ICI's '01 profits fall on National Starch, perf specialties

04 February 2002 14:47  [Source: ICIS news]

LONDON (CNI)--ICI said Monday that improved profits from the Quest flavours and fragrances business failed to offset declines from the National Starch and performance specialties divisions last year.

The UK specialty chemicals producer posted an 11% fall in pre-tax profits to £401m ($567m/Euro658m) on flat turnover (from continuing operations) of £6.42bn. Trading profits dipped 6% to £573m.

For the core, so-called international businesses - National Starch, Quest, performance specialties and paints - sales were 1% ahead at £5.64bn and trading profits fell 5% to £569m. On a comparable basis (excluding foreign exchange effects and disposals), sales were flat and trading profits were down 6%.

ICI reported that sales this year were progressing according to plan and "prospects for the group as a whole for the current year are satisfactory".

National Starch suffered a 11% (-12% on a comparable basis) decline in trading profit to £218m on sales down 2% (-4%) at £1.85bn. ICI said the division was hit by the worsening US economy and the sharp downturn in the electronics industry.

ICI plans to invest £37m in National Starch's restructuring programmes over the next two years, including the closure or sale of several sites in the US, Europe, Asia and Australasia and a "further significant headcount reduction". The restructuring will affect the specialty polymers and adhesives businesses in North America and Europe.

Sales of adhesives fell 3%, on a comparable basis, and trading profits also decreased as improvements in Europe and Asia were offset by the impact of the US downturn. ICI said starch sales were slightly below 2000 levels, and trading profits also declined. Specialty synthetic polymer sales dropped 2% but trading profits were "well ahead" thanks to cost reduction efforts and more favourable raw material costs. ICI said the electronic and engineering materials business suffered a 13% drop in sales.

Trading profits at Quest rose 4% (flat) to £107m on sales up 6% (+3%) at £727m. Sales from the fragrance business rose 5%, on a comparable basis, accompanied by a higher trading profit. In the food business, sales grew 2% but profits declined. ICI is restructuring the division, and expects to incur an exceptional cash expenditure of £41m within the next three years.

For performance specialties, trading profits dropped 9% (-10%) to £68m on sales down 1% (-2%) at £832m. ICI described the division's performance as "disappointing" but noted that the profits decline was limited by cost saving initiatives in Uniqema.

Uniqema's sales were down 5%, partly due to lower glycerine prices, and profits were "well down", said ICI. As announced in November, Uniqema in Europe is carrying out a restructuring programme for an estimated cash expenditure of £25m.

ICI said Synetix, the catalyst business it put up for sale last week, had an excellent year. Sales were ahead by 13%, on a comparable basis, at £143m and trading profits increased to £24m.

The paints division suffered a 1% (+1%) decline in trading profits to £176m last year, although sales rose 4% (+2%) to £2.23bn. Trading profits from Latin America halved but ICI said performance in Asia was excellent. The division recovered from the slowdown in sales immediately after the terrorist attacks of 11 September, and sales had reverted to expected levels by mid-October, the group said. The packaging business achieved sales growth of 3%, on a comparable basis, but profits were flat.

Profits from the regional and industrial activities, which ICI is still seeking to offload, plunged to £4m from £17m on sales down 8% at £821m. The Pakistani business registered a slight fall in profits, hit by a small loss from the purified terephthalic acid (PTA) operations. ICI acknowledged that, in the aftermath of the 11 September terrorist attacks, the market interest in the PTA operations "is unlikely to result in fair value being realised in the near term".

By: Anna Jagger
+1 713 525 2653

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