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Financial situation structurally healthy despite increased costs

  • The chemical and life sciences industry shows a healthy financial structure. On average, the return on shareholder’s investment has amounted to 8% over the last 10 years. In 2013, this ratio decreased to 4%, but it remained structurally higher than the risk-free return on long-term government bonds. The decrease after 2010 is the result, among other things, of higher raw material and energy prices on the one hand and the strong decrease of financial and/or exceptional incomes of some large companies on the other hand. The median value, which is less influenced by extreme figures of some large companies, increased slightly in 2013 in the chemical and pharmaceutical industry.
  • Financial profitability can be assessed by net income returned as a percentage of shareholders’ equity i.e. the return for the shareholders after deduction of all costs and taxes. This ratio measures how well a company uses the capital invested by shareholders. This return on equity should be structurally higher than the return on long-term government bonds. The differential is called the risk premium.