Report ranks global chems sector as 4th top value creation industry

21 May 2013 22:27  [Source: ICIS news]

HOUSTON (ICIS)--The global chemicals sector is one of the best performing industries, ranking fourth among 21 industries analysed by the Boston Consulting Group (BCG), the US-based analysis firm said on Tuesday.

The BCG released a report on the state of the global industry, examining the total shareholder return (TSR) of more than 100 publicly listed chemical companies, including those in base chemicals and basic plastics, agrochemicals and fertilizers, industrial gases, as well as focused specialty and multispecialty chemicals.

The consulting group said the global chemicals sector achieved an annual TSR of 4.7%, nearly double the 21-industry average of 2.4% during the five-year period just before and following the global financial crisis.

“Post-crisis, and for the past 20 years, the best-performing companies were largely based in emerging markets,” said Yves-Pierre Willers, a BCG senior partner and a co-author of the report.

“But when we look deeper at the 10- and 20-year periods, we see more than an emerging-markets growth story,” he said. “Many companies benefited from natural advantages, while others pursued disciplined operational and management strategies.”

The region of operation had an impact on the value creation, and most emerging-markets-based companies registered the highest TSRs, the BCG said.

South Korean companies benefited from high export rates.

In addition, mining-based companies excelled in downstream derivatives, while polymer producers took advantage of demand for basic needs in the emerging markets.

These companies moved operational levers – they pursued sales growth and EBITDA [earnings before interest, taxes, depreciation and amortisation] margin and reduced debt,” said Andreas Gocke, BCG’s global chemicals sector leader and co-author of the report.

“Savvy portfolio strategy, especially investments in specialty chemicals and inorganics, and an always-on approach to M&A [mergers and acquisitions] proved to be a winning formula for value creation,” he added.

Looking forward, the report examined the economic and industry developments that will affect the chemicals industry, including resource constraints, rising food demand, the North American shale revolution and the European debt crisis.

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By: Tracy Dang
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