Mastering Chemical Industry Disruption: Megatrends That Matter

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<ol><li> 1. Copyright 2015 Accenture All rights reserved. 8th October 2015 Chemical Industry Today and Tomorrow Mastering Chemical Industry Disruption: Megatrends That Matter </li><li> 2. 2Copyright 2015 Accenture All rights reserved. 2Copyright 2015 Accenture All rights reserved. Confluence of Trends Impacting Chemical Industry Megatrends Macroeconomic Customers Chemical Industry </li><li> 3. 3Copyright 2015 Accenture All rights reserved. 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 3Copyright 2015 Accenture All rights reserved. </li><li> 4. 4Copyright 2015 Accenture All rights reserved. Megatrends that Matter: Societal Changes Millennials 1/3 of global population by 2020 37% will be in India &amp; China Currently 27% of Europes population New buying habits New lifestyles 4Copyright 2015 Accenture All rights reserved. </li><li> 5. 5Copyright 2015 Accenture All rights reserved. Megatrends that Matter: Population Dynamics &amp; Demographics European population shrinking Over 60 population increasing twice as fast as before 2007 Nearly 60% of worlds population will live in cities by 2020 5Copyright 2015 Accenture All rights reserved. </li><li> 6. 6Copyright 2015 Accenture All rights reserved. Megatrends that Matter: Affluence &amp; Affordability Europeans waste their bodyweight in food each year World GDP/person grew by 24% between 2000 and 2014 Todays car costs $32,000 vs. $47,000 in 1915 (100 years) 6Copyright 2015 Accenture All rights reserved. </li><li> 7. 7Copyright 2015 Accenture All rights reserved. Megatrends that Matter: Commercial Efficiencies Miniaturization using high tech materials is the biggest change in flat screens from 7-8 years past Robotics costs &amp; abilities up Robotics now affordable to smaller business 7Copyright 2015 Accenture All rights reserved. </li><li> 8. 8Copyright 2015 Accenture All rights reserved. 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 8Copyright 2015 Accenture All rights reserved. </li><li> 9. 9Copyright 2015 Accenture All rights reserved. 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 9Copyright 2015 Accenture All rights reserved. </li><li> 10. 10Copyright 2015 Accenture All rights reserved. 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 Copyright 2015 Accenture All rights reserved. </li><li> 11. 11Copyright 2015 Accenture All rights reserved. 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 Copyright 2015 Accenture All rights reserved. </li><li> 12. 12Copyright 2015 Accenture All rights reserved. M&amp;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&amp;A by discipline (transaction value) Chemical company M&amp;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&amp;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 &amp; retail Food &amp; beverages Agriculture Health &amp; pharmaceuticals Commodity chemicals Specialty chemicals Copyright 2015 Accenture All rights reserved. </li><li> 13. 13Copyright 2015 Accenture All rights reserved. 13Copyright 2015 Accenture All rights reserved. Chemical industry imperatives Adding value products &amp; solutions Focusing on sustainability Aligning with trade &amp; 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 </li><li> 14. 14Copyright 2015 Accenture All rights reserved. 14Copyright 2015 Accenture All rights reserved. Business Model Innovation Operational Excellence Digital Enterprise Connected Innovation Customer Centricity Opportunities for the Near Future </li><li> 15. 15Copyright 2015 Accenture All rights reserved. 15Copyright 2015 Accenture All rights reserved. Follow us @AccentureChems Accenture Chemicals Visit www.accenture.com/chemicals About Accenture Accenture is a global management consulting, technology services and outsourcing company, with more than 358,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the worlds most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$31.0 billion for the fiscal year ended Aug. 31, 2015. Its home page is www.accenture.com. </li></ol>

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