In today's world, most companies span several regions and sell across the world. As my Foolish colleague Morgan Housel notes, 10 years ago, less than a third of S&P 500 revenue growth came from abroad. Today, that area makes up half of the S&P 500's growth.
And that number is growing. The truth is, investors regularly underestimate how much demand comes from abroad. More importantly, for large, multinational corporations that have already established a presence in their home markets, much of their future growth comes from abroad.
With that in mind, today we're looking at Dow Chemical (NYS: DOW) . We'll examine not only where its sales and earnings come from, but how its sales abroad have changed over time.
Where Dow Chemical's sales were five years ago
Five fiscal years ago, Dow produced 37% of its sales within North America.
Source: S&P Capital IQ.
Where Dow Chemical's sales are today
Today, North America's presence in Dow's sales has been reduced as the company continues growing in developing markets.
Source: S&P Capital IQ.
Growth in North America across the past five years has been unimpressive. However, rest-of-world markets like China have continued driving results.
Europe, Middle East and Africa
Rest of world
As Dow said in their last earnings call, developed markets continue to see weak demand while emerging markets have picked up the slack.
"Overall, volume was flat year-over-year as our emerging geographies delivered growth of 7% fully offsetting weak demand in the developed regions. This was led by China which was up an impressive 12%."
Dow's not alone in this trend. DuPont (NYS: DD) saw 133% growth in China over the past five years. Hunstman (NYS: HUN) is seeing impressive growth not only in China but also in markets such as Mexico.
The point? Companies providing materials that form the basis not only of industries like consumer goods but also agriculture will increasingly see their results driven by high-growth markets such as Asia and Latin America. If you're a Dow investor, these are the regions that'll be driving your growth across the next decade.
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At the time thisarticle was published Eric Bleeker owns shares of no companies listed above. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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