Looking Back 2019, International Chemical Giants Are Competing For Survival.

In December 2019, a number of international chemical giants, including BASF and colon, announced that they would sell or transfer part of their business. Driven by the environment, in 2019, especially in the fourth quarter of the year, many international chemical giants such as winning, lanxon, ACMA, Huntsman, Xuan Wei and others announced similar decisions. They divestied and sold some of their businesses, factories, equipment, and even their subsidiaries' equity, and strive for transformation and upgrading to improve profitability.


In the fourth quarter of 2019, the news of international chemical giants selling their businesses was endless. BASF announced the sale of its construction chemicals business to the US private equity company's lone star fund in 3 billion 170 million euros. The company also agreed to sell the masterbatch business that had already been announced to Puli Wan, with a transaction value of US $1 billion 560 million. The business adjustment of the two companies has also received wide attention from the global industry.


In addition to the concern of BASF and the business adjustment of crane, other international chemical giants also have related actions. In the fourth quarter of 2019, the United States announced its sale of its ceramic tile coating business to a Spanish pigment company. DuPont sells $26 billion 200 million worth of nutrition and Bioscience branch to International Flavors & Fragrances (IFF). Xuan Wei has completed the asset sale action of a wholly owned subsidiary in Zhaoqing, China. Kansai Coatings Co., Ltd. has sold shares in the joint venture in China, and has closed a factory in China, and plans to stop Kansai coating Europe Co., Ltd. Lanxon sold its 74% stake in Rustenburg chrome, South Africa, to Clover Alloys, South Africa's Chromite supplier. COSCO has officially completed the sale of European polyurethane system business to H.I.G.Capital. ACMA announced that it would divest its functional polyolefin business to SK comprehensive chemistry, and ACMA will further transform into specialty chemicals and advanced materials. In the fourth quarter of 2019, the business adjustment of enterprises was almost everyone's share.


In addition, in the third quarter of 2019, there were many notable business selling cases, such as BASF's sale of ultrafiltration membrane business to DuPont and the sale of pigment business to DIC. COSCO also signed an agreement to sell its European polycarbonate sheet business to Serafin group.


For international companies, adjusting business has always been a common practice. Many enterprises also have their own business adjustment plans. However, such concentration of business adjustment is not very common, but also compared with the large-scale mergers and acquisitions of international companies in the previous period. In fact, the concentrated business adjustment is the embodiment of the inefficiency of international enterprises and the reduction of profits. It is also a microcosm of the overall economic situation in 2019 as expected.


Since the second quarter of 2019, many international chemical giants have been making bad profits due to the impact of the world economic situation. Net profit, sales volume and other indicators have dropped significantly compared with those in the same period in 2018. BASF, DuPont, Dow, MITSUBISHI Chemical Holdings and so on all have similar situations. The second quarter report released by the chemical industry in 2019 showed that the sales volume of chemical products almost fell across the board, and the industrial chemicals sector was in a predicament. Sales of such commodities as automobiles, housing and high-end electronic products were also seriously affected, resulting in a lower volume of sales of various consumer chemicals. In the third quarter of 2019, this situation did not get much better. BASF, lanxon, and so on, and other enterprises in the three quarter recorded a slight decrease in net profit report.


The decline in profits and the rise in costs caused international chemical giants to start cutting costs and accelerating transformation. For example, BASF has already had a stripping plan for pigments and building chemicals. The company, CEO, said in the autumn of 2018 that its chemical building materials business had no obvious coordination effect with other business areas, and its profitability was not expected, which would strip the business. Many companies, including lanxon and colon, have also been pursuing the business objectives of high-yield businesses. However, business decisions were concentrated in December 2019, reflecting both the decisiveness of these enterprises and the urgency of transformation brought about by the overall economic situation.


If the transformation strategy is carried out, the international chemical giants will get better development opportunities. After selling the masterbatch business, Guo Haili, executive director of the company, said: "he is focusing on a path that is higher than market growth, higher profitability and stronger cash generation. This transaction is an important milestone in the development of the company." He asserted that the future of clay will be renewed, focused and stronger.