Welcome to The Chemical Show, the podcast where Chemical means business.
I'm your host, Victoria Meyer, bringing you stories and insights
from leaders driving innovation and growth across the chemical industry.
Each week we explore key trends, real world challenges, and the
strategies that make an impact.
Let's get started.
victoria_2_08-18-2025_085915: Welcome back to the Chemical
Show where Leaders Talk Business.
We have just wrapped up the second quarter earning seasons, and it's no surprise
that it's been mixed results depending on where in the industry you sit, et cetera.
So.
Today's podcast episode is really about bringing to you second quarter
earnings insights, and what it means for the industry and what it means
for you as a leader as we lead through chemical industry transformation.
So I'm gonna be unpacking some of these insights and also tying it
into the themes and advice that we've been discussing this year.
And talk about what you can and should be doing as you go through the
second half of 2025 and into 2026.
I know that we are in the midst of business planning, budgeting,
not just finishing out the year, but really looking ahead to what
next year will be and how you.
And your company and your business will be running, leading, growing, managing,
navigating, all of those things.
One of the things I really wanna talk about as well as there is still time
for you to attend the Chemical Summit.
In fact, if you're gonna do one thing to set yourself up for
success for the coming year.
Attending the Chemical Summit.
So it's being held on September 30th and October 1st in Houston, Texas.
And it is a great opportunity for leaders, senior leaders, mid-level
leaders, leaders, rising leaders to engage and set the stage for
2026, not just for your company.
And that's super critical.
And in fact, that's, I know where the, a lot of the investment
is when we think about what.
People are doing where they're spending their money.
It's on investing in the business, but it's also about investing in
you as a leader, in terms of the insights that you bring to the table,
the connections that you are making with other leaders in the industry.
And more so the Chemical Summit goes beyond the typical
industry conference, right?
And it's the form where leaders can go beyond this idea of
we're already being strategic.
And test whether their actions are really moving the needle and
how other leaders are doing that.
So you get to do three things throughout this conference, and I
think these are some of the three value points that you get to bring,
uh, that we bring to the table for you, which is number one, benchmarking.
Compare how your approach a.
Is in your company's approach against peers who are already gaining traction.
What are they doing?
How are they tackling the opportunities and the obstacles in business today?
Number two, it's the conversations and connections.
I hear this over and over again from people that are there.
These are amazing connections and their connections that are much deeper than what
you're gonna get at a typical conference.
'cause you're not just sitting and listening or going through
a trade show booth, but you're actually conversing with peers.
In the room leaders doing the same thing that you're doing.
So great opportunity there.
And then the third piece is really about around being future focused.
What are the tools and insights that will help you lead through the next shifts
and the current shifts and the next shifts, whether the AI and sustainability,
geopolitics, supply chain regionalization.
We're gonna be talking about that a little bit more.
Setting yourself up for success before they hit the earnings.
Because we know the path that you're on manifests over the
next 6, 12, 18 plus months.
And so doing the right things and understanding how to tackle
those things is critical.
So if you're ready to set your leadership and your business on the
right trajectory heading into 2026, join us at the Chemical Summit.
You can visit the chemical summit.com
to learn more.
Alright, hope to see you there.
Now let's talk about where we are.
Just past midyear, we've just wrapped up.
Second quarter earning season.
There's probably a few people, companies still trickling in
with results by and large.
No surprise to you.
No surprise to me.
Mixed Right.
So that's where I'm gonna say is the theme of this is really mixed, and I
think it depends on where in the industry you sit, whether you're a commodity
player or a specialty player, whether you are heavily invested in certain
markets or, invested in, anchored to certain markets, whether you're broader.
So, you know, what are we seeing?
Commodity chemicals, commodity chemicals, petrochemicals, plastics, right?
Overall weak demand, oversupply, and a lot of pricing pressure.
We've been seeing this, we've been hearing it.
No surprise.
Go listen to my recent episode with John Richardson.
And we'll link to that in the show notes to talk about where some of this pressure
is, particularly in the petrochemical and the polymers value chains,
, around petrochemical, oversupply, Chinese competition, et cetera.
So.
We're seeing losses, we are seeing shutdowns, particularly across Europe,
and that's looking at companies like Dao, BASF, lion Buell, right?
So difficult business environment that they're taking some real
focused efforts to resolve.
So some of the key levers that we're seeing is around cost cutting.
, Including cutting the dividends, which is always, by the way,
guys, you know, that's a big deal.
When a company cuts its dividends, it's a big sign because companies
don't like to cut dividends.
Shutting down plants, restructuring a lot of capital disciplines.
So that's really on this commodity space.
When we look at specialty chemicals, it's actually a little bit brighter right now.
Not everywhere.
It depends on the market that you're in and the end use application, but
generally more resilient performance.
And you know, looking at companies like clearing It, which beat its
expectations for the second quarter.
Leny had weak volumes, but they're aggressively restructuring Science
Co inev which has made a lot of portfolio shifts over the past.
Year or two and they've had some great earnings that have come through.
So I think it's around, what we're seeing, especially when we look at the difference
between commodity and specialty, is regionalization versus globalization.
More resilient markets, right?
I mean that ultimately is the story for specialty a lot, is that you're
getting value through differentiation as opposed to in some of these more
commoditized markets where it's value through being a effective COS
player, bigger is better, et cetera.
Well.
Today, bigger is not better.
but overall, I think what we're seeing and what I'm hearing as I go out and talk
to leaders is this idea that specialties just are having more resilience.
There's selective growth, not easy.
Nobody is saying that 2025 is easy.
I think, those easy days are over.
We're hoping they come again.
Probably not in 2026, but, but going forward, Let me just break
this down though a little bit more.
That's kind of the high level in terms of the differentiation between
specialty and commodity and the fact that we've got a mixed bag.
\ Number one, what's coming through persistent weak demand
and macroeconomic stress?
You know, I think if we just start talking about tariffs and the uncertainty
that tariffs has brought, that is a certain play on macroeconomics.
We, while we say we're not really in inflationary times, there's.
Certainly some demand destruction.
Um, I think we've seen declines across that.
And, companies are warning of slower growth, whether it's
BASF, Dow is making some shifts.
Otherwise, you know, if we look at Europe, um, Europe is under stress
for a lot of the policies now.
They've recently come through with some new.
Statements and policies.
I think some people, some chemical companies might be saying
it's a little bit too little, too late, um, but we'll see.
But consistently, uh, what we're seeing as we look through earnings
reports is this idea of weak demand and just macroeconomic stress.
We are in a period of just disruption.
Um, and I think that's the best way to think about it.
And that disruption is causing stress.
The second theme that's coming through, and again, this is no surprise, we
have been talking about this for over a year, and it's around this idea of
operational excellence and uh, cash focus.
And so that is coming through and that's paying dividends.
For some people cash is king, right?
So I think what we're seeing is this bigger focus on cost,
discipline, operational excellence.
Now, the downside of this is it is also manifesting in.
Plant closures.
It's manifesting in some, layoffs and certainly we saw, the latest I
saw last week was CP Chem announcing some additional layoffs, which maybe
is part of their overall 20% cut, which is by the way, a big cut.
, But companies are really prioritizing this cash generation, Now what that's
not saying is that they're not investing.
There is still continued investment, right?
So investment in the right places, but absolutely a cash is king focus.
Um, which, you know, let's be honest, their investors would say, yes, please
pay attention to the cash because your overall economic situation is not ideal.
Again, for all these other reasons, macroeconomic, stress, right disruption.
Some, uh, demand declines and oversupply certain when we look at certain
markets, petrochemical, plastics, et cetera, dramatic oversupply.
And then when we look at, depending on, uh, what markets you feed into, right?
So automotive is still struggling.
it's on the struggle bus for a long time, and I don't know about you.
I personally haven't bought a car in a while.
I'm about ready to, um, buy a new car.
But I think that's one of the things when you just look around at who's.
Where are people spending their money?
It's not necessarily on, some of the things that certain markets would like.
Um, so maybe go buy a car and save the chemical industry or save
parts of the chemical industry.
you know, I think there's the other pieces around this.
Focus on strategic investment and long-term focus.
I think one of the dangers in business planning at every level
is the hockey stick, right?
And you guys know the hockey stick, right?
It's like, it's gonna be stinky this year.
It's not gonna be great.
We're gonna be flat, flat, flat.
And all of a sudden miracles are gonna happen.
And next year, two years from now, the market's gonna pick up and it's gonna be.
Skyrocketing market.
I'm not seeing so much on the hockey sticks and people aren't talking
about that, but they're absolutely deferring the point of view that
things are gonna get better.
Until 2026, we were hearing parts of the idea that, ooh, second
half of 2025 is gonna get better.
I think we're just pushing that down the road.
And that's something that, is.
Probably no surprise to you, but I think this whole idea that we're pushing, um,
that down the road, what does this mean?
So, okay, I'm not, I'm not going through the deep dive of all these,
earnings reports you guys have.
I'm giving you some of the highlights, but what does it mean and how do you
need to be thinking about business today?
For the second half of 2025 and going into 2026.
Number one, there's this whole idea of this global demand shifts, right?
This reliance on China, we know this, we've been talking about this for a long
time, that we've got some oversupply, we've got tariff exposure, we've got cheap
Chinese imports that even though we've got tariffs coming in play, you know,
and I think I sit in the US obviously.
So that's a bit of a US-centric view, but it's applying globally.
We've got regional hotspots, and regional cold spots.
I guess from a strategic lens though, I think where we're at is we need
to be really thinking through.
Additional market diversification, additional innovation pipelines.
One of the things that's been really positive and I think
is a positive note, is we are seeing more innovation this year.
People have said this, I'm hearing it pretty consistently, when I talk
to companies is that they're seeing more innovation 'cause things got
put on pause for a little bit.
Innovation can only be on pause for a very short while before
it has really negative effects.
So, um, because.
You know, when I stop innovating this year, the effects aren't
felt for a couple years.
So we're in a bit of that.
So I think what the positive news is that there's focus on
innovation in the right places.
, Whether it's building growth in adjacent markets, right?
And if, and figuring out how to apply your business in your products,
in those adjacent markets, that's becoming really critical as well
as defending the core businesses.
So that's, that's one lens.
The second lens.
Is around regionalization, , and really focusing in on supply chain.
I'm gonna say it again.
The 2020s have a decade of the supply chain.
We did not talk about supply chain nearly this much in any of the rest of my career.
I mean, it's been there, right?
It's always been important, but it's really about supply chain,
supply chain strategy, and I think a bit more regionalization.
So I'm gonna bring out Clat, as an example because they've talked about
how while they're a global company.
Their business is actually less exposed to international, supply chains.
Something like 70% of their supply chain, their, their raw materials are coming in.
They're local, so they're regional, , whether it be Asia, north America, Europe.
And so that provides some benefit from both.
a timing basis of, I just think about the.
Length of time it costs to move product globally, the cost of moving product
globally, some of the challenges that you may have, so you're facing, and
you define competition a little bit differently when you're focusing on
local and regional markets versus when you're focusing on global markets.
And so that has served them well.
Westlake would be another one I don't often talk about.
Westlake.
Um, you know, they're very, uh, US-centric.
and they're.
Proud to be US centric.
And that has served them well because they're in a market
that has created resilience.
And especially when you think about the global pressures that
companies are facing, your company is facing, figuring out how to
create the local infrastructure, some of the, trade barriers.
You can create and you're not, you know, we're not talking about anti-competitive
behaviors, but just thinking about what are the things that you are doing to
carve out and protect your business.
Some of this is a regional footprint, some of it's around the way that
you structure your agreements.
And of course the thing we learned in 2020 is around being really clear about what
that supply chain is, who you're relying on, where your products are coming from.
Not being sole sourced, although I hear people kind of going back to some of
their old ways of, oh, I'm gonna focus in working with, you know, just one
or two key suppliers or key partners.
and that actually leaves you quite vulnerable, right?
Um, when there's disruption.
So I think thinking about supply chain from a resilient perspective, where
your customers are located, where your suppliers and your business partners are
located, um, becomes really critical.
The third strategic theme that's really emerging from these insights, and again,
I'm just gonna say it's a platform that we've been focusing on this year,
is around cost discipline, right?
So thinking about cost discipline as an asset.
Not just an opportunity or a hindrance, right?
And I think we sometimes say, oh, we're, it's the slash and burn.
Nobody wants the slash and burn when it comes to cost discipline, it's really
around the right prioritization of where you're spending money to invest.
So digital is one space, although I'm gonna be really honest, I
had a conversation last week where people were saying.
Companies are a little bit sketch in terms of where they're
seeing their digital investments.
I think it's also this idea that, oh gee, one size fits all.
We're gonna go in and go big.
Rather than getting back to the whole idea of let's pilot, let's get
resilient, let's be fit for purpose and where we make our investments.
So I think where we are today in the companies that are being most successful.
So far in 2025, and as we close out the year and head into 2026
is around being very mindful of, where those investments are.
I think we're gonna see a lot less of these big investments, whether
they're in assets, whether they're in digital, whether they're in
innovations, and a lot more nimble innovations, nimble investments that.
Pay results more quickly that you can affect more quickly, get
results more quickly, et cetera.
So, and I think about this when with the leaders that are framing cost discipline.
With investment discipline, um, and investment discipline.
Not being don't spend, but spend the right way.
And being creative in how you're doing that.
Those are the winners and that's where we're gonna see, and it ties
in with this idea of continuing to innovate because when you innovate
today, it pays dividends tomorrow.
making the right investments today, 'cause those investments
today pay dividends tomorrow.
So it is a bit of this long term view, but you have to execute here in 2025
and going into 2026 the right way.
the other piece we're seeing and kind of the theme and, and you know,
again, this becomes a bit structural in your company, but this divergence
between specialty and commodity it has gotten, More highlighted, right?
So I think you would say perhaps that some of the specialty products
or certain product lines that have been more resilient because they
have more value built into it.
They have tighter connections with their customers and creating
customer centric solutions.
And there are things that customers really need.
And so I think this is where we're seeing some of this divergence.
and, and frankly, it's harder to replicate.
So, you know, I get back to this commodity specialty perspective.
It's kind of easy to replicate polyethylene now.
Okay folks, you polyethylene producers out there, don't hate on me.
But there's been a lot of benefit and a lot of focus as companies start
up, as they grow, as they think about what their product landscape is.
I'm base loading, you know, this commodity product.
Great.
There's value there.
But it's also easy for others to replicate specialties, harder to replicate.
So, okay, so you don't have a specialty portfolio.
What are you gonna do?
Think about the things that are in your control that are difficult to replicate.
Some of this may be about your approach to talent.
This may be your customer centricity.
How do you approach your customers?
How do you create value with your business partners?
Right?
So I think there's a way of, of bringing in this specialty and
diversification even when you'd say, ah, my co my, my products are vanilla.
I, they're not very differentiated.
Yet the way that you approach markets can be differentiated.
So I think that's what we're seeing, um, as we, we focus in on that, particularly
as you think about customer-centric solutions and things that are
creating value for your value chain.
And then investing through transformation.
Right.
So I think this piece is.
While there is cost control, this whole idea of business transformation,
business transformation, industry transformation takes long-term commitment.
There is no doubt in my mind that we are at an inflection point in the industry.
It may not be a momentary inflection point.
It's an inflection point that's taken a couple years where our approach
to business and how we're evolving is very different than where it was.
So, um, when you look at.
You know, some of the learnings that we can get from this
second quarter earnings reports.
It's around this.
Cutting where it's appropriate, but continuing to invest, investing in
talent, digitization, sustainable innovation, sustainability.
You know, uh, we don't talk a lot about sustainability and, or I mean we do a
little bit not, I sometimes characterize sustainability with the small s like I do.
You have a sustainable business versus sustainability with the Big S is
your bus, are you focusing on kind of this glory days of sustainability?
Which when we think about where we were in 2020, it was kind of a hotspot, right?
And now there's a focus on ESG investing.
There was a focus on sustainable, sustainable development.
There was a lot of tax incentives.
Those are slowly filtering away, maybe quickly filtering away,
depending on your point of view.
And yet.
We're continuing to invest.
There continues to be a business case for sustainability and
companies continue to focus there.
They have to figure it out differently, figure it out perhaps without all the tax
incentives that made it super appealing.
Um, and so it's gonna be a slower study approach.
Fact, one of the panels that's at the Chemical Summit this year is
the business case for sustainability because there is still a stick case
for sustainability, whether it has lost its shine and luster and just
the super excitement, we're now in the hard work of it, , and getting real.
And, and that's part of the evolution of how the industry has evolved.
So, Those are the kind of the five themes that are going through this, right?
So think lessons.
When we think about lessons for you guys, what's your takeaway?
Number one, balancing today versus tomorrow, right?
So doing the right things in your business today that allow you to reinvest.
Grow focus on, on future business.
Second piece is this whole aspect of designing resilient supply chains.
I know that you think you've already done the work, right?
So here's this.
You're like, Victoria, we have done this work already.
Yes, you have.
And you're gonna have to do it again, and you're gonna have to do it again because
situations keep evolving and changing.
Um, and 2020 is the decade of the supply chain for a reason.
You need to continue investing and focusing and refining and creating
those resilient supply chains.
And the whole aspect of resilient is it's not one and done, it's ongoing.
So, I think that's really critical.
The third piece is really the focus on talent.
So we didn't.
Talk a lot about this, and yet talent kind of definitely weaves through, right?
Because the companies aren't, are not delivering these
results without their people.
We're in an evolutionary point of view when it comes to talent
across the industry, right?
And we're seeing.
People playing off, right?
And, and I referenced CB Chem earlier, there's others that are cutting
staff, and yet you still have to continue to have the right talent
and grow talent and bring talent in.
So I think, um, this complexity that comes through is, is really critical.
Um, and you know, I'm just gonna say at the end of the day, a lot of this,
, falls into communications, right?
Tell your story, communicate clearly inside your company.
Outside your company with your employees, with your other stakeholders.
Um, because as we're going through these changes, and I've seen this and I'm
sure you've seen this as well, people sometimes are living on yesterday's
assumptions, and yet today it's changed.
So getting crystal clear on how you're navigating what your
direction is, communicating that clearly to your stakeholders
inside your company and outside of your company is really critical.
That's my quick summary, um, of kind of what we can take away
from midyear earnings reports.
focusing it on 26.
But don't forget 2025, I actually look at this and I say, we have five months left.
There's a lot of amazing things, amazing business that can happen this year.
If you're ready, if you're primed, are you, if you're
ready to take advantage of that.
And when I talk to companies, they're like, um, winning business because
they're ready and they're losing business because they're not ready.
Getting your whole system, your people, your teams aligned to be ready
to take available of opportunities is more critical than ever.
So, um, that's it for today.
Um, I talked about this earlier in, in this podcast episode.
I'm gonna wrap it up as hell.
Love to see you guys at The Chemical Summit in 25.
Um, it's at September 30th and October 1st in Houston, Texas.
You are going to hear from a number of great guests that have been
featured on the Chemical Show, as well as people across the chemical
community in the audience, engaging, growing, focusing on business, and
strategic Strat focusing on business and strategic insights and boosting
your business opportunities for 2026.
Be there and thank you for listening today.
Keep following, keep sharing and we'll talk to you soon.