Financial analysts chemical industry

Drawing inspiration from this example for long years, the United States chemical industry, under the pressure of financial analysts and raiders, has in recent years undergone many upheavals. While they provided new opportunities for the fortunate few, they changed the environment and made people forget that to operate efficiently any industry must set its sights on the long term. 

As a logical extension of these extensive incumbent activities, it seems likely that most customer/supplier interactions will be e-enabled in some ways within a few years. Leading financial analysts like Goldman Sachs and Banc of America predict that 20-30 percent of all business-to-business (B2B) chemical sales in 2005 will be conducted online over the Internet. Many industry quotations from leading chemical companies point in the same direction GE Polymerland predicts that 40 percent of their sales will be effected online in 2000, DSM 50 percent in 2003, BASF forecasts 40 percent in 2002 and Dow 80 percent in a few years. Giv-... 

Each year Dow Chemical brings the financial analysts who follow the company to Midland for a conference. In the past, this event has featured sessions on how Dow was better than other companies in the industry in every area including the environment. While it is not necessarily clear that analysts cared that this was the case, at least they heard the message. 

So how does this look in the chemical industry More so than in many other industries, investors generally accept that social and environmental issues can be financially significant in the chemical industry, but within traditional parameters. Most chemical industry analysts lack training in how to analyze the financial impact of social and environmental considerations in the industry. It is not an ordinary or systematic part of what they consider. There are no accepted standards for when these issues are and are not important and there is no accepted means of integrating and understanding social and environmental issues into financial analysis. 

Part of the issue is one of communication from the companies themselves. Analysts and investors depend a great deal on communications from the company to know what issues are financially material. In a public forum hosted by the New York Society of Security Analysts, a chemical industry sell-side analyst said, We rely on the company to tell us when these issues are material. ... 

The other attitude found frequently among financial analysts is the belief that voluntary programs have effectively reduced many of the risks associated with social and environmental issues in the chemical industry. There are obviously ways in which this is true of programs such as Responsible Care , but it is by no means true of all the risks and opportunities of all chemical companies at all times. 

Familiarity is often said to breed contempt and there are times when inorganic and heavy chemicals, while not held in contempt, are perhaps treated with less concern than they deserve. Technical people, not closely associated with the industry, are apt to think improvements in products and processes have been pretty completely covered. Many users are apt to take it for granted that supplies will always be readily available. Financial analysts are, at times, inclined to underrate the value of activities in this field. 

It is an unfortunate fact of life that the chemical industiy has been steadily falling out of favor with the investing public and financial analysts over the past 30 years. Perhaps the leading reason is that many investors and analysts evidently consider the chemical industry as a whole to have become mature such investments are definitely not favored as buy-and-hold stocks. This has lead to the breakup and disappearance of a number of old names in the industry, e.g., American Cyanamid, Allied Chemical, etc. To add insult to injury, financial analysts have classed pharmaceutical companies as a separate stock... 

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