental problems that remain in the economy have forecasts still focused on caution.
Those assessments emerged in the wake of 2010 fourth-quarter and full-year earnings reports released in the past several weeks by the state's largest businesses: Coca-Cola Co., Coca-Cola Enterprises, UPS, Delta Air Lines, Home Depot, Southern Co., SunTrust Banks, AGCO, Aflac and Genuine Parts. Because of those companies' broad range of products and services and their global reach, they also are regarded as a barometer of business performance as a whole.
All in all, they had a positive story to tell in 2010. Home Depot, for example, posted its first annual revenue gain since 2006. The company was hurt in recent years by the collapse of the U.S. housing market and the effects of the recession. Net income also was up.
Delta finished the year with its first annual profit in three years. AFLAC, AGCO, Genuine Parts, Coca-Cola Co. and UPS reported jumps in yearly sales and income over 2009.
UPS chief financial officer Kurt Kuehn said, "I'm feeling great. It's been a tough couple of years, and it's good to see success."
SunTrust posted a loss for the year, but it reported its second consecutive quarterly profit for the final three months of 2010. Profit at Southern Co. dipped in the fourth quarter, but was up for the year, and sales rose, a hopeful sign.
Hope, even if tempered, appears to be the theme for 2011.
"Clearly, we're in recovery mode. We think it will be a pretty solid year in the profit segment even though there are some headwinds," said Phil Larkins, money manager at Northern Trust.
The headwinds, he said, are high unemployment which, "we think will drop only slowly," and the residential and commercial real estate mess that, he said, will take a couple more years to wade through.
Those problems could affect profitability at some companies, many of which may have already squeezed out all the cost efficiencies they can to boost the bottom line.
"We're likely to see continued growth this year," said Dorsey Farr, partner in French Wolf & Farr, an Atlanta investment management firm. "But the growth will be weaker than out of some economic recoveries."
Farr said expectations for growth are high, but noted that 2010 started strong, only to slow as the year went on.
In 2011, he said, "Expectations are a little bit too lofty. We see some optimism turning into disappointment."
He pointed to declining housing prices nationally as well as the state of the labor market, which he said is, "in very sad shape despite a year and a half of economic growth."
Another factor that could affect corporate financial performance is commodity prices. The cost of oil, which might be impacted by current political turmoil in the Middle East, looms as a threat for many companies.
Oil prices, Farr said, are "an outside force" that could cause the economy "to go in a different direction."
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