KPMG: Chemical Companies to Invest in Acquisitions, New Products

By Rob Starr, Content Manager, Big4.com

According to a recent survey from KPMG International,  chemical industry executives say they will use the significant cash on their balance sheets to pursue strategic acquisitions and new product development to spur company growth. Sixty-three percent of all executives plan to increase capital spending over the next year. Eighty-one percent of the respondents in Asia-Pacific predicted an increase in capital spending, (down from 100 percent in 2011) versus 48 percent in the US and 58 percent in Europe.

In the KPMG 2012 Chemicals and Performance Technologies Industry Outlook Survey of 156 senior level chemical executives in the US, Europe and Asia-Pacific, 72 percent of industry executives indicate that their companies have significant cash on the balance sheet – up from 70 percent in KPMG’s 2011 survey – and more than half (51 percent) say their companies’ cash positions have improved from last year.

Ninety percent of executives indicate that their companies are likely to be involved in a merger or acquisition in the next two years – up from 83 percent in KPMG’s 2011 survey. Once again, respondents in the US were most bullish on being buyers (48 percent) while European respondents were the most likely sellers (52 percent).

As for where they intend to deploy that capital over the next two years, global chemical executives cite China, the US, and Europe as the geographic regions that will be the focus of investment. However, when analyzing the individual regional responses, US and European executives showed a much stronger preference for domestic investment. Unsurprisingly, China remained a favored investment location for executives in all three regions.