Top 100 global chemical companies

Top 100 companies

17 September 2007 00:00  [Source: ICB]

Sales and profits rose in 2006 for the top global chemical players. In our annual look at the state of the industry, ICIS shows how the world's top firms fared

Nigel Davis/London

THE CHEMICAL industry enjoyed another great year in 2006. Demand improved almost across the board. Companies fought with the rocketing oil price and its impact on feedstock and energy costs, but the battle was largely won. Higher costs were passed on to customers down most product chains. Cash flowed freely as companies capitalized on a third successive year of growth.

The good times are reflected in the annual ICIS analysis of the financial performances of the Top 100 global chemical producers. The data for 2006 - and for the Japanese majors for fiscal 2006/07 - show sales increasing and profits climbing with them.

The year did not necessarily feel that good for market players in July and August, when when first-half problems, coupled with a record-high oil price hit most businesses hard. But still-buoyant demand, particularly from developing Asia, and also from a resurgent Europe, helped keep supply/demand balances tight. That tightness was reflected in better second-half performance.

There were pockets of underperformance, as might be expected in a group of such diverse companies and markets. For most firms, however, the trick will be to match 2006 performance in 2007.

The Top 100 numbers tell the tale for 2006 as a whole. Sales for the leading 20 chemical firms were 14% higher operating profits were up by 6%. Companies used cash to pay down debt, reward shareholders and expand. Net profits for the top 20 were, on average, 8% higher than in 2005.

The ICIS listing includes the major chemical firms and the oil companies' chemical offshoots. Corporate data are given to ensure that as much information as possible can be included in the listing and comparisons with earlier years made easily.

A feature of the latest analysis is that despite significant merger and acquisition (M&A) activity, the company ranking by sales value is little changed. In a fast-moving business environment, most companies in 2006 sought greater strength through M&A rather than step-out deals. Top-line growth was strong for many firms.

The big acquisitions of 2007 have included fast-developing global players such as SABIC, as well as private money, and will change the face of the industry, but their impact will be more apparent in 2007 and beyond. For most publicly traded companies, the focus has been on value creation, which has been reflected in the sector's rising market capitalization.

Share values moved higher in the year, and the increase has continued into 2007. The mid-year 2006 pitch downward on the financial markets, driven by rising concerns over the dramatically increasing oil price, hit some firms harder than others, but global chemical stock market indexes ended the year higher.

Asian stocks showed the greatest volatility, while North American stocks were hit hardest. Perceived underperformance in upstream chemicals in the second quarter also lent weight to the belief that the chemical cycle just might be about to turn.

But the 2006 data show that sector companies continued to deliver healthy financials. This outperformance has largely persisted into 2007. The sector is still on a roll, and industry growth projections remain strong.

The industry remains dominated by the diversified giants BASF and Dow Chemical, with the major petrochemical producers not far behind. The big petrochemical makers ExxonMobil, INEOS, SABIC, Shell and Sinopec pushed sales up hard. US giant Dow showed throughout the year, but particularly in the first half, just how difficult it was to capture sales growth across the board. Its more specialized performance segments did not do as well as some expected earlier in the year. The group's sales were a healthy 6.1% higher for the year, but that increase paled against the 23.1% lift achieved by BASF and from the likes of Basell, Sinopec and even US rival Lyondell.

The year was good overall for the petrochemical makers in terms of sales growth. Fertilizer producers also capitalized on stronger demand, with companies such as Agrium, Kemira and Yara showing strong sales growth.

Tough market

Converting sales into profits was not always easy in 2006, particularly in the US, where fears of an impending chemical downturn were heightened more than anywhere else. Olefins and polyolefins market conditions fluctuated throughout the year. Chlor-alkali and polyvinyl chloride (PVC) makers were hit by the slump in the US housing market later in the year. The US consumer, however, stood firm and ultimately helped lift the sector.

By year end, DuPont was talking of a 2% volume increase for the year and a 2% lift in prices. Average annual manufacturing capacity utilization was a high 84%.

Dow Chemical put the real cost of still higher oil and gas into perspective. Its raw material and energy costs were up $2bn (€1.4bn) over 2005, with its hydrocarbons bill rising to nearly $22bn for the year. The volatile energy scene created great volatility in its markets.

The big players, and many others, however, managed well in 2006, turning sales growth into stronger cash flows and profits. There were some notable exceptions with Air Liquide, Dow, Lyondell, Mitsubishi Chemical and Shell seeing operating profits decline. Generally, however, sector companies produced strong profits driven by still tight cost control as well as the overall healthy market conditions.

This performance profile has been maintained in 2007 and improvements have been booked by the major US petrochemical and polyolefin players. Companies have demonstrated, particularly, that they can react to tougher operating environments by controlling costs and often by ramping up output to take advantage of new market opportunities.

The major Asian and Middle Eastern players performed well in 2006, lifting sales and profits. Sinopec's advance is worth noting as the big China joint-venture (JV) projects, particularly, ramped up to full production. In 2006, SABIC produced the biggest net profit in the sector, of $5.4bn.

Western firms also benefited from their new JVs in China and the Middle East. The JV income booked by companies such as Dow Chemical and ExxonMobil was substantial. Our sales figure from BP's remaining chemical operations includes estimates of turnover for its aromatics and acetyls businesses, as well as a share of its petrochemical operations in Germany and JVs in China - the SECCO venture - and Malaysia. The sales figure given for INEOS was supplied by the firm but includes the group's refining operations as well as those for chemicals.

INEOS has moved sharply up the rankings in the past few years, but its position in 2006 was unchanged from that of 2005. One of the biggest rankings jump by sales was made by Cementhai (the Siam Cement petrochemical business is shown in the table), a move that reflected the consolidation of Thai Plastics and Chemicals (TPC) as well as higher product prices.

Some of the major Japanese players showed stronger growth as firms pulled away from years of underperformance. Of the majors, Sumitomo Chemical produced a strong top-line increase. The big petrochemical and general chemical makers, including Mitsubishi Chemical and Mitsui Chemical, gained strong profit increases.

Europe-based players benefited from stronger-than-expected regional growth as the major European economies improved even as the weakness of the US dollar caused headaches. The strong overall performances of companies such as BASF and Bayer are noteworthy. BASF's chemical businesses did well in 2006 as the company concluded major acquisitions to shift the portfolio into less cyclical business areas, such as catalysts and construction. Bayer's MaterialScience operations continued to perform well, and its pharmaceutical businesses improved. BASF was also buoyed by an understandably strong performance from its oil and gas segment.

Little distinction can be made directly between the performance of the industry's upstream petrochemical and commodity players and the makers of more specialized chemicals. The specialty producers were able to pass higher raw material and energy costs on in product prices in mostly buoyant markets. Key end-use industries for chemicals continued to perform strongly and their demand for raw materials increased.

More important than the dramatic increase in the oil price and the high price of natural gas in 2006 was the fact that product supply/demand balances remained tight and, in some significant instances, tightened further.

Spending discipline

Tighter control of capital spending over many years, and more focused capital expenditures, directed increasingly at growth markets in China and elsewhere in Asia, has stood the industry in good stead. But competition remains intense, and in some markets has intensified further. The newer players in the chemical business continue to flex their muscles, taking advantage of opportunities. Production capacities are going to increase sharply over the next few years. The ethylene chain looks set for oversupply from 2008 and beyond, despite plant start-up delays.

The future performance of the sector generally relies on the performance of the global economy and continued growth in manufacturing industry's demand for raw materials.

Given that reliance on continued strong global economic growth, the significant increase in capital spending by the Top 100 companies in 2006 serves as a warning that sector performance might have passed a peak.

The average increase for the Top 100 companies for 2006 was 15.3%. The numbers in some instances include acquisitions but the rise emphasizes the fact that sector companies have expanded strongly.

Employee numbers for the Top 100 companies rose in 2006 by an average 3.4%. Companies continued to keep a close eye on costs and made cuts where appropriate.

THE TOP 100

	Company	Sales		Operating profit		Net profits		Total assets		R&D		Capital spending		Employees
		$m	%change	$m	% change	$m	% change	$m	% change	$m	% change	$m	% change	Number	% change
1	BASF1	69,459	23.1	8,912	15.8	4,245	6.9	59,796.3	27.0	1,686.0	20.0	5,370.9	85.9	95,247	17.7
2	Dow Chemical	49,124	6.1	4,972	-22.3	3,724	-17.5	45,581.0	-0.8	1,164.0	8.5	1,775.0	11.1	43,000	1.4
3	ExxonMobil2	48,900	13.5	3,403	-0.7	4,382	11.1	-	-	756.0	15.6	-	-	-	-
4	Bayer3	38,230	17.2	3,647	9.9	2,222	5.4	73,791.2	52.2	3,032.7	32.9	2,560.0	38.5	106,000	28.3
5	Shell2	36,306	17.0	991	-13.8	-	-	-	-	-	-	-	-	8,500	-1.2
6	INEOS4	36,000	44.0	-	-	-	-	-	-	-	-	-	-	15,000	-
7	Sinopec2	29,253	27.6	2,210	20.6	1,437	10.4	-	-	-	-	1,164	-14.0	-	-
8	DuPont	27,421	2.9	-	-	3,148	53.1	31,777.0	-4.5	1,302.0	-2.5	1,532.0	14.3	59,000	-1.7
9	Total2	25,234	14.0	1,604	5.8	1,167	-8.6	-	-	-	-	-	-	-	-
10	SABIC	23,022	10.3	8,237	5.9	5,412	5.9	44,426.0	21.6	-	-	-	-	19,000	11.8
11	Lyondell Chemical	22,228	19.5	1,069	-15.7	186	-65.0	17,846.0	18.3	94.0	3.3	400.0	60.6	11,000	10.0
12	Mitsubishi Chemical	22,037	8.9	1,080	-3.8	843	17.3	19,482.8	9.0	766.1	1.8	1,099.4	33.7	33,447	1.5
13	Akzo Nobel	18,137	5.7	1,930	-1.6	1,522	20.0	16,879.7	2.9	1,168.4	9.3	698.4	2.9	61,900	1.0
14	Sumitomo Chemical	15,040	15.0	1,173	15.6	789	3.5	19,533.9	6.7	-	-	1,343.1	28.0	24,691	2.2
15	Air Liquide	14,456	4.9	1,616	-16.9	1,030	-16.4	20,359.9	-5.3	-	-	-	-	36,900	2.8
16	Degussa	14,416	11.6	1,161	19.3	1,833	N/A	415.0	3.1	838.4	-16.8	838	-16.8	45,553	0.9
17	Mitsui Chemical	14,183	14.6	770	56.2	439	18.5	12,587.7	12.7	-	-	-	-	12,511	0.3
18	BP5	14,000				-	-	-	-	-	-	-	-	-	-
19	Basell	13,856	22.5	817	-	-	-	-	-	-	-	-	-	6,603	-1.7
20	Asahi Kasei	13,643	8.4	1,074	17.5	576	14.9	12,266.3	6.1	440.5	1.9	709.2	27.3	23,715	3.0
21	Huntsman	13,148	1.2	737	3.0	230	-	-	-	-	-	-	-	14,000	23.9
22	Yara International	12,773	37.3	-	-	-	-	-	-	-	-	-	-	7,060	-
23	Solvay	12,409	9.8	1,451	20.5	-	0.1	14,656.3	-1.2	743.3	19.3	1,132.8	-55.5	29,258	1.8
24	Johnson Matthey	12,053	34.5	494	21.7	-	-	4,092.6	-3.6	-	-	-	-	7,000	-9.3
25	Chevron Phillips Chemical2	11,839	10.6	1,443	54.5	1,349	58.1	7,119.0	2.3	-	-	191.0	7.9	5,150	0.0
26	DSM	11,064	2.3	1,101	3.2	722	3.8	13,322.8	-0.2	431.7	12.8	603.4	14.0	22,156	1.5
27	Shin-Etsu	10,962	15.7	2,025	30.3	1,294	33.9	15,627.7	11.3	350.4	30.3	1,769.5	45.2	19,177	1.5
28	Linde	10,639	32.7	-	-	-		-	-	121.5	19.5	1,107.7	20.9	44,308	99.7
29	ChemChina (CNCC)	10,260	-	-	-	192	-	-	-	-	-	-	-	100,000	-
30	LG Chem	10,149	25.3	364	-20.8	348	-20.4	-	-	-	-	-	-	10,000	-
31	Reliance Industries2	9,714	36.2	1,241	-	-	-	-	-	-	-	95.9	-87.1	-	-
32	ICI	9,492	5.3	983	4.8	-	-	-	-	299.7	4.1	-	-	31,070	-4.5
33	Lanxess	9,168	-2.9	496	1,242.9	260	-	5,551.7	-3.1	113.5	-14.9	352.5	6.4	16,481	-9.9
34	Polimeri Europa (part of ENI)	9,008	9.1	227	-14.9	230	-23.3	-	-	64.7	-	130.7	-11.6	6,025	-6.8
35	Air Products	8,850	13.9	1,061	6.6	748	5.7	11,181.0	7.4	151.0	14.4	1,261.0	36.6	20,700	2.5
36	PPG Industries2	8,808	10.3	1,283	15.0	-	-	-	-	-	-	-	-	15,800	0.6
37	Dainippon Inks & Chemicals	8,614	1.1	436	3.8	191	-	8,411.3	2.3	-	-	-	-	25,634	-
38	Praxair	8,324	8.7	1,519	17.5	988	35.0	11,102.0	5.8	87.0	8.8	-	-	27,042	-1.0
39	Merck KGaA	8,264	8.5	1,459	25.1	1,298	49.2	10,697.5	11.3	992.8	5.5	334.0	-5.6	29,999	3.0
40	Rohm and Haas	8,230	4.4	-	-	735	15.4	9,553.0	-1.5	286.0	9.2	404.0	21.3	15,815	-0.7
41	Syngenta	8,046	-0.7	829	-3.6	634	1.9	11,852.0	3.9	796.0	-3.2	217.0	24.7	19,500	2.6
42	Sherwin-Williams	7,810	8.6	-	-	576	24.4	4,995.0	14.3	37.0	15.6	210.0	46.9	30,767	4.5
43	Sekisui Chemical	7,782	4.6	380	12.2	214	26.1	7,387.0	8.8	205.8	6.5	305.0	28.3	18,905	5.2
44	Arkema	7,745	2.7	156	-	537	-4.9	5,995.3	-2.6	221.8	-4.5	443.6	0.9	17,000	-7.6
45	Borealis	7,581	19.3	466	49.6	248	44.7	4,846.7	6.6	59.4	9.8	308.9	5.9	4,602	1.3
46	Eastman Chemical	7,450	5.5	640	-15.5	-	-	6,173.0	6.9	167.0	3.1	389.0	13.4	11,000	-8.3
47	Braskem	6,893	10.3	-	-	-	-	-	-	-	-	-	-	-	-
48	Celanese	6,656	10.3	747	30.4	406	46.6	7,895.0	6.0	-	-	-	-	8,900	-4.3
49	GE Advanced Materials	6,649	0.7	-	-	-	-	-	-	-	-	-	-	674	-22.3
50	Clariant	6,646	4.8	486	11.1	-64	-	5,897.8	0.1	169.8	5.1	297.0	2.8	21,748	-1.7

	Company	Sales		Operating profit		Net profits		Total assets		R&D		Capital spending		Employees
		$m	% change	$m	% change	$m	% change	$m	% change	$m	% change	$m	% change	Number	% change
51	Tosoh	6,565	20.4	506	27.0	239	3.5	-	-	-	-	-	-	-	-
52	Nova Chemicals	6,519	16.1	-680	-	-	-	-	-	-	-	-	-	3,300	-8.3
53	Shanghai Petrochemical	6,489	10.1	211	-7.8	335	-5.8	-	-	-	-	28,500	11.8	28,500	11.8
54	Rhodia	6,350	-10.0	474	286.0	87	-	6,803.4	-8.7	136.0	-1.0	410.6	8.7	16,000	-17.9
55	Repsol	6,308	2.9	466	14.6	601	-	-	-	-	-	-	-	3,213	0.2
56	Mosaic	5,774	8.8	616	-	420	-	-	-	-	-	-	-	-	-
57	IRPC Public Company Limited	5,760	9.7	-	-	-	-	-	-	-	-	-	-	7,155	-
58	Transammonia	5,700	-6.6	-	-	-	-	-	-	-	-	-	-	-	-
59	Formosa Chemicals & Fibre	5,585	13.9	-	-	-	-	-	-	-	-	-	-	8,722	-
60	Ciba Specialty Chemicals	5,212	5.3	379	18.8	-34	-84.0	7,451.0	-14.4	221.5	-0.7	193.6	-4.1	14,130	-26.0
61	Hexion	5,205	17.2	286	37.5	-109	25.3	3,508.0	9.3	-	-	179.0	1.7	6,900	-1.4
62	Sasol2	4,981	10.7	282	-	-	-	-	-	-	-	-	-	7,701	3.2
63	NPC (Iran)	4,939	21.1	690	46.5	276	28.4	21,356.0	5.8	33.0	-23.3	1,773.0	-22.7	16,991	6.5
64	Occidental Chemical	4,815	3.7	-	-	901	48.4	3,762.0	-2.2			251.0	45.1	3,160	-5.4
65	Honeywell2	4,631	43.2	-	-	568	121.0	-	-	-	-	186.0	20.0	-	-
66	Formosa Plastics	4,524	9.5	-	-	-	-	-	-	-	-	-	-	-	-
67	Wacker-Chemie	4,406	21.1	605	80.3	411	116.0	4,301.4	11.5	200.7	3.4	693.1	75.6	14,668	1.6
68	Dow Corning	4,392	13.2	-	-	668	31.8	5,972.0	16.1	-	-	-	-	9,000	-1.1
69	Agrium	4,193	27.3	72	-	33	-88.3	3,265.0	17.2	-	-	209.0	19.4	6,554	38.9
70	Mitsubishi Gas Chemical	4,055	9.7	355	8.3	519	22.4	5,124.9	8.1	-	-	-	-	2,159	-
71	Lubrizol	4,036	11.5	182	12.7	106	-43.9	4,386.0	0.5	205.5	3.3	131.0	-4.4	6,746	-10.2
72	Orica	4,002	4.5	491	9.5	-	-	4,263.7	32.4	24.6	3.1	-	-	13,348	21.9
73	Kaneka	3,976	1.9	308	-23.0	154	-34.6	3,924.6	3.1	-	-	298.8	2.5	7,430	1.7
74	K+S	3,905	5.0	367	10.8	358	55.7	3,737.7	25.3	18.5	7.7	172.3	22.0	11,873	7.8
75	Kuraray	3,853	2.7	402	5.0	-	-	5,087.0	5.7	130.0	-7.8	377.0	11.2	6,812	-0.4
76	Chemtura	3,723	24.6	61	-34.5	-187	-	4,986.0	86.1	52.0	8.3	104	60.0	6,578	37.8
77	Nalco	3,603	8.8	166	71.1	99	106.3	5,656.5	1.9	58.5	2.6	93.0	24.0	11,100	1.8
78	Showa Denko	3,483	10.5	181	-19.2	-	-	3,145.5	-	-	-	125.8	57.0	-	-
79	Cementhai Chemicals	3,440	42.5	493	5.5	294	33.5	-	33.5	-	-	-	-	-	-
80	Grupo Alfa	3,410	6.4	238	-15.6	-	-	-	-	-	-	-	-	-	-
81	Potash Corp. of Saskatchewan	3,377	-2.8	-	-	632	16.4	6,217.0	16.0	-	-	-	32.9	4,871	-0.2
82	Cognis	3,372	6.2	206	261.4	2	-	2,640.0	3.5	94.0	2.2	100.0	-24.2	7,719	-0.9
83	RPM	3,339	11.0	-	-	-76	-	3,333.0	11.2	-	-	70.0	14.8	9,400	17.5
84	Ashland	3,336	7.9	105	-33.6	-	-	-	-	-	-	-	-	-	-
85	Cytec Industries	3,330	13.8	305	90.0	168	17.5	3,831.5	-0.7	74.0	8.0	-	-	6,700	-8.2
86	Israel Chemical	3,258	9.1	536	-4.5	374	-11.4	3,616.0	8.8	35.0	16.7	-	-	9,307	0.8
87	JSR	3,074	8.2	464	3.5	283	10.1	3,436.0	7.3	-	-	-	-	4,693	2.6
88	Valspar	2,978	9.7	-	-	175	18.2	3,188.0	16.7	83.0	5.1	-	-	9,556	26.7
89	Givaudan	2,909	4.7	-	-	412	1.5	4,700.0	4.1	-	-	145.0	-9.9	6,056	2.2
90	Solutia	2,905	5.3	102	112.5	11	37.5	2,055.0	7.3	38.0	-7.3	106.0	37.7	5,100	-5.6
91	W.R. Grace	2,827	10.0	-	-	18	-72.8	3,637.0	2.8	64.0	8.5	-	-	6,600	1.5
92	PolyOne	2,622	7.0	190	35.7	123	161.7	1,774.0	5.1	20.0	2.6	41.0	28.1	4,670	-7.0
93	Denki Kagaku Kogyo (Denka)	2,587	10.0	219	1.9	129	13.1	3,496.8	6.5	74.0	84.0	-	-	4,739	-0.2
94	Asahi Glass	2,585	2.4	66	-51.9	-	-	-	-	-	-	217.5	-5.8	5,856	0.3
95	Cabot	2,543	19.7	-	-	-48	-	2,534.0	6.7	58.0	-1.7	188.0	1.1	4,300	-2.3
96	Kemira	2,523	26.5	202	22.1	-	-	2,769.0	18.8	51.0	18.6	462.0	14.9	9,327	21.6
97	Ube	2,510	12.7	-	-	-	-	-	-	-	-	-	-	212	-2.3
98	Westlake Chemical	2,484	1.8	-	-	195	-14.3	2,082.0	14.0	-	-	136.0	58.1	2,056	10.8
99	Hanwha Chemical (Korea)	2,421	4.9	-	-	-	-	-	-	-	-	-	-	-	-
100	Lonza	2,391	15.6	282	15.8	182	18.1	3,209.8	-9.7	62.4	20.6	-	-	6,146	2.7

Notes: ¹ - Includes oil and gas; ² - Chemicals only; ³ - Includes pharmaceuticals; ⁴ - Includes refiningThis table is available as a pdf from CSC@icis.com

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