ICI's Q4 trading profit dips 3.5% to £109m

08 February 2007 08:47  [Source: ICIS news]

By Nigel Davis

LONDON (ICIS news)--Higher raw material costs and a weak paints market in North America dragged ICI’s fourth quarter trading profit down 3.5% to £109m ($214m/€165m), the paints, adhesives and specialties starch group said on Thursday.

Profits from ICI’s paints business were down 16% at £46m despite a 0.5% rise in sales to £558m.

The company’s National Starch unit reported that fourth quarter trading profits were 3.4% higher at £61m, with sales up 1.8% at £497m.

ICI group sales for the quarter were £1.159m against £1,164m in the fourth quarter of 2005.

Excluding currency effects and the impact of acquisitions and divestments, sales were 1% lower than in the fourth quarter of 2005, ICI said. Paints and National Starch produced 6% and 8% comparable growth respectively.

ICI chief executive John McAdam said there were few signs of improvement in the North American decorative paint market but that business in developing markets were expected to deliver "another solid performance" in 2007.

"Combined with the incremental benefits of our transformation programme, ICI expects to make further progress in 2007," he added.

Full year trading profit from continuing operations was £502m from £479m in 2005, while full year sales were £4.85bn from £4.60bn.

Against a backdrop of mixed market conditions, the group delivered solid sales growth, maintained margins despite strong inflation and delivered an 8% increase in adjusted profit before tax, McAdam said.

The divestment of the Uniqema and Quest businesses in 2006 helped strengthen the balance sheet, he added.

Group net debt fell from £763m to £329m and the net pension deficits reduced significantly from £1.7bn to £1.3bn.

"Taken together with the £1.2bn proceeds from the sale of Quest, expected in early 2007, the stronger balance sheet means we can now invest in strengthening the competitive positions of our core businesses," McAdam said.

ICI said it would focus on organic and acquisition-led growth as part of its updated strategic plan combined with further cost controls. It said it aimed to improve return on capital employed by 1.0% over the next four years. ROCE had improved by 1.8% on average since 2003, it added.

($1 = £0.51)

By: Nigel Davis
+44 20 8652 3214

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