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In Chemicals, Invest to Outperform

Analysis of returns shows it’s better to invest in core strengths than to chase hot markets.

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In Chemicals, Invest to Outperform
Top-performing chemical companies beat out average companies in every sector over 5 and 10 years
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As growth slows or stagnates in developed and developing markets, some executives in the chemicals sector are tempted to chase the siren song of “attractive markets” that appear to offer higher profits or growth. But research by Bain & Company finds that investing to outperform in a company’s core delivers stronger results than expanding into new markets. In most industries, one or two players capture about 80% of the economic profit pool. In chemicals, the highest-performing commodity companies grew total shareholder returns by at least 50% more than the average specialty company over 10 years. We find winners in every chemicals subsector, demonstrating that it’s more about what you do than where you do it.

Jason McLinn is a partner in Bain & Company’s Chicago office, Piet de Paepe is a partner in Bain’s Brussels office, and David Schottland is a principal in New York. All three work with Bain’s Global Chemicals practice, which Jason leads in the Americas and Piet leads in Europe, the Middle East and Africa.

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In Chemicals, Great Strategy Beats Great Markets

Investing to outperform in core markets proves more rewarding than chasing after exciting new ones.

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