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The winners – How chemical companies deliver superior shareholder value

2014

As part of our extensive strategy work in the Chemicals industry, we have observed that chemicals companies display a very wide range of shareholder returns (dividend and capital gains). We thus set out to investigate how chemicals companies create value for their shareholders. We started by identifying the set of companies which outperform the industry – the "Winners". 22 Chemicals companies stand out as Winners, demonstrating both superior growth and profitability. Examples of Winners include Ecolab, Monsanto, and 3M. Interestingly, the choice of an industry segment does not drive financial performance: any type of company (Commodity, Specialty, and Diversified) can "win" in the broader Chemicals industry.

We have found that four strategic attributes drive "winning".

  • Business leadership
  • Strategic coherence
  • Financial scale
  • Proven ability to execute

Chemical companies can use our "Winners' Analysis" described above both as a diagnostic framework to understand historical corporate performance as well as a blueprint for future corporate strategy development and execution. The Winners' Analysis is based on business and financial fundamentals and is universal in its application: we have completed similar analyses for two additional sectors — industrial equipment and oilfield services — and observed that Winners in these industries share similar characteristics.

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