In January 2011, industries around the world posted the busiest start year-over-year (y-o-y) for mergers and acquisitions (M&A) in a decade, with even greater volume anticipated as the global economy continues to recover. After waiting patiently through the long recession, many companies are now playing catch up to take advantage of improving conditions.
This assessment certainly holds true for the chemical industry. Many chemical companies now have strong balance sheets as the result of increased sales in 2010 and lower overhead due to cost-cutting measures taken during the recession. With volumes still below 2008 levels, further sales growth is expected in 2011.
According to Kevin Swift, chief economist and managing director at the American Chemistry Council, in 2011 global chemical shipments will increase by 5 percent. In addition, profit margins are expected to remain strong, since plant closures and a general lack of expansion in 2008 and 2009 left the industry struggling to meet new demand in 2010. Finally, an increased focus by most industry players on transparency around product costing and profitability will improve the ability of these companies to allocate capital more judiciously.
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