‘Orange County’s 75 largest private companies saw a decline in revenue last year after five straight years of gains, according to this week’s Business Journal list.
The drop came from big revenue slides at the two largest private companies here, as well as declines at the county’s real estate and auto businesses.
Of the 11 companies on the list with $1 billion or more in annual revenue, only two reported higher 2008 sales. Four reported lower revenue, two were flat and three were Business Journal estimates.
The 5% revenue decline for all companies on the list actually could be steeper, as figures for 33 companies on the list are Business Journal estimates. We tend to be conservative when estimating figures up or down.
The largest 75 companies, made up of real estate, technology, service and other businesses, also saw declines in employment, with a sharper drop locally.
OC employment in these companies dropped 5% to 37,262 in the past 12 months,on par with that seen at all local businesses, according to the most recently available figures.
In March, versus a year earlier, the county’s businesses lost 71,900 jobs, a 4.8% decline.
Companywide employment at the county’s largest private companies fell 2% to 169,606.
No. 1 Newport Beach-based Pacific Life Insurance Co. retained its longstanding spot atop the list,but just barely.
The seller of life insurance reported $4.01 billion in 2008 revenue, $10 million more than No. 2 Fountain Valley-based Kingston Technology Co.
The spread is the smallest ever seen on the list.
A year ago, Pacific Life, which also offers annuities and other investments for individuals, businesses and pension plans, saw about $500 million more in revenue than Kingston did.
For 2008, Pacific Life’s revenue fell 21%, or more than $1 billion, by far the biggest decline by dollar amount on the list.
Besides being hurt by the recession, Pacific Life’s accounting practices require it to recognize investment losses in its revenue.
In November, Pacific Life released details of its investments,a rare move,to reassure its policyholders that it’s well capitalized.
It saw write-downs of about $183 million,about a half percent of its total investments,for the 12 months through September on its bonds and stocks, the company said.
The company’s losses likely continued through the rest of 2008 as Wall Street melted down in October and November.
Its investments included stakes in American International Group Inc., Merrill Lynch & Co., Wachovia Corp. and Lehman Brothers Holding Inc., the company said in November.
But it has capital “well above” regulatory requirements, Chief Executive Jim Morris said at the time.
Kingston, the biggest maker of memory products for computers and consumer electronics with a 25% market share, also saw a drop in 2008 revenue, slipping 11% to $4 billion.
It was the first decline in five years.
Kingston was hit hard by falling prices for its products, an oversupply of memory chips and low demand for computers and other electronics.
The company buys memory chips and assembles them onto circuit boards that are used for short-term data storage in computers. As the prices for memory chips fall, so do the prices for Kingston’s products.
Memory chip prices should stabilize in 2009 and are showing signs of turning around, according to recent data by El Segundo-based market research company iSuppli Corp.
No. 11 Orange-based David Wilson Auto-motive Group was another big decliner on the list, falling 25% in 2008 to $1.4 billion in revenue.
There are seven auto dealers on the list that are facing the worst market for auto sales in recent memory.
The 25 largest auto dealers here saw revenue drop 15% to $3.8 billion in 2008, according to the Business Journal’s March list.
Nationally, sales of new autos fell 18%, the biggest dip since 1992.
No. 34 Santa Ana-based Crevier BMW was the only auto dealer on the private companies list that saw a single-digit percentage decline,its revenue slipped 3% in 2008 to $302 million.
The dealer saw new auto sales fall by 4% to 4,055 vehicles in 2008 but made up the difference with more used sales, which were up 8% to 1,439 autos.
Homebuilders and other companies in the real estate industry also were slammed in 2008.
No. 18 homebuilder William Lyon Homes Inc. of Newport Beach was one of the list’s biggest percentage decliners.
Its revenue fell 52% in 2008 to $526 million.
Sales for homebuilder No. 40 Warmington Group of Costa Mesa also dropped by a wide margin in 2008, falling 48% to $289 million.
It is believed that No. 10 Newport Beach-based Irvine Company, a diverse real estate company, fared better than most in its industry. The Business Journal estimated its revenue flat at $2 billion.
The real estate owner and developer is estimated to have seen a big drop in land sales to homebuilders, lower rents at its office buildings and some fluctuation in tenants at its shopping centers.
But that’s believed to have been offset by revenue from acquisitions.
In late 2007, Irvine Co. bought a 90% interest in 16 Archstone apartments in Orange and San Diego counties, among other deals.
There were some bright spots on the list.
No. 4 Irvine-based Golden State Foods Corp. saw a 10% rise in sales to $3.7 billion.
The supplier of meat patties, sauces, buns and other products to McDonalds Corp. and others was helped by higher commodity prices for products such as sugar and oil, according to Bill Sanderson, corporate vice president of finance.
The company also saw increased sales of its sauces and dressings, due to strong comparable sales growth in McDonald’s Far East Asian market, Sanderson said.
McDonald’s recent gourmet coffee push also has helped Golden State, as they supply the fast food chain with its coffee syrups and whip cream toppings.
No. 5 Brea-based Ventura Foods LLC also saw a boost in revenue.
The maker of salad dressings and other edible oils upped its revenue by 15% to $2.3 billion.
