Helping Chemical Companies Plan for Recovery
Year on year chemical industry output fell by 15.6 percent in the UK in the three months to April 2009 and by 12.5 percent in Europe as a whole. If annualised, this would represent an output decline in dollar terms of approximately US $116 billion.
These declines have been driven by the impact of the recession being felt most severely in the automotive and construction markets which has decimated demand for plastics, paint and man-made fibres. Whilst the massive de-stocking of late 2008 and early 2009 has come to an end, there is currently little sign of recovery towards pre-recession levels of demand.
However, recovery will undoubtedly come and KPMG is currently helping a number of chemical companies take actions, not only to ensure they survive the recession, but to position themselves for recovery when the market turns.
- KPMG is providing advice to a number of large clients in the sector in support of cost optimisation initiatives and significant change programmes.
- Our research has identified €22 billion which could be released by European chemical companies from improved working capital management. We are helping our clients with the identification and realisation of working capital.
- In these uncertain times, security of supply is critical. We are providing clients with real time assessments of the financial health of their customer and supplier base.
- As the majority of chemical companies are long established with a wide geographical footprint, which has grown either organically or through acquisition, their legal entity structures have become increasingly complex. We are assisting companies to achieve significant direct and indirect cost savings through legal entity rationalisation.
- With margins under pressure, a value based pricing model can help companies face the market challenges. We have successfully implemented value based pricing globally for a number of large chemical companies.
For further details on these and other ways KPMG is helping chemical companies position for recovery contact Chris Stirling.
KPMG's regular commentary on key issues affecting global Chemical companies.
Are there ways to step out of the margin squeeze?