The best and worst companies of 2007

In looking at the best companies for 2008, there have of course been some wonderful mining performances, although many of those reflect the strong resources market. The company I have chosen as the best performer of 2007 is Leighton Holdings. A few years back this company hit lots of trouble, but veteran CEO Wal King corrected the mistakes and it is now a much better company. The sharemarket has responded and Leighton's stock has more than doubled this year (see chart here).

The company was the biggest single beneficiary from changes to the building code which saw control of building sites removed from unions and the new government has signalled it will continue the Howard government's regulations. King has been in Asia for a long time but did not make acquisitions because he found the culture different. But he can now see big opportunities in India and the Middle East.

Picking the worst company for 2007 is easy: Centro gains the wooden spoon by a big margin. But it is not the only company that will look back on 2007 and see that it was exposed to short-term debt which might have caught it out if the balloon went up at the wrong time. It's a lesson for all chief executives.

There were a few decisions in 2007 that will need to be watched in 2008. The Suncorp takeover of Promina saw two very different cultures coming together. Suncorp is centralised and Promina was decentralised. We are now seeing key Promina people leaving.

Had bank of Queensland bought Bendigo Bank they would have also faced cultural differences. But Bendigo Bank, which is now buying Adelaide Bank, now faces challenges given the wholesale nature of the Adelaide Bank's funding.