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CARIBBEAN BUSINESS Top 400 Locally Owned Companies

Largest local companies shun a slow economy, war jitters, and skyrocketing oil prices to post remarkable 10% growth in revenue last year.


November 4, 2004
Copyright © 2004 CARIBBEAN BUSINESS. All Rights Reserved.

Against all odds

Banks, food & beverage distributors, and healthcare insurers helped the Top 400 post $27.5 billion in total revenue in 2003

Ten-percent growth is very respectable, in any league. But considering the odds—local and stateside economies barely crawling back to health, consumer and investor confidence bogged down by wartime uncertainty, and sky-high oil prices siphoning cash from people’s pockets—the $27.5 billion in total revenue posted by the CARIBBEAN BUSINESS Top 400 Locally Owned Companies in 2003 is nothing short of remarkable.

Last year, when CARIBBEAN BUSINESS expanded its annual November classic to include 400 companies, up 100 from the 300 we had been surveying for the previous seven years, the group had posted total 2002 revenue of $25 million.

The companies in the group represent a variety of industries, including auto dealerships, hospitals, advertising agencies, insurance companies, residential developers, general contractors, banks, and wholesale distributors. What they have in common is that they are rooted in Puerto Rico—they are at least 51% owned and managed by local residents—and each generated more than $11 million in revenue during 2003.

Nearly three-fourths of the Top 400 companies saw revenue increase during 2003, and 84 of them reported that gross income rose by more than 15%.

All told, these companies employ 149,923 people, approximately 12% of all jobholders and 15% of the private-sector work force on the island.

A tribute to entrepreneurship, the Top 400 list salutes companies ranging from small enterprises such as auto-accessories wholesaler Kupey Auto Distributors (No. 331), which is investing in an oil-recycling plant, to big businesses such as banks with assets in the billions.

The No. 1 company, Popular Inc., has held the top position since the survey was born as the Top 100 in 1988. The holding company for the island’s largest financial institution, Popular’s 2003 revenue amounted to almost $2.6 billion, and its work force in Puerto Rico totals 10,640.

Banks take the lead

Banks continue to dominate the top positions on the list, capturing the first, third, fourth, fifth, and eighth slots. Together, the 11 financial institutions on the list accounted for $5.5 billion in revenue, 20% of the total sales of the Top 400.

Buoyed by record-low interest rates, the financial sector’s revenue increased 9% from 2002. The combined income of the top five banks—Popular Inc., Doral Financial Corp., First BanCorp, R-G Financial Corp., and W Holding Co.—accounted for 93% of financial institutions’ revenue. Mortgage giants Doral and R-G Financial each increased 2003 revenue by 25% over the previous year. The hefty growth pushed R-G Financial upward from sixth place to fifth, edging out the island’s largest wholesaler, V. Suarez & Co.

Food & beverage distributor V. Suarez, ranked in the top 10 since the initial survey, posted $545 million in revenue for 2003, the same as the previous year. In April, the company acquired Packers Provision Co. of Puerto Rico Inc., among the largest institutional food-service suppliers and No. 26 on the list, with $195 million in revenue. As a wholly owned subsidiary, Packers Provision is expected to boost 2004 revenue at V. Suarez and, perhaps, nudge the island’s premier wholesaler a notch or two higher.

On an island where nearly everything is imported, it isn’t surprising that wholesalers make up the largest sector—78 companies in all—and take the second-biggest piece of the revenue pie, with $5.1 billion or 19% of the total.

Revenue for the sector grew nearly 10% over last year. Borschow Hospital & Medical Supplies Inc. climbed to 10th place from 17th last year The wholesaler of medical equipment and pharmaceutical products posted $300.8 million in sales, 43% more than in 2002.

Food distributors dominate the top revenue positions among wholesalers and include Plaza Provision Co., Mendez & Co., Northwestern Selecta Inc., B. Fernandez & Hermanos Inc., Ballester Hermanos Inc., and Puerto Rico Supplies Co. Despite increased revenue, wholesalers are under pressure from big-box stores such as Wal-Mart, Sam’s Club, and Costco.

B. Fernandez, one of the oldest and largest distributors, saw its 2003 income drop by 10%. Cash-and-carry stores, categorized as retailers under the North American Industry Classification System, have seen sales to small businesses slide. J.F. Montalvo Cash & Carry, which owns Plaza Gigante supermarket, reported a 5% decrease in 2003 revenue.

"The entrance of businesses such as Wal-Mart, Sam’s, and Costco, has weakened the position of distributors and wholesalers," said Jose Joaquin Villamil, president of consulting firm Estudios Tecnicos.

Although the trend toward megaretailers has affected small retail businesses in the States, the impact in Puerto Rico has fallen on both the retail and wholesale sectors. That’s because Puerto Rico has a different distribution setup, explained Villamil. The island lacks a full-service distributor such as White Rose that can supply a grocery store with everything, from soup to toilet paper. Enter Wal-Mart.

"Wal-Mart isn’t a retailer; it’s a distribution technology," said Villamil. It’s a different technology and a different approach, he said. "In Puerto Rico, the wholesale-and-distribution business is going through a profound transformation. People are going to have to reinvent themselves. We’re going to be looking at a very different distribution system of retail and wholesale," he said.

In number of companies, retailers comprise the second-largest group, with 71 companies selling diverse products, everything from groceries, clothing, furniture, electrical and plumbing materials, and ceramic tiles to bunker fuel. Leading the retail sector is Supermercados Grande, ranked No. 9 with $365 million in 2003 revenue. The company, founded by Atilano Cordero Badillo, has been a regular on the list since 1988. In second place is J.F. Montalvo Cash & Carry with $277 million in sales.

The retail sector generated $3.9 billion in 2003 revenue, or 14% of the total. Together with the wholesalers, these companies number 149 and account for one-third of the total revenue produced in 2003.

Puerto Ricans love their wheels

From the first survey of locally owned companies, Puerto Ricans’ love affair with the automobile has been evident. Indeed, the auto industry was No. 1 among the Top 100 in 1988, with 22 companies on the list. Some drivers would park their cars in their pockets if they could.

On the list published today, auto dealers and related companies have grown in number to 36, accounting for 9% of the Top 400 companies, a slight decrease over last year, when 37 companies in the industry made the list. Consolidation reduces the numbers; earlier this year, Autostore Group of Ponce acquired Lugo Auto Sales.

As a subsector of the service industry, healthcare continues to grow to serve the aging population as well as the medically indigent, who benefit from health reform, and a more health-conscious population. Out of 28 healthcare companies on the Top 400, 25 are hospitals and three are laboratories.

Health insurers fall under the insurance industry. That is why the No. 2 health insurance company, Triple-S Management Corp., which includes insurers Triple-S Inc. and Triple-C. Inc. (the health maintenance organization formed to bid on the government’s health insurance business), isn’t under healthcare. Triple-S posted 2003 revenue of $1.3 billion, a slight increase over the previous year. Medical Card System, another big health insurer, ranked No. 7 with more the $500 million in revenue.

Had the healthcare subsector included health insurance companies and medical-supplies wholesaler Borschow, the sector’s combined revenue would have swelled by $2 billion, to approximately $3.2 billion.

Among the companies new to the list are three hospitals—Hospital Del Maestro (No. 213), Hospital San Francisco (No. 305), Servicios Medicos Universitarios Inc. (No. 170)—and First Medical Health Plan (No. 11).

Hospitals are among the oldest businesses in Puerto Rico. Their roots run deep, spanning two centuries. Among the oldest are Hospital de la Concepcion in San German (1842), ranked No. 152; Hospital Damas Inc. in Ponce (1863), No. 101; and Hospital Español Auxilio Mutuo de Puerto Rico in Hato Rey (1883), No. 48. Auxilio Mutuo’s health maintenance organization (HMO) predates the local Office of the Insurance Commissioner and is the only HMO not required to submit its financial statements to the regulatory office. Protestant religious sects founded Ashford Presbyterian in Condado (No. 143) and Hospital Episcopal San Lucas in Ponce (No. 30) in the early 20th century.

On a strong social foundation, they built successful enterprises. Healthcare companies, primarily the hospitals, produced $1.2 billion or 4.5% of the 2003 revenue.

Insurers, like banks, are few in number, but the 15 insurance companies that compose the Top 400 sector accounted for 12% of revenue, a disproportionately large share of the $27.5 billion total. Health insurers hold the Nos. 1, 2, and 3 slots in the group but are outnumbered by property & casualty companies, which sell auto insurance, fire insurance, medical malpractice policies, and other insurance coverage.

Combined, financial institutions and insurers produced one third of the total Top 400 revenue in 2003. Yet, the 26 companies combined make up just 6.5% of the Top 400 companies.

Six of the 10 fastest-growing companies are in the construction industry. Real-estate developer Muñoz Holding Inc., for instance, posted an 85% revenue gain over the previous year. In 2003, the company completed work on housing development Los Balcones, which boosted revenue.

The construction industry’s revenue can be volatile because these companies depend on a steady stream of projects. If development comes to a halt, revenue falls. From 2002 to 2003, revenue grew more than 50% at Builders Unlimited Inc., L.P.C. & D. Inc., S&R Engineering S.E., Anibal Diaz Construction Inc., N.LL Construction S.E., and HR Group Corp.

Puerto Rican manufacturers are a diverse group; their products range from rum to pharmaceuticals, construction materials, and computers. The group totals 34 companies, or 8.5% of the whole, and they generated 5.4% of the total Top 400 revenue in 2003. Leading the sector is Mova Pharmaceutical Corp., the only locally owned drug manufacturer.

The service sector sweeps across a wide variety of companies. It includes shopping-center giant Empresas Fonalledas Inc., Inter American University, commercial printer Ramallo Group, law firm Fiddler Gonzalez & Rodriguez PSC, and entertainment empire Angelo Medina Inc. The group of 63 service companies accounted for 9% of revenue in 2003.

If there were a doubt regarding Puerto Rico’s transformation from an agriculture-based economy, one need only note the few companies in the agriculture sector. These locally owned businesses made up less than 1% of the total revenue.

Thirty companies won a place on the Top 400 for the first time or made a comeback. Among the new arrivals are fast-growing security providers Genesis Security Services Inc. and Capital Security Police Inc., which chalked up revenue increases of 25% and 65%, respectively. With crime statistics high, the demand for private security firms is up.


Angelo Medina Inc., real-estate developer Federico Stubbe, and others are gracing the list for the first time this year. The complexity of the real-estate business makes it difficult to pin down some of the biggest developers. They don’t have the traditional corporate structure; instead, they establish special partnerships for each residential development. Sometimes, they will have a corporation that provides services to the various partnerships. The bottom line is that it is difficult to calculate their aggregate revenue.

So, it isn’t unusual that some businesses elude the Top 400 researchers or that their revenue must be estimated. More than 85% of the companies provided CARIBBEAN BUSINESS with 2003 sales figures, but 13% refused to disclose their revenue. That is when CARIBBEAN BUSINESS turns to industry sources, government filings, and other business databases to arrive at a ballpark estimate of a company’s gross income. This year, CARIBBEAN BUSINESS estimated revenue for 53 companies that declined to provide their figures. Although estimates are made as a last resort, estimating the sales of companies that belong on the list is the newspaper’s policy, set by the publisher.

As soon as a company is identified as generating annual revenue of over $10 million, it becomes a candidate for the list. If we left out companies because they failed to provide us with their figures, the Top 400 wouldn’t be a true representation of the top locally owned companies.

"If a company won’t supply its revenue, we will use every source possible to estimate the revenue and will identify it as an estimate," said CARIBBEAN BUSINESS Editor in Chief Manuel A. Casiano.

Other new arrivals on this year’s list are supermarket Super Max (No. 83); Ceramica, Azulejos, Terrazos Inc. (No 198); and Farmacias Caridad (No. 400). These companies can be identified because they don’t have a previous year’s rank on the Top 400 chart. A couple of companies, among them CMA Architects (No. 304) and Ultra Pure Systems (No. 356), made a comeback.

The average 2003 revenue for the 400 companies was $68.8 million, and the median gross revenue, the midpoint, was $30 million, which was reported by both Structural Steel Works Inc. of Bayamon (No. 200) and Enigma Investments Corp. (No. 199), a pizza-delivery franchise in Carolina. The $30 million median is up a couple of notches from 2002, when the average was $62.6 million and the median $27.5 million, reported by Universidad del Sagrado Corazon.

Departures from the list

About 30 companies fell from the list, some gobbled up by bigger fish in their industry. The Bank & Trust, for example, was acquired by Eurobank and Lugo Auto Sales by Autostore Group of Ponce. Some are no longer considered locally owned because their owners moved to the U.S. mainland, as did the owners of

Others had a tough year; their revenue dropped below the $10 million mark needed to qualify as a candidate for the list. There is always a chance they will be back next year. The cutoff for this year’s candidates was $11 million, slightly higher than last year’s $10.5 million.

Discount retail chain Almacenes Riviera Inc. is in the process of closing shop; C.R. Rondinelli sold its auto line, shrinking the business so it missed the $11 million cut. J.R. Insulation Sales & Service filed for Chapter 11 bankruptcy protection at the end of February.

About 80 small companies with great ambitions lacked the $10 million ticket to become a candidate for the Top 400. Some of them came very close. We look forward to seeing them make the mark next year.

How we rank the companies

Like the Fortune 500 list, the CARIBBEAN BUSINESS Top 400 Locally Owned Companies list ranks companies according to revenue, considered a measure of company size.

For more than 85% of the Top 400 companies, revenue means sales, a straightforward item that refers to a company’s gross income.

Banks and insurance companies use different yardsticks to determine annual revenue. Neither industry books sales as retailers and manufacturers do. To ensure we compare apples with apples, CARIBBEAN BUSINESS hired accounting firm Ernst & Young (E&Y) four years ago to come up with an equivalent of revenue for select industries, including advertising, financial services, and insurance.

E&Y researched each industry represented on CARIBBEAN BUSINESS' list of the largest locally owned companies and provided this newspaper with the sources of income that should be counted as revenue. We continue to refine this ranking criterion in an attempt to level the playing field for all Top 400 candidates. This year, we requested that hospitals provide us with patient revenue, a more accurate measure of gross income because it nets out discounts.

A year ago, we refined the yardstick for property & casualty (P&C) insurers to exclude reinsurance—business these companies cede to reinsurers. On the insurance industry charts, we continue to use the criterion of total premiums written.

For P&C companies, premiums are defined as premiums earned; other items included in the concept of total revenue are net investment gain or loss and other income. These financial figures are taken from the statutory audits submitted by the insurance companies to the Puerto Rico Office of the Commissioner of Insurance.

For banks and credit unions, revenue is equated to total interest and investment income, service fees, and any gain on the sale of loans. Advertising agencies report total commissions and fees received.

E&Y also provided revenue definitions for the following industries:

  • Automobile: Total automobile and truck sales, parts sales, income from repair services, income from automobile rentals.
  • Construction: Total sale of real property and/or income for services rendered (including engineering and construction contracts).
  • Real estate: Total commissions on the sale or rental of real estate.
  • Telecommunications: Total sales of services, goods, and/or advertising time.

Although revenue is a widespread measure of size, the amount of revenue posted doesn’t necessarily correspond to a company’s profitability. To measure profitability, net income is the yardstick.

In addition to revenue, the Fortune 500 list includes data on profits as well as total return to investors. These data are available because the companies on the famous list are publicly owned.

CARIBBEAN BUSINESS doesn’t have such a wealth of information available because 98% of the Top 400 companies are privately held and aren’t required to disclose their financial data. Nonetheless, more than 85% of the businesses on the list did provide CARIBBEAN BUSINESS with their revenue figures for 2003. For the rest, estimates were made.

Vying for a slot on the list

Today marks the publication of the 17th edition of CARIBBEAN BUSINESS’ list of locally owned companies in Puerto Rico. Since the first list, The CARIBBEAN BUSINESS 100, the rules have remained unchanged.

To be considered a candidate, a company must generate revenue of $10 million or more and must be at least 51% owned and managed by Puerto Rico residents. Candidates also must be in the private sector. Local nonprofit educational organizations have been included in the survey since 1999.

Winning a place among the Top 400 Locally Owned Companies is competitive and rewarding. Companies that make the list have excelled in business and deserve this recognition.

The selection process began in June when a one-page questionnaire was mailed to about 1,000 companies selected from CARIBBEAN BUSINESS’ database, industry sources, and Dun & Bradstreet (D&B), a worldwide source of business data.

More than 500 companies responded, either by mail or fax. About 80 small businesses, most of them great little companies, didn’t have the requisite $10 million in revenue.

As a rule, not all company owners volunteer revenue figures. Sometimes, they are too busy or refuse to disclose their gross sales for the year. When a qualifying company doesn’t provide this information, an estimate is entered for the company. Estimates are made by researching industry trends, interviewing industry sources, and consulting D&B databases and government filings.

In the table of the Top 400, an asterisk next to the sales amount indicates the number is an estimate. The majority of the individual supermarkets in the Supermercados Econo chain didn’t provide their revenue, so estimates were made. Although these stores operate under the Econo banner, like franchises, the assets belong to the individual stores. For the Top 400, the Puerto Rican supermarket chain in its entirety isn’t considered a single entity. For the supermarket industry chart, however, the chain is counted as a whole.

When two or more candidates tie for a slot, the company with the most employees precedes.

Highlighting entrepreneurs every week

Each week, CARIBBEAN BUSINESS proudly highlights one of the companies on the Top 400 Locally Owned Companies list.

Among the Top 400 companies featured in 2004 were Deya Elevator Service Inc.; freight forwarder CaribEx; Anglo-Puerto Rican Insurance Corp.; Roger Electric; one of the island’s largest law firms, McConnell Valdes; Fast Food Management (Hot Potato and Reggio Pizza); Lopito, Ileana & Howie; Hospital Damas; National Insurance Group; Gomez Hermanos Kennedy; Levitt Homes Corp.; Dr. Pila Hospital; Drugs Unlimited; Structural Steel Works; and Flexible Packaging Group.

This Caribbean Business article appears courtesy of Casiano Communications.
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