Interim sales breached pounds 5bn for the first time as higher chemical prices and rising volumes produced the best trading conditions since the recession. The shares, which have risen sharply since March, added another 5p to close at 807p.
Ronnie Hampel, the newly installed chairman, said: "These are pleasing figures. It is gratifying to see the benefits coming through from the painful restructuring and reshaping of the portfolio over recent years."
Since 1990 ICI has been pushing through a cost-saving programme which it estimates has saved pounds 500m of overheads. Yesterday further improvements of between pounds 300m and pounds 400m were promised following an appraisal of operating practices.
The company said it had underperformed for some time against its cost of capital and had set in place a detailed project list with identifiable targets to improve its relative performance. Over the past 20 years, ICI shares have underperformed the rest of the stock market by 50 per cent.
Analysts described the profit improvement target, due to be achieved by 1998, as ambitious and some were sceptical about ICI's ability to achieve the improvement in such a short time. Others, however, upgraded their forecasts to about pounds 950m for the full year. During the first six months pre-tax profits jumped from pounds 240m to pounds 533m. After a rise in earnings per share from 17.4p to 45.4p an interim dividend of 11.5p was paid, up 1p from last year's payout.
The star performers were industrial chemicals and materials, the two largest divisions.
Industrial chemicals benefited from firm selling prices, higher productivity and favourable currency movements, with profits soaring from pounds 109m to pounds 298m. The company warned, however, that prices in the third quarter are expected to soften despite remaining above those achieved in 1994.
Strong selling prices also gave a fillip to the materials division, which includes ICI's acrylics, polyester and poyurethane businesses. Volumes increased by 13 per cent and profits jumped from pounds 47m to pounds 86m.
Regional businesses also had a good half, with profits more than doubled to pounds 73m (pounds 35m), but the other divisions, explosives and paints, suffered from industrial disputes and weak consumer demand.
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