2015 was a strong year for the global chemical industry despite a difficult macroeconomic environment – slow emerging market growth (particularly the slowdown in China and recession in Brazil), low demand from Europe and the sustained decline in oil prices. Despite these challenges, industry shareholder returns exceeded S&P 500 by 4 percentage points. Lower raw material prices and the strengthening of the USD against most major foreign currencies caused industry revenues to drop, however the average company saw volumes and long-term assets grow by 2% over 2014 levels, with Commodity chemicals companies leading the pack, spurred by investments in the shale-related investment in the US gulf coast.

Meanwhile, Commodity and Specialty companies delivered strong shareholder returns (6% and 7% respectively) with strong profitability, while Fertilizer and Agriculture companies saw declining returns. On a 3 year timeframe, these focused Commodity and Specialty companies outperformed their Diversified counterparts, confirming the activist hypothesis that focused portfolios create higher shareholder value and are simpler to understand and manage.To better understand the paths that companies can take to achieve profitable growth, we analyzed movements of companies across the quadrants of our Winners' profitable growth matrix between the post crisis 2010-2012 period and the more stable 2013-2015 period. Our analysis reveals that, while profitable growth is the holy grail, achieving profitability before growing is critical, which is most likely achieved via focusing on the core business vs. by pursuing acquisitions.