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Top 50 Operations

Mixed Picture On Spending For The Future

by Patricia L. Short
July 24, 2006 | APPEARED IN VOLUME 84, ISSUE 30

The world's major chemical companies went on a spending spree in 2005 that reflects the healthy improvement in their profits, according to C&EN's ranking of the global Top 50 companies.

Combined capital spending in 2005 soared by 27.6% over 2004, to nearly $31.5 billion. Moreover, capital spending as a percentage of total sales picked up as well, reversing a dip the year earlier. Capital spending of 4.7% of chemical sales, however, is still the second lowest in the 10 years that C&EN has examined this measure as part of its ranking of the industry.

The increase in capital spending was led by the major Japanese companies, which boosted their investment by 26.3% over 2004 levels. The U.S. followed closely, with the major U.S. companies increasing their aggregate capital investment by 21.0%. Even European producers increased their spending by 9.6%.

Spurring European investment was a resurgent German chemical industry, the largest in the region. Werner Wenning, president of the German Chemical Industry Association and chairman of Bayer, said at the association's half-year press conference earlier this month that investments by the country's producers "are not only about modernization and rationalization of chemical plants but, because of the strong demand for chemicals, also about capacity increases."

The R&D front, however, gives a much less encouraging picture of the global chemical industry.

Combined R&D spending by those 32 companies reporting this figure for chemical operations was up by 1.2% in 2005, to $9.9 billion. As a percentage of chemical sales, however, R&D spending fell from 1.8% in 2004 to 1.6% in 2005. That marks the fourth year in a row that the proportion of R&D spending has fallen; it is now precisely half the level of 1998.

U.S. companies upped their R&D spending, however, by 4.5% to a total of $3.4 billion in 2005. Lagging behind, however, Europe's industry showed yet another decline in spending: Combined R&D spending for European companies in C&EN's rankings this year was down by 2.4%, accelerating the decline of 0.1% shown in 2004.


Global Top 50

Dow and BASF retain the top two spots, but the chemical businesses of three big oil companies edge DuPont out of the top five of C&EN's annual survey

Table 1 - Global Top 50

Oil companies' operations nudge DuPont out of third place, while Dow and BASF maintain dominance. (Adobe PDF Format - 64 KB)

Table 2 - Spending

Strong pickup in capital spending is not matched for R&D. (Adobe PDF Format - 56 KB)

Download The Entire Document of Global Top 50

(Adobe PDF Format - 252 KB)



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