13 September 2010 12:35 [Source: ICIS news]
By Nigel Davis
LONDON (ICIS)--The 100 largest companies account for 39% of total chemicals shipments and the top 10 for more than a third of that. The bigger you are the more influence you have; and you should have the ability to grow faster than the rest.
Over time, that may be true, but not so in 2009. A landmark year for all the wrong reasons, in 2009 the biggest of the bunch struggled to perform along with everyone else. Markets were severely depressed from the start. At the beginning of the year, most companies had plants closed somewhere around the world. Only slowly would operating rates be brought back to anything approaching normal.
In difficult times, companies of alls sorts sought to preserve cash. Non-essential employees were let go. Working capital was kept extremely tight. Discretionary spending on capital projects and on research and development was under the microscope.
The ICIS Top 100 listing of key financials for the leading global chemicals producers highlights both the impact of the credit crisis and of global recession and the reaction to it.
It is well known that sales volumes and prices were severely hit from the start of the year. The ICIS Top 100 data show by just how much. In absolute US dollar terms, sales for the leading 100 chemicals companies were down close to 20% in 2009. That is an incredible figure by any standard. Unprecedented operating and financial conditions helped drive annual sales for industry giants down more than 30%.
Upstream petrochemicals and polymer players suffered the worst, taking the hit of the recession early. More diversified players fared somewhat better but even specialty players were not immune. Few companies were able to drive sales higher for the year - although some did when they were able to take advantage of relatively protected portfolios or advantageous geographic and market conditions. ?xml:namespace>
“The global chemical industry was hit hard in 2009 as the financial and economic crisis slammed confidence and business froze in the early part of the year.” Global Editor of ICIS Chemical Business Joseph Chang said on the launch on Monday of the latest ICIS Top 100 Chemical Company listing. “But many companies have since managed to climb out of the depths in solid shape,” he added.
Demand recovered in 2009 and the recovery persisted into 2010, with this year’s second quarter possibly marking a
The Top 100 data table, which can be accessed here shows, however, how badly hit most companies were by the downturn. This makes the recovery through the year, and its persistence into 2010, all the more significant. Volume demand is not quite back to where it was at the peak of the last cycle, but for some products it is fairly close.
The important question now is whether relatively strong demand growth can continue following the withdrawal of many government stimulus programmes and the drive by countries worldwide to contain sovereign debt. Austerity packages do nothing for chemicals demand. They could help make a difficult situation much worse. But firms were buoyed by a stronger than expected second quarter in 2010. There has been some talk in
Clearly, the Top 100 analysis for 2010, when it is published next year, will tell a different story and one more of strong growth out of the pits of the slump. It remains to be seen, however, whether the buoyancy apparent at the end of the first half can be maintained at least part way through the second. In many respects chemical players do not want 2010 to be a year of two halves.
A PDF of the ICIS Top 100 Chemical Companies is available for download here
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