Albright to ride out peso crash

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The Independent Online
Albright & Wilson, the chemicals company re-floating on the market after a 17-year gap, is to keep faith with the joint venture route to international growth despite writing off £3.6m following the recent collapse of the Mexican peso.

The devaluation came less than a month after Albright set up a joint venture with Troy Grupo Industrial to make purified wet phosphoric acid.

Dr Robin Paul, chief executive, said the silver lining of the peso's slump was it gave Albright an even lower cost base in Mexico - a crucial investment factor. Observers believe other key expansion areas include China, India and Eastern Europe.

Dr Paul said that although the March flotation, expected to value the company at £600m, would give it access to alternative financing, future expansion would not be acquisition-driven.

"Joint ventures are important to us," he added. "We have nine significant ones." They range from North Carolina in the US to Australia, and have annual turnover of about £250m.

Yesterday's flotation pathfinder prospectus said that the Troy Grupo charge was part of a £20.2m exceptional charge for restructuring and environmental improvement of closed plants. It said the charge meant estimated taxable profits in 1994 would probably fall to £40.7m against £58.3m in 1993. However, operating profits are expected to have risen from £56.4m to £62.7m.

Next month's return to a public listing comes 17 years after Tenneco, the US conglomerate that already owned 50 per cent of Albright, bought the remaining 50 per cent. It is now selling its interest via a placing, mainly with institutional investors, in order to focus on core interests. Between 5 per cent and 15 per cent of the shares will be available to the public.

Birmingham-based Albright is one of the world's biggest makers of phosphates and surfacants - used in products such as washing powder, toothpaste and soft drinks. Its speciality chemicals are used in flame retardants.

Dr Paul said the company's strategy was to continue expanding into high-margin "downstream" - added value - products. This partly accounted, he said, for Albright's success in passing on raw material price increases to consumers. "We are increasingly selling technology rather than chemicals," he added.

The prospectus also revealed that the company is involved in litigation in the US relating to an explosion and fire at one of its plants in 1991, which killed nine people. Dr Paul said the claims were being contested but that Albright was insured.