Markets react well to ICI profits and job cuts

SHARES in Dulux paint owner Imperial Chemical Industries Plc surged nearly 19% on Thursday, after the firm said it was cutting a further 1,410 jobs and reported better-than-expected first-half profits.

Shares in the firm, one of Britain's proudest corporate names, were up 17.7% at 165p by 13.20 GMT, as investors welcomed the group's latest plans to overhaul the business and slash costs. Before Thursday's rise the biggest one-day gain since July 2001 the shares had tumbled 39% this year.

The rally added nearly £300 million to ICI's market value, now at more than £1.9 billion.

ICI, which had already announced plans to cut 700 jobs when it released first-quarter results in May, said it hoped to save £110m in 2005, rising to £115m in 2006, from the two rounds of restructuring. Analysts cheered ICI's profits and said the restructuring plan, announced by management led by chief executive John McAdam, was bolder than anticipated.

Pre-tax profit before exceptionals and goodwill for the half-year to June 30 fell to £150m from £191m last year. Analysts had expected profits of £132m to £146m.

The interim dividend was cut to 2.75p from 3p.

Chief financial officer Tim Scott said 450 of the job cuts would be at the adhesives and food thickeners unit National Starch, with another 370 at paints.

Some 300 jobs will be cut in Britain and 780 in the US.

Specialty chemicals unit Uniqema will lose 290 jobs. Quest, ICI's fragrances and flavourings unit, will lose 185, while another 100 will go at the head office.

Scott said there were no plans for further restructuring soon.