ICIS Chemical Business presents the Top 10 regional chemical players

Global impact

18 September 2009 15:09  [Source: ICB]

No region was unaffected by the global economic and financial crisis and many companies suffered big falls in revenues and profits

Rex Features

ALL FOUR regions represented in this section of the Top 100 have been hit hard by the financial crisis, as have their chemical companies.

Some, such as the Asian economies, appear to be pulling out strongly, boosted by national economic stimulus plans. Others are still plainly in the doldrums.

In Central and Eastern Europe and Russia, economic growth has yet to rebound. Economies and governments were driven to the edge of bankruptcy by collapsing credit markets, causing some to turn to the International Monetary Fund for emergency finance. Even the Middle East - that powerhouse of economic and chemical industry growth - has not been immune. Lower oil prices slowed growth and construction markets neared collapse.

Latin America was hit badly, though there are signs this region may be among the first to start the long haul back to healthy growth.

MIDDLE EAST and AFRICA
John Baker/London

Compared with their US and European counterparts, Middle East and South African players fared well in 2008. Only National Petrochemical Co. of Iran reported a slight slippage in sales and operating profit, while other companies included on the ICIS regional Top 10 listing saw robust double digit hikes in sales, in local currency and US dollar terms.

Saudi Arabia's SABIC by far leads the pack, after a decade of huge capital investment in new capacities in Saudi Arabia and acquisitions in Europe and the US. Sales of $40.2bn (€27bn) were up by close to 20% for the year, but profitability was hit by the sharp downturn in the final months of 2008, resulting in net profit falling from $7.2bn to $5.9bn.

The driving force for many of the region's top players in 2008 was the surge in volumes and

Even the Middle East… has not been immune. Lower oil prices slowed growth

prices for fertilizers and crop protection products, on the back of increased food demand and planted acreage. Israel Chemicals Ltd. had its best year to date. Sales were up by 68% to $6.9bn and net earnings more than doubled to $1.2bn. Similarly, strong figures were achieved by fellow Israeli company Makhteshim Agan and Qatar's fertilizer producer Qafco.

In South Africa, Sasol and AECI both saw sales and earnings in local currencies grow strongly, but the dollar comparison figures were hit hard by the 40% devaluation of the Rand against the US dollar during 2008.

Qatar's Qapco, Kuwait-based Equate and Sipchem of Saudi Arabia's increase in 2008 sales is down to new investments coming on stream and overshadowing the fall in volumes and prices in the fourth quarter (Q4). Further investments are planned and it will be no surprise to see these companies increasing sales robustly in coming years.

Only the top four in this region make it onto the global ICIS Top 100, but Makteshim Agan looks ready to make the grade soon. And if sister companies of Qafco and Qapco are aggregated under majority owner Qatar Industries, it too will soon feature in the main rankings. Few others are anywhere close.

No region was unaffected by the global economic and financial crisis and many companies suffered big falls in revenues and profits

TOP 10 MIDDLE EAST/AFRICA CHEMICAL COMPANIES

	Sales
Company	Total	% change		Operating profit $m		Net profit $m
	$m	Local currency	$	2007	2008	2007	2008
SABIC	40,198	19.5	19.2	10,968	9,753	7,221	5,872
National Petrochemical Co. (Iran)	7,509	-3.2	-3.2	1,217	1,060	240	627
Sasol**	7,281	25.1	12.4	472	687	-	-
Israel Chemical	6,904	68.3	68.3	743	2,335	550	1,194
Makhteshim-Agan	2,540	22.8	22.8	255	367	148	219
AECI	1,362	48.0	5.7	111	110	69	40
Qafco	1,262	68.1	67.6	527*	966*	-	-
Equate	1,210	5.0	0.0	-	-	769	683
Qapco	1,204	38.6	38.4	571*	754*	388	-
Sipchem	455	11.8	11.5	239	252	159	143
SOURCE: COMPANY REPORTS
*Gross profit
**Turnover figures from polymers, solvents, olefins and surfactants are added together

LATIN AMERICA
Anna Jagger/London

Brazil and Mexico continue to dominate the Latin American chemical sector, with interesting developments, both involving Braskem, in the two countries. The Brazilian chemical giant, which remains Latin America's top player, is in talks with its Brazilian rival Quattor about a possible tie-up. And in Mexico, Braskem has joined efforts to build much-needed petrochemicals capacity.

Braskem has been seeking acquisition opportunities from the global economic downturn across the Americas. An acquisition of Quattor, created in June 2008, following a major restructuring of the Brazilian petrochemical sector, would help Braskem achieve its goal of becoming one of the world's 10 largest petrochemical companies.

Braskem is also considering investing in Mexico, where plans to build a large-scale petrochemical project are being revived, following the failure of the proposed Phoenix project in 2007. The Brazilian group has joined Mexican companies Alpek, Mexichem and IDESA to form a consortium which plans to bid for an ethane supply contract with Mexico's state-owned energy group PEMEX.

PEMEX and Alpek remain at second and third in the ICIS Latin American Top 10, while Mexichem has beaten Quattor to fourth. However, although Quattor has slipped to sixth place, the new ranking is not based on a full data set for 2008. The company would sit higher up the list if it had provided pro forma data for the full year.

Similarly, Venezuela's state-owned petrochemical producer, Pequiven, is unranked because of a lack of data. Alpek, the petro-chemical business of the ALFA industrial group, started up a new polypropylene PP plant in Altamira, Mexico in 2008, and also completed the integration of two polyethylene terephthalate (PET) plants it acquired in 2007 in Argentina and Mexico. The PP plant is part of Alpek's Indelpro PP joint venture JV with Dutch petrochemical major LyondellBasell Industries.

Mexichem's 2008 revenues were boosted by acquisitions including Brazilian polyvinyl chloride (PVC) tube firm Plastubos. CEO Ricardo Gutierrez said in July that the company intends to slow the pace of acquisitions and focus on consolidating its operations in Mexico.

TOP 10 LATIN AMERICA CHEMICAL COMPANIEs

Company	Sales $m		% change*	Operating profit $m		Net profit $m
	2007	2008		2007	2008	2007	2008
Braskem	10,620	7,670	-4.4	865	-1,091	363	-1,060
Pemex (petrochemical products)	5,290	5,870	38.9	-1,300	-1,417	-1,480	-1,369
Alpek (petrochemical business of Alfa)	4,007	4,709	17.5	177	182	-	-
Mexichem	2,115	2,298	36.2	399	703	169	10
SQM	1,188	1,774	49.3 (in $)	259	632	180	501
Quattor**	-	1,582	-	-	47	-	-283
Fosfertil	1,370	1,464	41.6	412	623	251	329
Petrobras Argentina (petrochemicals)	974	1,009	13.5	29	98	-	-
Oxiteno	997	822	11.2	89	89	-	-
Pequiven***	-	-	-	-	-	-	-
SOURCE: company reports
*In local currencies
**Quattor created in June 2008 by combining five companies. Data is for whole company, June-December 2008 plus one of the five companies, Quattor Petroquimica, for the first half of 2008
***No relevant public domain data found for 2008

russia/cee
Will Beacham/London

The financial crisis and subsequent economic recession has hit Central and Eastern Europe (CEE) and Russia very hard. Many of the Russia/CEE regional Top 10 experienced steep falls in sales and profitability during 2008.

Many CEE economies and governments were on the verge of bankruptcy during the harshest part of the financial crisis, as global banks withdrew the credit that had provided a vital stimulus earlier in the decade.

Hungary's deep economic malaise has been reflected in the results of the country's national chemical champion TVK, the chemicals business of energy giant MOL. Sales slumped from $2.3bn to $1.7bn, while operating profits plummeted from $236m to $24m.

Most Russian companies for which both years' figures were available experienced steep drops in sales, while operating profits tumbled even more steeply.

Unsurprisingly, the trend looks set to continue in 2009, with poor results pouring out of the region in Q1 and Q2. Poland's PKN Orlen has been in trouble this year, forced in April to strike a deal with its banks over breached debt covenants.

The country is still struggling to pursue a privatization plan for its chemical sector, not an easy task in this economic climate. In August 2009, Orlen conceded that the plan could face difficulties - it said economic conditions meant it could struggle to sell PVC and nitrogen fertilizer subsidiary Anwil before 2010.

The company hopes to raise around zlotych 5.3bn ($1.8bn, €1.3bn) from the sale of Anwil, fuel transport unit Orlen Transportation and a 25% stake in mobile telecom firm Polkomtel.

Orlen's beleaguered Czech petrochemical unit, Unipetrol, suffered another setback earlier in the year when forward-thinking CEO Francois Vleugels left his post abruptly. In August, Vleugels took up another post as CEO of the Czech resin manufacturer Spolchemie.

As you can read on my Looking East for Chemicals blog, China's Yantai Wanhua is reportedly interested in Hungary's PVC major BorsodChem.

TOP 10 RUSSIAN/CEE CHEMICAL COMPANIES

Company	Sales $m		Operating profit $m		Net profit $m
	2007	2008	2007	2008	2007	2008
Sibur**	4,846	5,927	1,180	1,173	909	529
PKN Orlen**	6,741	5,128	537	190	-	-
BorsodChem	1,510	2,444	-	-	-	-
Nizhnekamskneftekhim	2,400	2,126	287*	-	-	104
Salavatnefteorgsintez	3,960	2,036	-	-	1,630	16
Uralkaliy	1,190	1,950	-	-	-	681
Habas Sinai Ve Tibbi Gazlar Istihsal Endustrisi	-	1,941	-	-	-	-
TVK	2,300	1,713	236	24	-	-
Silvinit	-	1,678	-	-	-	-
Petkim Petrokimya Holding	1,860	1,555	96	-	61	-
SOURCE: accenture/company reports
*Profit from sales
**Chemical figures only

ASIA
Malini Hariharan/Mumbai

There are few surprises in this year's listing of the Top 10 chemical firms in Asia (excluding Japan).

Ready access to the lucrative Chinese market has helped Sinopec and PetroChina top the rankings chart. The two state-operated firms are poised to grow even bigger in the coming years on a string of new refinery and cracker projects.

India's Reliance Industries saw sales and profits decline during an extremely challenging year for producers across the globe. But it should see higher numbers this year as it has commissioned a new mega refinery and PP plant in Jamnagar.

South Korean major LG Chem, with its diversified business portfolio is well placed to ride out the petrochemical down cycle. The company has invested in expansions and debottlenecking to make its petrochemical plants worldscale and more competitive.

However, future investments are being directed towards the lithium ion battery and liquid crystal display businesses. The only petchem project on the cards is a proposed acrylonitrile butadiene styrene (ABS) plant in China. South Korea's SK Energy too is hoping to enhance its presence in China with its JV cracker with Sinopec at Wuhan. Progress has been slow but both parties appear to be committed to the project.

Malaysian oil major Petronas, ranked No. 10, hit the headlines recently after it acquired Dow Chemical's stake in the three Optimal JVs the two operate in Malaysia. But it remains to be seen if this development marks a change in strategy for Petronas that had slowed down its expansions in petrochemicals during the past few years.

Still "bubbling under" the Top 10 is Thailand's PTT Chemical. But this could change next year once the state-owned major commissions its new cracker and derivatives complex.

TOP 10 ASIAN CHEMICAL COMPANIES (EXCLUDING JAPAN)

Company	Sales $m		Operating profit $m		Net profit $m
	2007	2008	2007	2008	2007	2008
Sinopec*	32,998	35,366	-	-	-	-
PetroChina	11,466	15,713	2,127	1,858	-	-
Reliance Industries*	13,210	10,195	1,783	1,324	-	-
LG Chem	11,551	10,046	709	1,068	734	797
SK Energy*	7,937	8,235	543	106	-	-
Formosa Chemicals & Fibre	7,398	7,602	-	-	1,558	77
Formosa Plastics**	5,598	5,537	-	-	1,562	552
Orica	4,910	5,373	722	796	434	443
Cementhai Chemicals	4,374	3,978	462	171	570	179
Petronas	4,400	4,418	2,373	2,303	-	-
SOURCE: ICIS DATA & ANALYTICS
*Chemical segment figures
**Net profit is pretax

The ICIS Top 100 table is based upon the ICIS annual analysis of the performance of the world’s leading chemical companies. Download a pdf of the Top 100 rankings

By: Will Beacham
+44 20 8652 3214

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