Company of the week: ICI

IMPERIAL Chemical Industries, Europe's number three chemical company, said fourth-quarter profits by 43 per cent - less than expected - to $48m (pounds 29m). While makers of commodity chemicals face falling demand as manufacturers adjust to slowing economic growth, ICI's specialty-chemicals unit performed better than anticipated.

Still, the company said it saw "continuing uncertainty" for bulk products this year. Analysts said its prime concern should be reducing its debt of pounds 4.2bn, which is hampering its ambition to expand into more profitable specialty chemicals.

"The world chemical industry is consolidating around them, and they have no opportunity to participate in it," said an analyst with Paribas Capital Markets. "They are saddled with too much debt," he explained.

The company announced no new asset sales that might enable it to cut debt. Most of its borrowings result from the $8bn purchase of Unilever's specialty-chemical divisions in 1997. Finance Director Alan Spall said the company's aimed to cut debt to pounds 3.5bn this year, although he added that borrowings could fall faster if ICI made a major asset sale.

ICI has sought to withdraw from commodity chemicals in favour of "lighter" products. It said it still had 18 months to meet its goal of selling pounds 5bn worth of assets within three years of the Unilever purchase.

The programme has encountered serious setbacks. Since October, three US companies - WR Grace, NL Industries, and DuPont - backed out of agreements to buy nearly $1.5bn worth of ICI businesses. All three cited restrictions that US anti-trust regulators would have imposed on them.

Mr Spall said ICI was not barred from making acquisitions, even though its debt was roughly equal to the company's market value. He said it was not planning any major acquisitions, although it would look at smaller ones.

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