Financial Statistics for Large Chemical Companies – Part 3

In an earlier blog on financial statistics for large companies, I presented a table with financial statistics for thirty-seven large global chemical companies. Click here to read that blog. In a second blog (Financial Statistics for Large Chemical Companies – Part 2), I presented correlations between those statistics. Click here to tread the second blog.

In this blog, I am presenting in the following table an additional statistic - the return on invested capital (ROIC):

 

company	return on invested capital (ROIC)
air products	11.7%
arkema	8.2%
basf	1.7%
chemours	14.0%
clariant	7.0%
covestro	7.0%
dsm	10.4%
evonik	6.1%
fmc	15.6%
kemira	12.1%
lanxess	7.5%
linde	13.4%
mitsui	2.0%
ppg	10.6%
sekisui	7.7%
solvay	6.9%
umicore	12.1%
wacker	5.6%
yara	8.0%
average	8.8%

 

Only nineteen of the thirty-seven chemical companies provide their ROIC percentages in their annual reports. Why the remaining seventeen do not is uncertain. The ROIC seems to be an excellent statistic for evaluating how well a capital-intensive company is doing in managing capital. ROIC is the amount of money a company makes that is above the average cost it pays for its debt and equity capital. Capital intensive companies are companies, such as chemical plants, which need and use large capital amounts in their businesses, e.g., in building production plants and in research and development. Capital intensive companies’ financial success likely relates to how well it employs its capital to obtain financial returns to the company. 

The average ROIC for the nineteen companies in the table above is 8.8%, which judging from management comments in some of the annual reports I reviewed, is a fairly good result.   Many of the nineteen companies state in their annual reports that ROIC is a major measurement that they use to judge their success by.