28 January 2009 15:31 [Source: ICIS news]
LONDON (ICIS news)--More than two thirds of chemical CEOs expect financing costs to increase, forcing them delay investments, while over half believe they will have to reduce growth expectations, according to a study released by consultants PricewaterhouseCoopers (PwC) on Wednesday.
PwC surveyed the leaders of 48 chemicals companies about challenges facing the industry, finding only 17% were very confident they could increase revenues in 2009, compared with 39% of those surveyed in 2008.
In addition to weakened demand, financing was a key concern, with 65% of respondents concerned that the disruption of the capital markets would affect their own expansion plans.
“Every chemicals industry CEO will need to make tough decisions about what actions are required to ensure their company’s short-term survival,” said PwC’s global chemicals leader Saverio Fato.
“Retaining the right skills to deliver long-term business growth is essential, and companies that cut back too far now may struggle to take advantage of the economic recovery, when it occurs,” he added.
Although confidence was seen to be lower since the economic downturn took hold, chemical CEOs were less pessimistic than other industry leaders overall, according to the survey.
They were also much less likely to be planning to reduce product and service development, with many chemicals CEOs planning to maintain a focus on R&D in 2009.
Some 33% of those surveyed were planning a cross-border merger or acquisition in 2009, compared with 25% of total industry leaders.
“While the economic downturn has significantly affected the large deal market, the small to mid-sized deal market remains relatively strong, as companies look for bolt-on acquisitions to strengthen their existing positions and dispose of assets that do not meet their internal performance levels,” added PwC global chemicals advisory leader Volker Fitzner.
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