Survey Says Chemical Companies Seeking Formula For Growth


Dec 01, 2010

According to a survey of 88 chemical-company CEOs, presidents and other senior-level executives released by AlixPartners LLP, a majority of senior executives in the chemical industry expect their companies to be back to pre-recession revenue levels by the end of this year, and four out of 10 expect their companies to be involved in some sort of merger-and-acquisition activity within the next 12 months.

“When the economy turned south a couple of years ago, chemical companies – especially compared to companies in many other industries -- responded quite well by cutting costs and driving leaner operations,” says Bob Sullivan, managing director of AlixPartners and co-lead of the firm’s Global Chemical Industry Practice.  “And of course, there are still benefits to be realized on that front, as there always is in any industry.  But the name of the game now is the top line -- everything from improving pricing, to improving customer relationships, to improving employee productivity. That’s where chemical companies are going to sink or swim from here on out.  However, at this point it would appear that many are content to just tread water.”

The survey found that 53% of companies expect to reach pre-recession revenues by the end of 2010, and 42% of respondents said they think it’s either “very” or “somewhat” likely their companies be involved in a major acquisition, merger or takeover in the next 12 months – and for executives from large chemical companies that number was 54%. 

The AlixPartners survey found that chemical-processing companies see the year ahead as indeed being very much a growth-oriented one.  When asked to name their top three priorities for the next 12 months, 43% cited innovation and 40% said revenue growth.  By comparison, just 34% cited cost reduction.  Additionally, despite the apparent interest in M&A in the year ahead, 56% of said they view organic growth as either a “critical” or “major” revenue engine as well. 

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