Analysts lift forecasts as ICI's profits surge

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The Independent Online
A solid increase in ICI's third- quarter profts was tarnished yesterday by its cautious announcement about consumer resistance to price increases. The chemicals giant's taxable profits jumped 59 per cent to pounds 143m (pounds 90m).

But, despite the shares dipping 13p to 786p, brokers last night boosted full-year profit forecasts to around pounds 500m-pounds 510m, up from pounds 490m. About pounds 700m-pounds 710m is being predicted for 1995.

The third-quarter improvement, powered by the industrial chemicals and materials divisions, meant profits in the first nine months of 1994 were pounds 383m (pounds 443m). Last year's performance was aided by a pounds 175m contribution from Zeneca, the pharmaceuticals business demerged last year. Nine-monthly sales advanced 8 per cent to pounds 6.8bn.

Sir Denys Henderson, ICI's chairman, said most improvement had come from market volume gains and sharpened productivity, with prices over the nine months largely unchanged on 1993. However, it appeared there was a 6 per cent rise in some industrial chemical prices in the third quarter.

Sir Denys said demand throughout OECD countries looked more promising than for some time. The British, US and Australian markets remained firm.

Continental European recovery was in train and the Japanese market seemed to have bottomed. Robust growth in the rest of the Far East continued.

Industrial chemicals profits in the third quarter more than trebled to pounds 71m, while profits from industrial materials quadrupled to pounds 14m.

However, static prices in paints meant profits in that division rose just pounds 3m to pounds 37m.

Alan Spall, ICI's finance director, said: 'It is clear the nearer we get to the consumer the less appetite there is for price increases.'

ICI also announced yesterday that it is spending pounds 100m on a new MDI plant at Rozenburg, in the Netherlands, next to its existing plant. MDI is a key component in making polyurethanes.

Other possible capital projects include building two pure tereththalic acid plants in Pakistan and Taiwan at a total cost of dollars 600m (pounds 368m).

PTA is used in producing synthetic fibres.

ICI's capital investment is likely to be held to the 1993 level of pounds 348m.