Megatrends are creating opportunities and challenges in the chemical industry. See Accenture's Cefic 2015 presentation on "Mastering Chemical Industry Disruption: Megatrends that Matter". Learn more: http://bit.ly/1NPSvXu.

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8th October 2015
Chemical Industry Today and Tomorrow
Mastering Chemical
Industry Disruption:
Megatrends That Matter

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Confluence of Trends Impacting Chemical Industry
Megatrends
Macroeconomic
Customers
Chemical Industry

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Megatrends that Matter:
Resources Sustainability
• Agriculture uses 75% of fresh water
• Over 40 million electric 2 and 4
wheelers will be sold annually by 2020
• European goal of 20% renewable
energy by 2020
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Megatrends that Matter:
Societal Changes
• Millennials
 1/3 of global population by 2020
 37% will be in India & China
 Currently 27% of Europe’s
population
• New buying habits
• New lifestyles
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Megatrends that Matter:
Population Dynamics &
Demographics
• European population shrinking
• Over 60 population increasing twice as
fast as before 2007
• Nearly 60% of world’s population will
live in cities by 2020
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Megatrends that Matter:
Affluence & Affordability
• Europeans waste their bodyweight in
food each year
• World GDP/person grew by 24%
between 2000 and 2014
• Today’s car costs $32,000 vs. $47,000
in 1915 (100 years)
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Megatrends that Matter:
Commercial Efficiencies
• Miniaturization using high tech
materials is the biggest change in flat
screens from 7-8 years past
• Robotics costs & abilities up
• Robotics now affordable to smaller
business
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Megatrends that Matter:
New Frontiers
• Nearly 927 new satellites by 2020
• World military expenditures $1.8 trillion
in 2014
• 20 countries spending more than 4%
of GDP on military
 Up by 5 countries from 2013
 Only 3 are democracies
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Megatrends that Matter:
Emerging Markets
• Maturing growth in China
• China has 300 million people ill from
bacterial food-born diseases yearly
• Logistics costs of China are 18% of
GDP vs. 10% of GDP in developed
nations
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China: The momentum of China manufacturing gains is slowing, with
impacts back to Europe
Source: Accenture Research analysis of IHS Global Trade Information Services an Oxford Economics data.
0%
2%
4%
6%
8%
10%
12%
14%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Chinashareoftotalworldtrade
Rollingaverage4Q%changeintotaltradelevel,rolling4Q
Total trade - China vs. World
China share World China
Import share of chemicals consumption (4Q rolling average)
13,0%
13,5%
14,0%
14,5%
15,0%
15,5%
16,0%
16,5%
17,0%
17,5%
18,0%
Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15
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39
38
32
24
24
19
19
12
0 20 40 60
EE
WE
NA
LA
Africa
APAC
NE Asia
Mideast
Operations: A variety of trends are impacting chemical operations in
Europe
Unplanned outages were at high levels recently in Europe
Average age of crackers
(years)
Factors related to trendsEurope ethylene shutdowns
(May to July 2015)
• Similar trend in North America
• High operating rates in certain products
 Exchange rates
 Oil prices
• Greater focus on safety
• Aging facilities
• Aging talent/training issues
• Climate/weather
Early May
End July
Fire
Fire
Compressor problem
Technical issues
Fire
Power outage
Heat related
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M&A: A key avenue for growth and business model migration
The acquisition of enabling technologies is likely to be the future trend
World chemicals M&A by discipline
(transaction value)
Chemical company M&A indicators
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0
50
100
150
200
250
300
350
400
450
500
550
600
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Debt%ofmarketcapitalization
Index,2000=100
Debt %, Market Cap Cash%, Market cap M&A value, 4 yr moving avg index
Historical avg debt % of market cap
Historical avg cash % of market cap
0
10
20
30
40
50
60
70
80
2009-11 2012-14
$USbillion
Digital technologies
Other
Biotechnology
Services & retail
Food & beverages
Agriculture
Health & pharmaceuticals
Commodity chemicals
Specialty chemicals
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Chemical industry imperatives
• Adding value products & solutions
• Focusing on sustainability
• Aligning with trade & investment
patterns
• Securing assets
• Managing capital projects effectively
• Strict portfolio management
• Managing talent issues
• Mitigating cyclicality and volatility
• Diversifying supply and products
• Utilizing new growth platforms
o Energy
o Sustainability
o Technologies

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Business Model Innovation
Operational Excellence
Digital Enterprise
Connected Innovation
Customer Centricity
Opportunities for the Near Future

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