(FORTUNE Magazine) – The giants of world business charted new territory last year, from cigarette factories in Uzbekistan to oil pipelines in Bolivia, as FORTUNE's Global 500 pushed across borders to seize fresh markets and swallow up local competitors. More countries meant more profits too. Earnings at the world's 500 biggest corporations grew a healthy 15%, on revenue growth of just 11%. That's considerably slower than last year's stunning 62% pace, but it is still rather remarkable, considering that the global economy expanded just 2.4%, dragged down by near-recessions in Japan and much of Europe. The most profitable industries included airlines--which recovered from a long slump--brokerages cashing in on booming stock markets, and paper companies, whose products commanded premium prices.

Gordon Moore, chairman of U.S. chipmaker Intel (No. 228), credits his company's expanding reach for last year's whopping return on assets of 20.4%, the best performance among the Global 500. Intel, he says, deliberately decided to branch out of the increasingly PC-sated developed world to exploit voracious demand in areas such as India and Latin America. "The market for our products," he says, "is becoming increasingly global."

Likewise for 1995's largest money makers. Royal Dutch/ Shell Group (No. 10) led the pack in total profits, with $6.9 billion, followed closely by three others that this year managed to join it in the rarefied air of the $6-billion-plus profit club--General Motors (No. 4), General Electric (No. 20), and Exxon (No. 9). Sure, vice chairman John Jennings admits, Shell had some good luck with high oil prices. But one of the main reasons the company made more money than any other in the world for the second year in a row, he insists, is that Shell is in more countries--120--than any of its competitors. Shell's "greater spread" and its strong base in booming East Asia, says Jennings, give it "a platform for growth" a level above its rivals.

But even as they broaden their horizons, the winning companies continue to restructure and downsize their existing operations. Despite Shell's mammoth profits last year, the company has announced plans to cut its 5,000-strong headquarters staff by a quarter and sell off some oil-related divisions. One reason: As a look at our rankings of companies within industries shows, while Shell may have brought home more dollars than anyone else, its returns on assets and revenues still trailed some of its sisters'.

Drugmakers live in what seems like profit paradise; they are consistently among the highest-earning industries, and last year kept an average of 15 cents from every dollar of sales--tops among all industries on our global list. Yet even these money makers are being roiled by an unprecedented wave of merger mania, as they cope with rising R&D costs and constant pressure on prices. More consolidations are likely; Glaxo (No. 353), the world's largest maker of drugs, has just a 4.7% share of the market. (By the way, don't be confused by Glaxo's No. 7 ranking in our list of pharmaceuticals companies; the big boys above it fatten their revenues selling things besides drugs, such as chemicals and consumer goods.)

Some earnings standouts, of course, burnished their balance sheets with onetime gains, even as they reshaped themselves. Consider this year's leader in return on revenues, Seagram (No. 496). The Canadian beverage maker bought 80% of the MCA movie, TV, and recording studios last year and netted $3.2 billion from the sale of its 24% stake in Du Pont, which accounted for much of its chart-topping 38% profit margin. CEO Edgar Bronfman Jr. has warned that it would probably take Seagram a couple of years to recover from its metamorphosis.

How important are mergers and restructurings? They've touched nearly every company in every industry, and have vaulted a host of well-known names onto this year's Global 500: among them, Seagram, Kimberly-Clark (No. 280), and British Steel (No. 404). Meanwhile, mergers and restructurings removed some old familiars, such as American Brands and Martin Marietta, which has been subsumed into Lockheed Martin, now No. 132.

One clear message that pops out of this year's ranking: Overreliance on home markets is one of the surest routes to the bottom of the pack. Anyway you slice the data, Japanese banks are the sickest companies in the 500, making up almost half of the 20 biggest money losers. Reason: They overinvested in loans on inflated Japanese property and in equity in other Japanese enterprises that were also being buoyed by the "bubble economy" of the late 1980s.

Or take a look at the engineering and construction sector, which turned in a dismal performance. A closer examination shows that it was the more insular Japanese and French companies that suffered most. Fluor (No. 474), the smallest among that crowd and the only U.S. company to make this particular industry's list, did very nicely, thank you, reporting record profits for a second year in a row. "We are doing more things for more people in more locations than any rival in our field," says Fluor Chairman Les McCraw.

Some industries, though, had trouble everywhere. The telecommunications companies, for example, languished because of huge write-offs taken as they frantically prepare for new competition. Pacific Telesis Group reported the fifth-biggest loss in the world--$2.3 billion, due to a $3.4 billion charge for accelerated depreciation of equipment. "In a competitive world, you're not going to write things off over 25 years," the way regulation-protected monopolies used to be able to, explains Dave Dorman, president of Pacific Bell, PacTel's chief subsidiary. And the French electrical equipment giant Alcatel Alsthom lost $5.1 billion, more red ink than any other company in the world last year, because of goodwill write-offs and massive losses in its core telecommunications business.

Nowhere is the trend toward globalization more apparent than in the U.S., home of the largest number of Global 500 companies. The 153 U.S. companies on the list had an 11% increase in profits. Two of the three biggest money makers were American, and all three revenue leaders came from the U.S. (To be fair, some of those revenue gains came from mergers, while our three biggest revenue losers on the table above, all also American, shrank as a result of strategic restructurings.)

Globalization works both ways: U.S. companies may be seeking out new markets, but the world's largest economy is also drawing huge amounts of foreign investment. The latest addition to FORTUNE's lists, a compilation of 25 of the largest foreign-owned subsidiaries in the U.S., underscores this point (see following table). Honda, for instance, now pulls in 42% of its revenues from the U.S., while Belgium's Delhaize supermarket chain gets nearly two-thirds. We broke out the numbers for these economic colonies, which are still included in their parents' totals elsewhere, because they've become giants in their own right. By itself, Shell Oil in the U.S. would be among the 120 biggest companies in the world. And the American division of Siemens employs enough people to populate a small city.

One area where global companies are not expanding much: payrolls. The number of folks employed by the Global 500 rose just 1.8% last year. Some of the biggest job losers were companies that had a terrific year. Metals companies, for instance, lopped off about 1% of their collective staffs, even while booming demand from manufacturers pushed total industry sales up 13%. So where did new jobs come from? Most came from services industries: post offices and package deliverers, hotels, banks, and entertainment companies.

Robert Hormats, vice chairman of Goldman Sachs International, predicts the pace of downsizing will have to tail off eventually but sees no leap in hiring anytime soon. What will accelerate is the march of globalization. "What makes a successful company successful is the ability to draw on the best and lowest price inputs from around the world and then access markets around the world," Hormats says. For the Global 500, the payoff may be that they will become increasingly insulated from downturns in single countries as they continue to pursue profits around the globe.

--Kim Clark

REPORTER ASSOCIATE Henry Goldblatt