The 2012 Chemical Industry Value Creators Report

Rebounding from the Storm

By Jan FrieseSarah GehrleinAndreas GockeHubert SchönbergerFrank Plaschke, and Yves-Pierre Willers

When it comes to value creation, the global chemical sector has proved itself to be, yet again, one of the best-performing industries. From 2007 through 2011, it ranked fourth among the 21 industries analyzed in The Boston Consulting Group’s 2012 Value Creators report. (See Improving the Odds: Strategies for Superior Value Creation, BCG report, September 2012.)

For the roughly 100 top publicly listed chemical companies worldwide, total shareholder return (TSR, our measure of value creation) averaged 4.7 percent per year during that period—dramatically lower than the chemical sector’s ten-year average (2002–2011) TSR of 11 percent, but well ahead of most other industry sectors, which returned only 2.4 percent overall during the ten-year period. (See “The Components of TSR.”) More impressive still was the performance of the top ten companies, which achieved an average annual TSR of 39 percent, a return that surpassed that of the top ten of any other industry. Such performance, remarkable in good times, is nothing short of spectacular in a period that encompassed the global financial crisis and recession.

The Components of TSR

To what do we attribute this enormous gap between the top performers and the industry average? Identifying the underlying causes, particularly the microeconomic and management-driven ones, is the focus of this report.