Confidence of Chemical CEOs Dimmed by Market Challenges, Finds PricewaterhouseCoopers Survey

NEW YORK, May 29 /PRNewswire/ -- Only four in ten CEOs in the chemicals industry feel very confident about revenue growth over the next 12 months, according to PricewaterhouseCoopers 10th Annual Global CEO survey. CEOs of multinational chemical companies were interviewed for the report, which addresses the key issues that CEOs are facing in their efforts to operate their companies in a global marketplace.

Several challenges are dimming the confidence of chemical CEOs. Low cost competition was ranked as their top concern, with almost 90% viewing it as a threat to business growth. Another issue high on their agenda is energy. More than eight in ten respondents identified energy prices and energy security as particular threats. Over regulation was ranked fourth in the list of threats to revenue growth.

"It is not surprising to see that regulation is concerning chemical CEOs. The European Regulation, Evaluation and Authorisation of Chemicals (REACH) will have a considerable impact not only on EU chemical manufacturers, but the global chemical landscape," said Volker Fitzner, global chemicals advisory leader, PricewaterhouseCoopers. "With most business functions likely to be affected by REACH, the regulation will also alter the intra- and inter-company supply and value chain and thus influence the profitability of companies even beyond the pure chemicals' players."

In the face of these challenges, chemical CEOs are focused on generating growth opportunities. Respondents identified new product development (28%) as a key opportunity for future growth.

CEOs are also retaining their appetite for market growth through geographic expansion. Over one-third (39%) of chemicals industry CEOs completed a cross-border acquisition last year. Of these acquisitions, more than 40 percent involved Asia. That continent will continue to be an attractive market, with Mexico, Latin America, Korea and Central and Eastern Europe cited as regions offering growth potential. However, chemical CEOs do not underestimate the difficulties faced in cross-border mergers and acquisitions (M&A). Conflicting regulatory requirements, cultural issues and unexpected costs were cited by chemical CEOs as obstacles to M&A "It is clear from the survey that globalization is a journey that is far from over and, for many CEOs, only just beginning," said Saverio Fato, global chemicals leader, PricewaterhouseCoopers. "The chemicals industry has witnessed massive structural changes over the past decade, and consolidation is expected to continue. We see multinationals and local players now seeking to cement 'customer-centered' ownership arrangements by doing transactions to be close to where their customers are."

Almost forty chemicals companies were interviewed as part of PricewaterhouseCoopers 10th Annual Global CEO survey. The report is available for download at: http://www.pwc.com/chemicals

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