COMPANY OF THE WEEK

Click to follow
The Independent Online
ICI, Britain's largest chemical company, said third-quarter profit fell 22 per cent as demand from Asia slowed, and amid tougher competition in the US. Net income fell to pounds 59m from pounds 76m a year ago. Sales fell 30 per cent to pounds 2.3bn, mostly because ICI sold some businesses.

ICI faces a drop in global demand for commodity chemicals, a business it aims to quit in favour of more profitable specialty chemicals. DuPont, the largest US chemical company, said last week that third-quarter profit fell 16 per cent, partly because of Asia's slowdown. ICI comforted some investors by saying it doesn't plan to cut its dividend.

ICI shares rose 3.7 per cent on the news. The shares have fallen 60 per cent since May and when it announced lower than expected second-quarter earnings in July, it prompted the biggest-ever one-day decline in the shares this decade.

Alan Spall, finance director, expressed optimism that Asian business will improve, particularly for the chemical businesses ICI bought last year from Unilever. ICI generates about a quarter of its sales in Asia. He said this year Asian profit will rise at Quest, a fragrance and food ingredients unit, and at National Starch, which makes products from adhesives to electronic engineering materials.

Mr Spall said he isn't concerned about ICI's ability to sell assets as it shifts into specialty chemicals. Last week, WR Grace & Co dropped plans to buy ICI's Crosfield unit for $455m (pounds 269m). Analysts said ICI's difficulty in selling assets threatens to undermine its objective of slashing its pounds 4.4bn of debt, left over from the $8bn acquisition of Unilever's assets. ICI's interest cover - a measure of how easily its profit is able to finance interest payments on its debt - is a low 2.2 times.

"The results were at the low end of the range, with industrial [commodity] chemicals worse than expected," said Martin Evans, at Sutherlands.

Comments