CEOs face dilemma over their outlook forecast

Highwire.pngChemical companies are about to report excellent results for Q1. Those upstream may well record even higher profits than in 2007/8.

CEOs and CFOs therefore face a critical decision.

Do they assume today’s trends will continue, and forecast excellent profits for the rest of the year? This would be very tempting, and is clearly the easy option.

But it risks storing up major trouble for the future.

This week, the blog has provided worrying evidence that today’s high crude oil prices could well be followed by a major downturn:

• China’s markets for polymers and aromatics have clearly stalled
• Today’s crude oil price levels have always led to downturns in the past

The cardinal rule for financial markets is, of course, ‘no surprises’.

Many investors would be shocked by the idea that problems might lie ahead. But for CEOs to say nothing now, risks an even greater surprise later in the year.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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