Transformation & sustainability might be the new watchwords, part of PwC’s 22nd CEO Survey trends series
Just a short time ago, there was a notable dose of optimism evident in the chemicals sector. Having confronted extraordinary pressures for more than a decade, 2018 initially delivered some strong results. Profits were up, capacity was tight and global demand was on a positive trajectory.
With these results in hand, it is perhaps not surprising that, according to PwC’s 22nd Annual Global CEO Survey, more than 90% of chemicals companies’ CEOs said they were bullish about their organisations’ 12-month revenue growth prospects, the highest level in five years (see Exhibit 1).
But when CEOs were asked to consider their companies’ positions over a longer period of time, their enthusiasm markedly waned. According to the survey, the CEO three-year growth outlook is actually at its lowest point in five years. Indeed, it would seem that it is hard to maintain an upbeat attitude when economies around the world are signaling a slowdown and trade tensions are worsening.
Concerns about a number of wider ‘sustainability trends’ surpass nervousness about economic conditions. Among these worries: the impact of resource and materials substitution, decarbonisation, renewable energy and waste elimination. These are serious issues, particularly for the chemicals industry, which is at the tip of the spear of questions surrounding the role that fossil fuels and new forms of energy will play in the future, as well as in the mitigation of climate change and pollution. How chemicals companies address these concerns will ultimately affect their license to operate, their marketplace status, their relationships with customers and, as the CEOs seem to be keenly aware, their ability to grow over the coming years.
"The strategic direction for the chemicals industry is clear but the roadmap to navigate it is uncertain. The coming decade is likely to see the sector come under increasing pressure on a range of sustainability measures. The good news for CEOs is that the window of opportunity will remain open for some time for companies to show they are part of the solution, rather than the problem."
What concrete steps should chemicals companies undertake to prepare for the future’s increasingly unfamiliar business environment — and to exist in a volatile present?
Chemicals Industrial Sector, Partner, Strategy& Germany
Tel: +49 8954525
Dr. Nils Naujok
EMEA Metals Consulting Leader, Partner, Strategy& Germany
Partner, Strategy& Middle East
Tel: +971 4 436 3000