Speaking as the company revealed profits for 1994 in line with the prospectus, Robin Paul, chief executive, said the group had coped with price increases in raw materials ranging from 20 to 30 per cent in surfactants - an important ingredient in detergents, shampoo and the like. In attempting to pass on higher costs some volume had been lost, but there was evidence that price rises were starting to level off. This was particularly evident in key inputs such as alcohols and ethylene oxide.
The current year should also benefit from the absence of extensive restructuring in the European surfactants business, which shaved £6.8m from divisional profits last year, cutting surfactants' contribution to operating profits to £2.2m in 1994. In all, exceptional costs came to £20.2m last year, leaving group pre-tax profits of £40.7m for the 12 months to 25 December, down from £58.3m in 1993.
The results, which also saw operating profits rise 11 per cent to £62.7m, were exactly as predicted at flotation.
Although the shares shaded 1p to 173p yesterday, they remain well above the March offer price of 150p.
Mr Paul said continuing weakness in surfactants markets in Europe had been balanced by a strong contribution from the company's North American business. The strong market there and UK exports helped the core phosphates business to shrug aside increased costs, raising operating profits to £44.6m from £40.1m before.
Said to be the world's largest producer of wet phosphoric acid, the division has raised margins to the level they were at a year ago by a combination of price increases and cost savings, Mr Paul said.
Mike Lewis, at Kleinwort Benson Securities, expects total pre-tax profits of £65.8m for the current year, which compares with a pre-exceptionals figure of £60.9m for 1994.
The main driver of the share price in the short term would be the company's elevation to the FT-SE 250 index in June, he suggests.