PATRICIA L. SHORT, C&EN LONDON
In Chemical & Engineering News's rankings of the Global Top 50 companies in 2002 (PDF file), the lineup at the top remains a solid 1-2-3: Dow Chemical, DuPont, and BASF.
Those three, in fact, make up what is clearly a super league of producers, each with chemical sales of more than $25 billion. The rest of the top 10 all have sales below $20 billion, with some shuffling of positions and one newcomer. The newcomer, at number 10, is Akzo Nobel, which has nudged ICI out of the grouping.
STANDING TALL Sasol's a-olefins plant in Secunda, South Africa. SASOL PHOTO
Among the other companies in the top 10, Total--through its chemicals unit Atofina--continued its gradual move up the rankings to advance one rung to number four, pushing Bayer into the fifth slot. Petrochemicals giants ExxonMobil and Royal Dutch/Shell retained sixth and seventh places, respectively, and BP moved up one to eighth. The ninth slot is held by Degussa, down one.
Results of the Top 50 companies worldwide were mixed. Many showed a decline in 2002 sales. However, with sales increases among petrochemical producers, in particular, there was an overall increase of 1% in the aggregate sales of the Top 50 worldwide. Combined sales for the Top 50 hit $408.5 billion, up from $404.5 billion in 2001; in contrast, 2001 was a down year in which the Top 50 showed an 8.4% decrease in sales from 2000.
Sales for the three major geographical blocs--U.S., Europe, and Japan--represented in the rankings dropped again, reflecting the growth in sales from companies in "other regions." Growing from an admittedly small base, the other regions' grouping showed an increase of 47% in 2002 over 2001, as the number of companies in this group increased from four to six. This segment now includes producers in Canada, China, India, Saudi Arabia, South Africa, and Taiwan.
The two newcomers to the "other" list are Sasol and Nova Chemicals. Nova has been on and off the Top 50 over the years, but Sasol has jumped into the 2002 rankings at slot number 45, reflecting its acquisition of RWE's Condea operations.
Sales from companies in other regions added up to $34.0 billion, representing 8.3% of the total. That is more than double the 3.5% share held by the grouping in 1999 when three companies entered for the first time.
The U.S. chemical producer grouping included 15 companies, the same as last year. Those 15, however, accounted for only a 32.5% share of the whole, down a bit from the 33.4% in the 2001 rankings. The 2001 share, in turn, was down from the 34.8% of 2000, when 17 U.S. companies were on the list. U.S. aggregate sales for 2002 were down by 1.9%, to $132.7 billion.
Sales of the Top 50's European chemical producers were down 3.4%, to $188.5 billion. And the proportion was down slightly as well, to 46.1% of the total. European producers made up 48.3% of the 2001 sales, the same as in 2000. Some 21 European producers are represented in the 2002 rankings, down from 23 in 2001.
As happened in 2001, Japanese chemical producers on the Top 50 list showed an overall sales increase. Sales of the grouping hit $53.2 billion, an increase of 4.5% over the 2001 group total. The number of producers remained steady at eight.
The few changes in companies listed reflect the latest developments in mergers and acquisitions. The two companies that dropped off the list--Henkel and Aventis--both shed the bulk of their chemical operations in the past year and a half.
Henkel spun off Cognis in November 2001, leaving it with too small a set of specialty products to be included, and Cognis itself was not sizable enough to make the roster. Aventis sold its CropScience operations--its last significant chemicals business--to Bayer last year, leaving Aventis very nearly a pure pharmaceuticals company.
OTHER MERGERS had relatively less impact on the rankings. For example, SABIC moved up the rankings, but only by one notch, as its results reflected a part-year contribution of the European petrochemicals operations it bought from DSM last year.
Still to be determined is the impact on DuPont when it divests its fibers operations later this year. That business had sales of $5.6 billion in 2002, so any purchaser may well be getting an entry card to the Top 50 list--or a substantial boost up the ladder.
The 2002 rankings also confirm that, after the top 10, the companies are becoming rather more strung out. In 2002, the cutoff for the Top 50 was the $3.09 billion in chemical sales rung up by Monsanto. The previous year, however, Lyondell wrapped up the Top 50 with sales of $3.22 billion. The year before that, the cutoff was $3.64 billion.
And the rankings make clear that 2002--although not as bad as the atrocious previous year--clearly did not mark an upturn in the business cycle. Aggregate operating profits for the Top 50 were $25.6 billion, off 10% from the 2001 performance. And the 2001 level reflected a drop of 24% from 2000.
In fact, the calculated average profit margin for the Global Top 50 last year--at 6.3%--is the lowest it has been in the 14 years that C&EN has compiled this annual ranking.
Among the consolations for the year: Only two producers--Equistar and ENI's chemical operations--posted operating losses. That's a distinct improvement from 2001, when five producers showed red ink.
The global chemical industry will need more than this weak consolation before it returns to a robust position in 2003, however, and with the year nearly three-quarters through, the outlook is not promising.
Note: The following tables are available in Adobe PDF format:
FEW DRAMATIC CHANGES
Top tier of Global Top 50 producers held their positions in year of mixed results
Companies maintained R&D spending in 2002
After three steady years, R&D spending as a percentage of chemical sales of companies in C&EN's Global Top 50 rankings has held steady yet again. That helps make up for the decline in capital spending as a percentage of sales.
R&D spending as a percentage of chemical sales was 2.6% in 1999, 2000, 2001, and last year. That was still good performance, however: In the seven years C&EN has been analyzing these figures in its Global Top 50 rankings, R&D spending was higher only in 1998, when it hit 3.2% of chemical sales.
Companies for which R&D spending as a percentage of chemical sales can be determined showed an increase. Most of the largest increases came in companies with agro-science businesses: Monsanto, Syngenta, and Bayer. But a drive toward high-value-added chemical products also underpinned major increases in R&D spending at specialty producer Honeywell, for example.
R&D spending may have been boosted by chemical producers, but capital expenditure fell at more than half of the companies in the ranking.
The reductions brought capital spending as a percentage of chemical sales to 6.5%, down from 7.0% last year. That level is not the lowest in the seven years that C&EN has tracked the figures--it was lower in 2000--but it nonetheless is a reflection of reduced investment in the face of declining profit margins in recent years.