ICI brands profit performance 'unsatisfactory'

Chemicals group ICI today branded its profit performance in 2003 “unsatisfactory”, but said the outlook for demand was encouraging.

London-based ICI said annual pre-tax profits before goodwill and one-off items fell 15% below last year at £341m (€498.2m), with fourth quarter profits 2% below last time at £86m (€125.7m).

ICI said its key paint division did well, delivering 15% growth in profits, and trading profit in its Quest food flavourings business was in line with last year.

But the group was again hit by a poor performance in its Uniqema unit, which makes ingredients for toothpaste and soap, where profits were down 67%.

ICI added that high raw material costs had contributed to a 9% reduction in profits in its National Starch operation.

It said, however, that overall trading had improved in the fourth quarter relative to the first nine months and the demand outlook appeared more encouraging, particularly in North America.

Chief executive John McAdam said good cost controls and successful execution of its restructuring plans would continue to be essential.

“We remain committed to improving trading margins and profits and to making progress in 2004 towards our strategic plan targets,” he said.

ICI, whose brands include Dulux paint, has a workforce of about 36,000 and employs 5,000 people in the UK at sites including Slough, Middlesbrough and High Wycombe.

In July it announced plans to axe 1,400 jobs, with 300 in the UK, as it said first quarter profits had fallen 21% to £98 million. The cuts followed 700 job losses disclosed in May.

Today, the group said comparable sales for the international businesses were 4% ahead for the quarter, with 8% growth in National Starch and 5% growth in paints more than offsetting 3% lower sales at Quest and a 2% fall at Uniqema.

ICI said strong growth continued in both Asia, where sales grew 9%, Latin America, which was up 23% and North America, which returned to growth with a 3% increase in sales. However, European sales fell 1%.