The ICIS Top 100 Chemical Companies: Metrics and trends sliced and diced

Regan Hartnell

11-Sep-2011

 

The ICIS Top 100 Chemical Companies made a sharp recovery in 2010. The analysis highlights important trends in sales, profitability and spending patterns

The chemical industry emerged in 2010 from the financial crisis, stimulated by global government spending and fueled by emerging economies. The ICIS Top 100 Chemical Companies have once again joined the trillion dollar club, and sales were on par with the record levels of the 2008 boom.

The sharp V-shaped recovery experienced by the global economy since the bottom in the first quarter of 2009 flowed through to the chemical industry in 2010. Sales of the ICIS Top 100 in 2010 almost recovered to the pre-recession level of $1.24 trillion, seen in 2008.

In 2010, the ICIS Top 100 chemical producers recorded year-on-year sales growth of 23.9%, producing some $1.23 trillion-worth of sales. This represents 38.7% of the $3.2 trillion of global chemical sales (excluding pharmaceuticals), according to data from the American Chemistry Council.

The Top 10 giants, led by Germany’s BASF, have increased their market share of Top 100 sales revenue to 37.7%, representing a 2.1 percentage point increase on 2009 numbers.

Since the turn of the millennium, the ICIS Top 100 chemical producers have grown at an impressive average annual growth rate of 8.6%.

Sales of the Top 10 have grown at a slightly faster average rate of 9.2%. The sheer size of their balance sheets gives them financial ­flexibility to partake in organic growth via the development of world-class assets, as well as the ability to acquire high-growth, smaller companies through mergers and acquisitions (M&A).

The Top 100’s bottom 50 companies have experienced a 9.8% average growth rate, as smaller, more nimble players are able to align their business models more easily with the higher growth sectors.

The ICIS Petrochemical Index (IPEX) is a 36-item basket that covers the main olefins, aromatics and polymers over Europe, Asia and the US. Using the IPEX as a proxy for chemical prices, it can be seen that since 2000, the IPEX coincides well with sales growth of the Top 100 companies.

The IPEX leading indicator predicts a bumper year for 2011 chemical sales, albeit with the assumption that the global economy manages to struggle on and avoid the repeat of the late 2008-2009 financial crisis.

GERMANS, SWISS LEAD IN R&D
Germany’s Merck KGaA, with its life sciences and advanced materials focus, once again led the ranks in research and development (R&D), spending 15% of sales in this area. Switzerland-based agrochemical major Syngenta came in second as it strives to develop technology to feed a hungry world, with almost 9% of sales invested in R&D.

Noticeably, it can be seen that R&D plays a significant role in the business models of some specialty chemical companies, as they strive to gain a competitive advantage by producing solutions for high-level applications.

For declared data, companies in the ICIS Top 100 have spent a total of $20.6bn on R&D activities, with average growth of 4.6% in reporting currencies, above 2009 levels. In absolute terms, BASF was the biggest spender, with almost $2bn in R&D investment.

For declared data in 2010, ICIS Top 100 chemical companies spent almost $57bn on capital expenditures, slightly more than the levels of depreciation and amortization recorded over the same period.

Leading the data was Canada’s PotashCorp, as it invested 30.3% of sales in developing new and existing fertilizer assets, focused on sending increased volumes to emerging economies. Other fertilizer companies, Russia’s EuroChem and US-based Mosaic, also joined Potash Corp in the Top 12.

Industrial gases players took three of the top 12 spots.

In absolute terms, Saudi Arabia’s SABIC, with $4.3bn, and BASF, with $3.4bn, topped the list in capital spending.

View the full set of data on the ICIS Top 100 Chemical Companies

 

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