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1、Value Creation in Chemicals 2022Building Resilience as the Crisis Unfolds November 2022By Adam Rothman,Andreas Gocke,Hubert Schnberger,Frederik Flock,and Han ZhouBoston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest
2、 opportunities.BCG was the pioneer in business strategy when it was founded in 1963.Today,we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholdersempowering organizations to grow,build sustainable competitive advantage,and drive positive societal impac
3、t.Our diverse,global teams bring deep industry and functional expertise and a range of perspectives that question the status quo and spark change.BCG delivers solutions through leading-edge management consulting,technology and design,and corporate and digital ventures.We work in a uniquely collabora
4、tive model across the firm and throughout all levels of the client organization,fueled by the goal of helping our clients thrive and enabling them to make the world a better place.BOSTON CONSULTING GROUP 1Building Resilience as the Crisis UnfoldsSo far,however,the year 2022 has been much more chal-l
5、enging.Inflation,the war in Ukraine,disrupted supply chains,and oscillating prices for oil,gas,and raw materials are all taking their toll.Moreover,demand has contracted in several key customer groupsfor example,in some Chinese industries such as construction.Global auto sales,which represent anothe
6、r major customer group,continued a slump that began in 2020.With so much uncertainty afoot,the markets are struggling for direction,and many managers cannot decide whether to plan for growth or for recession.The overall TSR for the chemical industry fell by 13%in the first half of 2022,giving back a
7、lmost one-quarter of the value created during the previous five years.In the third and fourth quarters,uncertainty and volatility increased still further.We are long-term believers in the chemical industry.There are signs of the industrys persistence in delivering value.Chemical TSRs are down only h
8、alf as much as the broader stock market.Still,there is more to do in order for companies to build the resilience needed to thrive amidst uncertainty.This is the focus topic for this years report.Each year,we explore the changes in shareholder value,in terms of five-year annual TSR,for companies with
9、 a market value in excess of$1 billion.The chemical industrys value is often a harbinger of general economic growth;and if the 20172021 TSRs are any guide,the prospects are hopeful.As in previous reports,we tracked the TSR status of large-cap chemical companies against that of other industries,using
10、 comparisons from BCGs long-established Value Creators database.In the current assessment,covering 2017 through 2021,a good place to start is with large-cap chemical companiescompanies whose total shareholder value exceeds$8.5 billion.There are 79 such companies in the category for this years report
11、,and as a group they have done particularly well.Large-cap chemical companies ranked 7th against their large-cap peers across 33 major industries.(See Exhibit 1.)This represents a steady,signifi-cant improvement,from 16th place for the five-year period ending in 2019,to 12th for the five years endin
12、g in 2020,to their current ranking.Large-cap chemical companies also rose in absolute value,delivering an average TSR of 19%to shareholders for the five-year period ending in 2021a significant improvement over 13%and 11%for the equivalent time frames ending in the two previous years.The five-year pe
13、riod from 2017 through 2021 was turbulent in many respects,but it was a stable time for chemical companies.They enjoyed steadily increasing growth in total shareholder return(TSR)and in other fundamental economic measures.Even during two years of global pandemic,the chemical industrys value growth h
14、eld steady,and it was one of the first major industry sectors to recover financially.2 BUILDING RESILIENCE AS THE CRISIS UNFOLDSThe entire chemical industry,which in this study consists of all companies with a market cap over$1 billion,enjoyed similarly steady growth over the same period,albeit at l
15、ower TSRs and with less acceleration:from 8%(in the period from 2015 to 2019)to 10%(in the period from 2016 to 2020)to 12%in this years report.These numbers reflect the success of a much larger group of companies351 in all.The roster includes many relatively young companies,especially in India and E
16、ast Asia.They are growing rapidly,with high TSR performance,serving both global markets and those closer to home.We calculate and compare median TSR over five-year time spans,rather than just focusing on the current years returns,in order to obtain a more coherent view of each companys financial per
17、formance.Our approach downplays the temporary effects of spikes and plunges in shareholder price,which matters greatly in turbulent periods like the current one.(See“How We Calculate and Report TSR.”)As always,we see TSR as a valuable indicator of the overall vitality of an industry sector.Although
18、some readers might suppose that chemical companies rose in the rankings only because other industries faltered,that wasnt the case.In almost all markets,revenue increases drove most of the industrys growth,accounting for 9%of the 12.3%overall TSR.(See Exhibit 2.)Another 3.1%came from bottom-line imp
19、rovement,indicated by a rise in EBITDA margin.Uncer-tainty and lowered expectations led investors to undervalue the companies during this period,reducing TSR by an estimated 2.8%(represented here as the change in EBITDA multiples).But this was offset by a 3.1%gain in net cash flow effects,including
20、changes in debt,dividend yields,and number of shares.In short,the rankings show the chemical industry improving,not other industries getting worse.Median:12.5%05Forest products andpackagingRealestateAerospace anddefenseHealth care servicesAutomotivecomponentsMediaandpublishingT
21、ransportationandlogisticsServicesMedian annual TSR,2017 to 2021(%)TravelandtourismInsuranceBuildingmaterialsTechnologyMedical technologyConsumernondurablesFinancial infrastructureproviderGreen energy andenvironmentMetalsMachineryMid-capchemicalsLarge-capchemicalsLarge-cappharmaMid-cappharmaMiningRet
22、ailFashionandluxuryAllchemicalsAssetManagementandbrokerageConsumerdurablesPowerandgasutilitiesConstructionMulti-businessBanksAutomotiveOEMsCommuni-cation serviceproviderOilHigh-low range75th cutoff25th cutoff30242320730875442Industry median2022:Rank 7Sourc
23、es:S&P Capital IQ;Refinitiv;BCG value creators database;BCG ValueScience Center;BCG analysis.Note:This analysis comprises 2,339 companies.TSR calculations are based on each companys reporting currency and measured from January 1,2017,through December 31,2021.The large-cap chemicals category includes
24、 79 companies with market value greater than$8.5 billion.The mid-cap category includes 272 companies with market value of$1 billion to$8.5 billion.Exhibit 1-Large-Cap Chemical Companies Rank High in TSR PerformanceBOSTON CONSULTING GROUP 3Total shareholder return(TSR),which accounts for the change i
25、n share price and any other effects on share-holders net wealth in a specified period,represents the percentage increase in a companys valuestock price plus dividendsover a given period.Only companies listed on public stock exchanges can provide the data needed to calculate TSR.Multiple factors affe
26、ct TSR.Readers of BCGs Value Cre-ators series may be familiar with our methodology for quantifying the relative contributions of the various compo-nents of TSR.(See the exhibit.)We use the combination of revenue(sales)growth and change in margins as an indi-cator of a companys improvement in fundame
27、ntal value.We then use the change in the companys valuation multi-ple to calculate the impact of investor expectations on TSR.Together,those two factors determine the change in a companys market capitalization.Finally,our model also tracks the distribution of free cash flow to investors and debt hol
28、dersin the form of dividends,share repurchases,and repayments of debtto determine the contribution of free-cash-flow payouts to a companys TSR.All of those factors interactsometimes in unexpected ways.A company may increase its earnings per share through an acquisition and yet create no TSR if the a
29、cquisi-tion erodes its gross margins.Moreover,some forms of cash contribution(such as dividends)can impact a companys valuation multiple differently than others(such as a share buyback);the effects are complex.In this report,the TSRs used for groups and for purposes of comparison are generally media
30、ns.The TSRs associated with individual companies are straight calculations of those companies capital gainschanges in share price value plus dividend valuerounded to the nearest percentage.How We Calculate and Report TSRCapital gainsRevenue growthProfit growthMargin changeTotalshareholderreturnChang
31、e inmultipleDividend yieldCash flowcontributionShare changeNet debt changeSource:BCG analysis.Note:“Share change”refers to the change in the number of shares outstanding,not to the change in share price.Total Shareholder Return Is the Product of Multiple Factors4 BUILDING RESILIENCE AS THE CRISIS UN
32、FOLDSThis years report highlights several trends in the industry today.A wave of companies in Asiaparticularly in India and Chinaare making TSR gains.Several industry sub-sectors,including multispecialty companies and agro-chemicals and fertilizers,have generated shareholder returns above their prev
33、ious TSR levels.The top TSR per-formers are shifting,too,with five of the current top ten located in India.Climate-related activity and sustainability are more closely associated with TSR in this report than they have been for several years.In terms of business models,TSR performance over the past f
34、ive years suggests that technology-focused chemical companies are poised to do better than market-focused companies.This is a slight shift from our previous five-year analysis(for the period 2016 to 2020),in which market-focused business models outperformed the others.Meanwhile,consolidation in the
35、industry continues,largely through mergers and acquisitions,even as the total number of chemical companies expands.There are 113 new compa-nies in our rankings this year,each having crossed the TSR threshold to reach more than$1 billion in market capital-ization by December 31,2021,the end of our 20
36、17 to 2021 research period.The total roster has grown from 238 to 351 since our previous report,an increase of 47%.Consolidation may explain why,despite this overall increase,the number of large-cap chemical companies rose comparatively littlefrom 69 in last years report to 79 today.Mindful of the c
37、risis of 2022 thus far,we look at some of the pressures and contraindicators that confront the industry today.We also suggest some strategies that may help chem-ical company leaders maintain high TSRs going forward.9.0(2.8)12.33.13.1n=3381Median annual TSR,2017 to 2021(%)RevenuechangeMarginchangeCha
38、nge inmultipleCashfloweffectsOverallTSRSources:S&P Capital IQ;BCG analysis.Note:Cash flow effects represent the sum net debt change,dividend yield,and share number change.Because of rounding,the sum of the bar segment percentages listed does not equal the overall total percentage.1Of 351 chemicals c
39、ompanies with market value greater than$1 billion in 2021,13 are excluded because data for one or more financial drivers is unavailable.Exhibit 2-TSR Change in the Chemical Industry,2017 to 2021There are signs of the industrys persistence in delivering value.Chemical TSRs are down only half as much
40、as the broader market.6 BUILDING RESILIENCE AS THE CRISIS UNFOLDSAsian Success Stories For the past five years,TSR has grown across all parts of the world.(See Exhibit 3.)One important element of this story is the performance of companies in India and Great-er China.Indian companies have consistentl
41、y displayed strong performance relative to companies in other regions.They account for most of the TSR in emerging markets.Particularly during the past three years of this time period,chemical companies in three Asian economiesIndia,Greater China,and South Koreadid particularly well.(South Korea is
42、part of the Northeast Asia region.)As Asian companies grow,they develop global reach,com-peting against producers in Europe and North America while maintaining their home market as a base.Some Asian companies are also building value through mergers and acquisitions with companies in the West.In mid-
43、2021,Thailands PTT Global Chemical purchased Allnex,a Ger-man maker of coating resins;and in 2022,the Malaysian chemical group Petronas purchased Perstorp,a 140-year-old Swedish focused specialties company known for inno-vation in resins,coatings,lubricants,and sustainability-oriented products.Both
44、deals reflected a focus on long-term strategic benefits rather than immediate synergies.The acquiring companies are improving positions in their value chains,gaining access to new markets,and extend-ing their innovation capabilities in specialty chemicals.Chinas Revenue Growth StrategiesIn Greater C
45、hina,revenue growth has averaged 17%per year,driven by three specific growth trends.The first is the demand for focused chemicals in markets influenced by decarbonization and digitization.Makers of semiconduc-tors,electronic vehicles,and batteries have become in-creasingly important customers for As
46、ian chemical players.For instance,companies such as Dongyue,Shida Shenghua,and Huayou Cobalt have expanded their business in mate-rials for lithium-ion batteries.The second growth strategy in China involves broadening portfolios into adjacent businesses.Zhejiang Satellite expanded its petrochemical
47、production capabilities to provide a wider range of carbon-based offerings,and Hualu-Hengsheng moved beyond its coal-to-methanol business into solvents.The third growth strategy is backward integration,with the goal of securing supplies and optimizing costs.Some poly-ethylene terephthalate(PET)manuf
48、acturers took advantage of innovative crude-oil-to-chemical technologies to integrate their operations more closely with oil refining,while other chemical producers opened propane dehydrogenation plants.Both have been fertile areas for investment.Headwinds in the broader Chinese economy have com-pre
49、ssed valuation multiples,so the fundamental perfor-mance of the companies is stronger than the median TSR of 11%shows.In this years report,six Chinese companies appear among the 20 named as top TSR performers.The highest-ranked Chinese chemical company is the Dongyue Group,a multi-specialty business
50、 with a market value of about$3.5 bil-lion.During the period from 2017 to 2021,it delivered an average TSR of 59%,ranking it sixth among the mid-cap companies(those with a market value of$1 billion to$8.5 billion)globally.Downstream demand has driven Dongyue Groups rapid revenue growth since 2020,in
51、cluding a 178%increase in the first half of 2021.The company is a supplier of polyvinylidene fluoride(PVDF),which is used in lithium-ion batteries.Because of its businesses in fluoro polymers,organic sili cones,and refrigerants,Dongyue is well posi-tioned to catch other industrial trends too,includi
52、ng fuel cells and hydrogen.Indias New Domestic MarketsIndia,where companies have benefited from a high level of investor confidence,has seen a consistent rise in TSR from 2017 to 2021.Some countries that used to rely on Chinese chemical imports are shifting to India as a preferred supplier nation.In
53、 general,Indian companies are taking advantage of supply chain disruptions elsewhere;the ever-growing do-mestic market for focused specialties in categories such as paints,refrigerants,and pharmaceuticals;and the newer market for industrial chemicals.For example,there are now worldwide supply shorta
54、ges in amines because of new environmental restrictions in China.To fill the gap,Indian pharma and agrochemical companies have shifted to chemical suppliers in their own country.One prominent example of a high-TSR performer in India is SRF,a multispecialty company with a widening portfolio in the va
55、lue-added specialty chemicals segment.Its five-year TSR of 52%earned it a third-place ranking in performance among large-cap chemical companies.SRF is one of the top three refrigerant producers in India and is the only one with full backward integration to its refrigerant production.This has given i
56、t a cost advantage against competitors.It has pursued the large domestic Indian markets in agriculture and pharmaceuticals,along with other global markets.SRF is active in sustainability-related innovationfor example,in developing low-carbon-impact refrigerants.BOSTON CONSULTING GROUP 7New Patterns
57、of Subsector PerformanceIn most of our previous studies,the focused specialties subsector earned higher average performance figures than other subsectors did.In the five-year period from 2017 through 2021,other subsectors demonstrated noteworthy growth as well.The TSR for industrial gases,a small gr
58、oup of consistently profitable companies,rose from 13%to 17%,in a continuation of past trends.The most interesting stories involve the agrochemicals and fertilizers categories and multispecialty companies.These subsectors outper-formed their past track records.In agrochemicals and fertilizers,total
59、shareholder return rose from 3%(during the five years from 2016 to 2020)to 15%(during the period from 2017 to 2021).This wave of TSR improvement in the subsectorthe first it has experi-enced since 2016is due in part to favorable conditions for food growers,especially in Latin America.New business mo
60、dels have emerged,with data analytics a playing a major role in helping farmers use their resources more effectively.Another factor is the rise in prices for food-related commodities,especially soybean and corn prod-ucts,but also including ethanol fuel.Finally,agrochemicals and fertilizers,the two m
61、ain businesses within this subsec-tor,may have different dynamics.Fertilizers fared well during the pandemic,but agrochemicals are gaining in revenue during the current inflationary period.SubsectorEmergingmarketsTSR(%)EuropeTSR(%)GreaterChinaTSR(%)NortheastAsiaTSR(%)North AmericaTSR(%)Total marketc
62、apitalization($billions)200101020Five-year TSR(%):15.931.522.541.08.417.315.323.45.813.711.110.57.911.914.318.74.09.414.99.216.78.218.960622903676133.26671.249Circle size representsmarket capitalizationAgrochemicals and fertilizersBase chemicalsand basic plasticsFocu
63、sedspecialtiesIndustrial gasesMultispecialtyTotal marketcapitalization($billions)TotalmarketTSR(%)Total TSR(%)Sources:S&P Capital IQ;BCG analysis.Note:Total sample is 351 companies.“Northeast Asia”includes companies in Japan and South Korea.This analysis comprises data from 351 companies,subdivided
64、as follows:44 agrochemical and fertilizer companies,88 base chemicals and basic plastic companies,148 focused-specialty companies,8 industrial gas companies,and 63 multispecialty companies.Exhibit 3-Total Shareholder Return by Region and Subsector,2017 to 20218 BUILDING RESILIENCE AS THE CRISIS UNFO
65、LDSMultispecialty chemicals rose from 9%to 12%.This continues a trend that began in 2020,which we noted in last years report as a possible harbinger of future industry direction.These tend to be large,diversified producers,and they may be emerging from the doldrums of the 2010s.In general,the past f
66、ew years have seen multispecialty com-panies catch up with focused specialties in several key financial metrics,most notably capex as a percentage of revenue and EBITDA as a percentage of revenue.(See Exhibit 4.)This reflects a higher ROI for the capital expenditures that multispecialty companies ar
67、e making.One explanation for this shift in fortunes may be that multispecialty companies have been paying attention to the capital markets and have learned from the success strategies of other subsectors.They are managing their businesses with more differentiated focus and greater acumen.They are al
68、so spinning off or separating themselves from noncore and underperforming businesses,making them somewhat less diversified than they used to be.Finally,its possible that the breadth and scale of multispe-cialty companies give them the ability to weather volatility a bit more deftly than some smaller
69、,more specialized companies.This is reflected in the EBITDA as a percentage of revenue figures,which rose in this subsector from 14%in 2020 to 19%in 2021.During the first half of 2022,how-ever,this metric fell back to 17%a possible indicator of headwinds and turbulence ahead.The Top PerformersEach y
70、ear,we note the ten companies that ranked highest in TSR performance over the past five years.In calculating the rankings for this years report,we included each com-panys five-year annual TSR ending in 2021,which is our usual approach.Of the ten large-cap companies with the highest overall TSR for t
71、his five-year period,four are based in China and largely serve the domestic market thereexcept Wanhua,which also has a large global business.(See Exhibit 5.)The others are located around the world.By contrast,six of the top ten mid-cap companies are head-quartered in India.Smaller companies,with rap
72、id growth and more association with digital technology,tend to have relatively high TSRs.(See Exhibit 6.)461681012R&D of revenueCapex of revenueEBITDA of revenueReturn on capital employed,excluding goodwill32000202021Focused specialtiesMultispecialty5678Me
73、dian percentages,2012 to 2021(%)200002002020200202021Sources:Company reports;S&P Capital IQ;BCG analysis.Exhibit 4-Multispecialty KPIs Catch Up with Focused SpecialtiesBOSTON CONSULTING GROUP 9This yea
74、r,11 of the top 20 companies on our two lists are focused specialties producers.Examples include Alkyl Amines Chemicals and Balaji Amines(amine producers),Toyo Gosei(photosensitive materials used,for example,in displays and filters);and EcoPro(air pollution control materials).The next most prevalent
75、 subsector is multi-specialty companies such as Dongyue Group and Posco Chemtech.The only base chemical company in the overall group is Deepak Nitrite,a company with a market value of about$4.5 billion,located in India.Among large-cap com-panies,base chemicals have a larger presence:three en-trants,
76、all headquartered in China.This reflects Chinas ongoing role as a provider of and market for standard chemicals.And while agrochemicals and fertilizers ad-vanced as a group,only one company from that subsector made the top ten:Chambal,in India.The roster of top-performing companies changes continu-a
77、lly,and the past year has been especially volatile.Of the top performers on this years list,only twoLonza and Wanhuawere on last years list.Shareholder value for some previous high scorers declined during the first half of 2022,and many of these are likely to rebound.The Value of Technology-Based Bu
78、siness Models The business model that a chemical company adopts plays a major role in its TSR performance.Companies in this industry tend to divide into four broad groups,depending on how they create value over time:asset based,market based,multiple,and technology based.(See Exhibit 7.)The overall s
79、trongest performer of the four is the technology-based business model.Companies following this model compete through proprietary offerings and intellectual capital.This group includes some providers of high-performance polymers,enzymes,and catalysts for industrial processes,as well as some producers
80、 of elec-tronic chemicals used in manufacturing semicon duc tors.In many instances,innovations like these are difficult to reverse-engineer or reproduce.These companies thrive particularly well when their offerings are distinctive and few other companies can supply them.The technology-based business
81、 model seems to be chang-ing as sustainability efforts take hold.As innovation for alternative energyparticularly hydrogen fuel and battery technologyhas increased,so has the need for capital investment,which has begun to pay off for many compa-nies that have responded actively to the need.Rank in a
82、verage five-year TSR,2017 to 2021RankMarket value$8.5 billion21436587910South KoreaPosco ChemtechSwitzerlandBachemIndiaSRFUSEntegrisChinaGuangzhou TinciChinaWanhuaChinaZhejiang Huayou CobaltNetherlandsIMCDSwitzerlandLonzaChinaZhejiang SatelliteMultispecialtyMultispecialtyFocused specialtiesFocused s
83、pecialtiesFocused specialtiesBase Focused specialtiesFocused specialtiesBase Base CompanyCountrySubsectorFive-year TSR(%)546753737Sources:S&P Capital IQ;BCG analysis.Note:“Large-cap”refers to companies that have a market value of greater than$8.5 billion.“Base”=base chemicals and basic pl
84、astics.Entries shown in green type ranked in the top 10 for TSR among all chemical companies analyzed.Exhibit 5-Top-Ranked Large-Cap Chemical Companies10 BUILDING RESILIENCE AS THE CRISIS UNFOLDSThe market-based business model calls for companies to focus on satisfying customer requirements,typicall
85、y in the B2B sphere.They recognize the high level of industrial innovation taking place right now,and they accommodate rapid shifts in demand by synthesizing compounds upon request and supporting applications and particular indus-try needs.This group has experienced the most consistent increase in f
86、ive-year TSR,moving from 7%to 12%over three successive reports.When the market-based model requires investment,it is usually to improve customer service or to develop products and services tailored to specific customer needs.The asset-based business model is almost as strong on TSR as the market-bas
87、ed one.Companies in this category focus their businesses on running their assets efficiently and mastering supply chains seamlessly.The assets may include large-scale,high-investment production facilities,such as those used in cracking petrochemicals,or they may involve access to basic chemicals.In
88、our previous report,this group earned a median TSR of just 6%,but that figure has risen to 11%in this years report,reflecting supply shortages and increased demand for basic raw material products during the most recent five-year period.Continued disruptions in global supply chains could benefit this
89、 sector in the short run,by increasing prices and margins.Companies with multiple business models,which combine the other three models in some fashion,saw little change.In last years report,covering the period from 2016 to 2020,their median TSR was 6%.In this years report,it rose slightly to 7%.In t
90、he context of sustainability and volatile change,the multiple business model may be at a disad-vantage because it requires so much investment to keep up with changes in all three domains.Thriving in a Crisis What do the instability and macroeconomic headwinds that began affecting the markets in 2022
91、 augur?Is the sudden shift to an overall 12.5%TSR cause for long-term concern,or is it a temporary anomaly like the blip that occurred in mid-2020?One way to explore this question is to break companies out by product category.(See Exhibit 8.)Just a few of these categories fall above median rankings
92、in both the five-year period from 2017 to 2021 and the first half of 2022.To do so,their aggregate TSR had to stay above 12.3%for the first five years,and then their six-month TSR had to stay above 12.5%for the first half of 2022.The product categories that accomplished this feat were electronic che
93、micals(which delivered by far the highest TSR),agrochemicals,and fertilizers.Rank in average five-year TSR,2017 to 2021RankMarket value$1 billion to$8.5 billion21436587910IndiaAlkyl Amines ChemicalsIndiaDeepak NitriteJapanToyo GoseiSouth KoreaEcoProIndiaBalaji AminesChinaDongyue GroupIndiaNavin Fluo
94、rineChinaSKSHU PaintIndiaVinati OrganicsIndiaChambalFocused specialtiesFocused specialtiesFocused specialtiesBaseFocused specialtiesMultispecialtyFocused specialtiesMultispecialtyFocused specialtiesAgrochemicals and fertilizersCompanyCountrySubsectorFive-year TSR(%)95986894596248544744Sources:S&P Ca
95、pital IQ;BCG analysis.Note:“Mid-cap”refers to market values from$1 billion to$8.5 billion.Entries shown in green type ranked in the top 10 for TSR among all chemical companies analyzed.Exhibit 6-Top-Ranked Mid-Cap Chemical CompaniesBOSTON CONSULTING GROUP 11These categories have several attributes i
96、n common.They benefit from a high price environment for some of the materials they supply,such as nitrogen fertilizers and silicon wafers.On the customer side,demand for these materials is strong and growing stronger.The categories also tend to have robust pricing power,often on the strength of cont
97、racts with pass-through provisions.These areas have also benefited from digital innovation and close customer relationships.One example is CF Industries,a fertilizer producer based in Deerfield,Illinois.The company had a TSR of 21%for the five years ending in 2021,and then a TSR of 22%for the first
98、half of 2022,placing it among the very few companies with a higher TSR for those six months.CF Industries sells its fertilizer products in Europe,and the lower price of natural gas in the US gives it a competitive advantage in lower feedstock costs.It also has benefited from expanding demand for fer
99、tilizers,driven by population growth.The company built on these advantages in its strategy,which includes promoting sustainability,capital investment(for example,new blue ammonia plants in the US Gulf Coast),smart fertilizer systems,and the advanced use of digital technology.The disruptions of the p
100、ast several years,including oil price volatility,the pandemic,inflation,and the war in Ukraine,remind us that eras of relative stability are few and far between.Even if the macroeconomic climate calms down,geopolitical changes may create new challenges to global supply chains.At the same time,there
101、is reason to be optimistic.The crisis yields large opportunities for companies that gain competitive advantage now.The most resilient companies those that can adapt quickly to changing circumstancesappear to be getting stronger.A Plan for Increasing Your Resilience Some companies are responding to t
102、he current challenges with a surefooted combination of analysis and implementa-tion,deploying the full range of tools and leverage points now available.Beyond changes in cost structures and asset bases,resilience requires improved ways of working and faster decision-making practices.High inflation a
103、nd energy prices,which put margins at risk,can rapidly shift.Labor and supply shortages may vary around the world.Chemical companies that cannot turn on a dime will be unable to compete.7820020201720216.627.078.4312.28Technology-based business modelMarket-
104、based business modelAsset-based business modelMultiple business modelAverageMedian five-year TSR(%)Sources:Company reports;S&P Capital IQ;BCG analysis.Note:Figures show median TSR for each five-year time period.Analysis covers the 351 companies in the 20172021 peer set.The same peer set is used for
105、earlier time periods,excluding companies only if their five-year TSR was not available.Exhibit 7-Technology-Based Business Models Lead in TSR Performance12 BUILDING RESILIENCE AS THE CRISIS UNFOLDSEvery company is different,and there is no single silver-bullet strategy that will suit every situation
106、,but successful responses seem to have a sequence of activities in common.These can be summarized in three steps.First,size the problem that youre facing.Develop a set of scenariosalternative futuresthat capture the specific issues affecting your supply and demand.Then stress-test your existing fina
107、ncial health and business model against the most severe outcomes in each scenario.Include financial outcomes in the simulations.Assume that any of these outcomes could happen,and assess the gaps you identify in your capabilities and competitive environment.How would you stand up if the business envi
108、ronment began falling all around you?Conversely,would you be ready for a new wave of demand for products adjacent to your own,especially if they required you to pivot to provide them?Be ruthless in scrutinizing your strengths and weaknesses,particularly with regard to the competitiveness of your ass
109、ets.The point of these exercises is not to predict the future but to identify no-regret moves that you can make today in order to maximize your preparedness for any future that comes your way.The most robust investments involve gaining competitive advantage whether the business environment is brilli
110、ant or bleak.The scenario exercise will also illuminate your organizations temperament and give you confidence to make superior,thoughtful decisions,rather than hasty,self-defeating responses.Second,manage the short-term challenges that confront you.Focus on those that need immediate attention and t
111、hose that can provide you with a visible win to demon-strate to your organization.Develop pricing programs that offer customers relief from inflation,in part through your own ability to cut costs.Look for rapid energy transition opportunities and ways to shift from selling products by weight to usin
112、g fee-for-outcome pricing.34430280202222665151050510Electronic chemicalsAdditive/functional chemicalsPharma ingredientsAgrochemicalsFertilizersVinyl chloride/PVCEngineered/high-performance material/functional productsInorganic commoditiesPersonal careFibers and intermediatesPet
113、rochemicals and polymersAdhesives and tapes/construction chemicalsChemicaldistributionDiversifiedFood ingredientsIndustrial gasesInks andpigmentsMining and oilfieldPaints and coatingsSynthetic rubberMedian TSR,first half of2022:12.5%Median TSR,2017 to 2021:12.3%Median TSR,2017 to 2021(%)Median TSR,f
114、irst half of 2022(%)MultispecialtyFocused specialtiesAgrochemicals and fertilizersBase chemicals and basic plasticsIndustrial gasesSources:Company reports;S&P Capital IQ;BCG analysis.Note:Total number of companies:351 for 20172021 ranking;347 for the first half of 2022.Exhibit 8-Top TSR Categories i
115、n 2017 to 2022 and in the First Half of 2022The technology-based business model enables companies to compete through proprietary offerings and intellectual capital.14 BUILDING RESILIENCE AS THE CRISIS UNFOLDSThird,develop a plan to improve your resilience for the medium to long term.This has several
116、 components:Set up milestones to help the business move,step by step,toward its goals.Limit each business segment to just one or two goals,and avoid creating more proj-ects and initiatives.Protect your top line by gaining more transparency on your costs.Find the right balance between customer-centri
117、c direct-sales channels and cost-focused distributors.Improve your capabilities for B2B engagement and sales activation.Use data analytics and AI to rethink your approaches to capturing and keeping customers.Reduce your break-even point.Review your assets.Improve your procurement and sourcing strate
118、gies.De-velop your supply chain resilience by cultivating a wider net of local suppliers.Streamline all activities relate to selling,general,and administrative expenses,and design staff reductions to create a lean workforce,not to leave your company feeling weaker.Focus on operational excellence,usi
119、ng digital technology,yield improvement tools,and partnerships with other organizations.Review your portfolio,including capex investments and R&D.Be prepared to ditch or delay projects if you cant justify the required investment.Act rapidly on M&A possibilities and other opportunities when they aris
120、e.Develop innovative offerings through alliances and joint ventures,gaining machine learning and advanced data analytic capabilities in the process.Devise a sustain-ability strategy and a plan for diversifying downstream toward more specialty products.Continually consider adjacent categories that yo
121、u could expand into.As an ex-ample,Navin Fluorine started as a fluorine producer but is now active in materials for electronics and batteries.Learn from your experience.Monitor risks and make specific people accountable for rapid action when circumstances change.Set up processes to adjust plans as n
122、eeded.For example,you may need to implement cost reductions if demand softens.Escalate incrementally from moderate improvements,such as supplier contract renegotiations,to radical ambitions,such as a 20%rise in productivity.This year,the industry is cautiously optimistic yet chal-lenged,as it seeks
123、to retain its ability to create value while preparing itself for more change.You are not alone in this:your customers,suppliers and competitors are all engaged in the same difficult task.No matter how volatile things get,you will not lose your license to operate.Be bold and determined as you build r
124、esilience now.Sooner or latermaybe sooner than you thinkyou will use that resilience to seize your future.Beyond changes in cost structures and asset bases,resilience requires improved ways of working and faster decision-making processes.16 BUILDING RESILIENCE AS THE CRISIS UNFOLDSAbout the AuthorsA
125、dam Rothman is a managing director and partner in the Chicago office of Boston Consulting Group.You may contact him by email at .Andreas Gocke is a managing director and senior partner in the firms Munich office.You may contact him by email at .Hubert Schnberger is a knowledge senior director in BCG
126、s Munich office.You may contact him by email at .Frederik Flock is a partner in the firms Chicago office.You may contact him by email at .Han Zhou is a managing director and partner in BCGs Shanghai office.You may contact her by email at .AcknowledgmentsThe authors acknowledge the contributions of t
127、heir BCG colleagues Jooyoung Ahn,Matthias Baeumler,Robert Blaudeck,Prakash Chandrasekar,Paul Duerloo,Clint Follette,Jan Friese,Amit Gandhi,Abhrajit Guria,Susumu Hattori,Christian Hoffmann,Alexander Hogreve,Marcin Jedrzejewski,Ryan Jones,Jihoon Kim,Livia Lin,Martin Link,Tobias Mahnke,Julia Meisel,Mar
128、cus Morawietz,Christophe Nauts,Semi Park,Eduard Pujol,Katarzyna Raszka,Mirko Rubeis,Asheesh Sastry,Priyanka Singh,Ekaterina Sycheva,Siqi Tang,Jegor Tsihnjajev,Kirill Tuishev,Anand Veeraraghavan,and Yaroslav Verkh.They also acknowledge the contribution made by BCGs ValueScience Center.For Further Con
129、tactIf you would like to discuss this report,please contact one of the authors.Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities.BCG was the pioneer in business strategy when it was founded in 1963
130、.Today,we help clients with total transformationinspiring complex change,enabling organizations to grow,building competitive advantage,and driving bottom-line impact.To succeed,organizations must blend digital and human capabilities.Our diverse,global teams bring deep industry and functional experti
131、se and a range of perspectives to spark change.BCG delivers solutions through leading-edge management consulting along with technology and design,corporate and digital venturesand business purpose.We work in a uniquely collaborative model across the firm and throughout all levels of the client organ
132、ization,generating results that allow our clients to thrive.Uciam volora ditatur?Axim voloreribus moluptati autet hario qui a nust faciis reperro vitatia dipsandelia sit laborum,quassitio.Itas volutem es nulles ut faccus perchiliati doluptatur.Estiunt.Et eium inum et dolum et et eos ex eum harchic t
133、eceserrum natem in ra nis quia disimi,omnia veror molorer ionsed quia ese veliquiatius sundae poreium et et illesci atibeatur aut que consequia autas sum fugit qui aut excepudit,omnia voloratur?Explige ndeliaectur magnam,que expedignist ex et voluptaquam,offici bernam atqui dem vel ius nus.Nem facca
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