Value Creation in Chemicals 2025: Chemical Companies Won’t Recover by Doing More of the Same
Chemicals' value creation slid to 7% annual TSR, below the all-industry median, as overcapacity and margin pressure overwhelmed revenue growth; results diverge by region and subsector, so footprint, capital discipline and differentiation matter more than size.
Summary
Average annual TSR in chemicals fell to 7% for 2020-24 from 12% in the prior period, below the 10% all-industry median, as soft demand, structural overcapacity and rising costs cut EBITDA margins by about 1% a year and multiples by 1.1%. Company size no longer predicted returns, while India (28%), focused specialties and electronic chemicals led and European multispecialty and emerging-market base chemicals lost value. Strategy and business model mattered more than subsector, so BCG urges repositioning asset footprints, tightening capital discipline, raising efficiency, and investing in differentiation.
Editor's opinion
Chemical companies cannot recover value by doing more of the same and need strategies that counter commoditization, respond flexibly to value chain and geographic shifts, and keep a clear focus.
Key concepts
TSR drivers · Structural overcapacity · Commoditization · Asset footprint repositioning · Capital discipline