Mastering Chemical Industry Disruption: Megatrends That Matter

Copyright © 2015 Accenture All rights reserved.

8th October 2015

Chemical Industry Today and Tomorrow

Mastering Chemical

Industry Disruption:

Megatrends That Matter

2Copyright © 2015 Accenture All rights reserved. 2Copyright © 2015 Accenture All rights reserved.

Confluence of Trends Impacting Chemical Industry

Megatrends

Macroeconomic

Customers

Chemical Industry

3Copyright © 2015 Accenture All rights reserved.

Megatrends that Matter:

Resources Sustainability

• Agriculture uses 75% of fresh water

• Over 40 million electric 2 and 4

wheelers will be sold annually by 2020

• European goal of 20% renewable

energy by 2020




Societal Changes

• Millennials

1/3 of global population by 2020

37% will be in India & China

Currently 27% of Europe’s

population

• New buying habits

• New lifestyles




Population Dynamics &

Demographics

• European population shrinking

• Over 60 population increasing twice as

fast as before 2007

• Nearly 60% of world’s population will

live in cities by 2020




Affluence & Affordability

• Europeans waste their bodyweight in

food each year

• World GDP/person grew by 24%

between 2000 and 2014

• Today’s car costs $32,000 vs. $47,000

in 1915 (100 years)




Commercial Efficiencies

• Miniaturization using high tech

materials is the biggest change in flat

screens from 7-8 years past

• Robotics costs & abilities up

• Robotics now affordable to smaller

business




New Frontiers

• Nearly 927 new satellites by 2020

• World military expenditures $1.8 trillion

in 2014

• 20 countries spending more than 4%

of GDP on military

Up by 5 countries from 2013

Only 3 are democracies




Emerging Markets

• Maturing growth in China

• China has 300 million people ill from

bacterial food-born diseases yearly

• Logistics costs of China are 18% of

GDP vs. 10% of GDP in developed

nations



China: The momentum of China manufacturing gains is slowing, with

impacts back to Europe

Source: Accenture Research analysis of IHS Global Trade Information Services an Oxford Economics data.

0%

2%

4%

6%

8%

10%

12%

14%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15C

hi n

asha

reof

tota

lw

orl

dtr

ad

e

Rolli

ng

avera

ge

4Q

%change

into

taltr

ade

leve

l,ro

lling

4Q

Total trade - China vs. World

China share World China

Import share of chemicals consumption (4Q rolling average)

13,0%

13,5%

14,0%

14,5%

15,0%

15,5%

16,0%

16,5%

17,0%

17,5%

18,0%

Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15



39

38

32

24

24

19

19

12

0 20 40 60

EE

WE

NA

LA

Africa

APAC

NE Asia

Mideast

Operations: A variety of trends are impacting chemical operations in

Europe

Unplanned outages were at high levels recently in Europe

Average age of crackers(years)

Factors related to trendsEurope ethylene shutdowns(May to July 2015)

• Similar trend in North America

• High operating rates in certain products

Exchange rates

Oil prices

• Greater focus on safety

• Aging facilities

• Aging talent/training issues

• Climate/weather

Early May

End July

Fire

Fire

Compressor problem

Technical issues

Fire

Power outage

Heat related



M&A: A key avenue for growth and business model migration

The acquisition of enabling technologies is likely to be the future trend

World chemicals M&A by discipline (transaction value)

Chemical company M&A indicators

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

0

50

100

150

200

250

300

350

400

450

500

550

600

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

De

bt %

of m

ark

et ca

pita

liza

tio

n

Ind

ex, 2

00

0=

10

0

Debt %, Market Cap Cash%, Market cap M&A value, 4 yr moving avg index

Historical avg debt % of market cap

Historical avg cash % of market cap

0

10

20

30

40

50

60

70

80

2009-11 2012-14

$U

S b

illio

n

Digital technologies

Other

Biotechnology

Services & retail

Food & beverages

Agriculture

Health & pharmaceuticals

Commodity chemicals

Specialty chemicals



Chemical industry imperatives

• Adding value products & solutions

• Focusing on sustainability

• Aligning with trade & investment

patterns

• Securing assets

• Managing capital projects effectively

• Strict portfolio management

• Managing talent issues

• Mitigating cyclicality and volatility

• Diversifying supply and products

• Utilizing new growth platforms

o Energy

o Sustainability

o Technologies


Business Model Innovation

Operational Excellence

Digital Enterprise

Connected Innovation

Customer Centricity

Opportunities for the Near Future


Follow us

@AccentureChems

Accenture Chemicals

Visit

www.accenture.com/chemicals

About Accenture

Accenture is a global management consulting, technology

services and outsourcing company, with more than

358,000 people serving clients in more than 120

countries. Combining unparalleled experience,

comprehensive capabilities across all industries and

business functions, and extensive research on the world’s

most successful companies, Accenture collaborates with

clients to help them become high-performance

businesses and governments. The company generated

net revenues of US$31.0 billion for the fiscal year ended

Aug. 31, 2015. Its home page is www.accenture.com.

https://twitter.com/accenturechems

https://www.linkedin.com/company/accenture_chemicals?trk=other_brands_logo

https://www.accenture.com/us-en/chemicals-index?c=res_chemfy15sldshr_10000003&n=smc_0515

Mastering Chemical Industry Disruption: Megatrends That Matter

Services

Transcript of Mastering Chemical Industry Disruption: Megatrends That Matter