ICI beats expectations with 11% fall to £108m in Q3 pfts

01 November 2001 12:33  [Source: ICIS news]

LONDON (CNI)--A better than expected performance from National Starch and the paints businesses helped UK specialty chemicals group ICI overcome disappointing results from flavours and fragrances division Quest to deliver third quarter profits ahead of most City forecasts.

ICI said Thursday its pre-tax profits before exceptional items for the three months to 30 September were down 11.5% to £108m ($155m/Euro173m) on sales from continuing operations 4.8% lower at £1.60bn. Trading profits were down 8.9% to £153m and net earnings 7% lower at £79m.

Although ICI was, as expected, hit by the US economic slowdown, its pre-tax profits were some 6% better than consensus forecasts from City analysts.

At the nine months' stage, ICI's pre-tax profits were 8.1% down at £318m on sales 2.1% lower at £4.92bn.

The results were announced together with a major restructuring programme aimed at saving some £60m a year through the loss of 1300 jobs from ICI's 40 000 global workforce.

Some 400 jobs are to be lost at National Starch where Q3 comparable trading profits were down 9% at £56m on turnover 5% lower at £459m. Although sales continued to be affected by slowing US demand, trading margins benefited from accelerated cost-reduction measures.

ICI's paints business, which is to lose 280 jobs in the new restructuring round, managed to peg comparable trading profits at £57m despite what was described as a loss of retail sales momentum following the terrorist attacks in the US on 11 September. The impact on sales was estimated by ICI at £12m, although paints revenues grew 1% to £596m.

Lower sales in Europe and North America were blamed by ICI for a disappointing performance from Quest, where Q3 comparable trading profits fell 10% to £24m. Sales at Quest, which is to lose 370 jobs, were down 2% at £179m.

The performance specialties business delivered decidedly mixed results, with the impact of slower North American economic growth hitting the Uniqema unit particularly hard. Overall, comparable trading profits for performance specialties were down 24% at £13m on sales 2% lower at £201m. Uniqema, which is to lose 235 jobs, suffered a 6% decline in Q3 sales, while revenues at the catalysts business Synetix were up 21%.

ICI's regional and industrial businesses suffered a decline from £5m to £3m in trading profits on sales down from £229m to £173m. The purified terephthalic acid (PTA) business made a small trading loss in the quarter compared with a small profit in the corresponding period last year. PTA sales overall increased slightly but revenues from the regional businesses in Pakistan, India and Argentina were slightly below last year.

ICI said October sales will be slightly below last year's levels. It admitted that the events of 11 September had increased the uncertainty about the Q4 outlook. However, it stuck to the view expressed in July that the group would continue to perform well relative to the industry for the full year.

By: Neil Sinclair
+44 20 8652 3214

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly