ICI, the Dulux paints and speciality chemicals group, embarked on a fresh round of restructuring by announcing plans yesterday to axe 2,300 jobs at a cost of £340m.
The job cuts - equal to 8 per cent of ICI's 32,000-strong workforce - will mainly take place over the next three years and will produce annual savings of £140m by 2011. No details were given of where the job cuts will fall but the impact on ICI's UK workforce is expected to be limited as the company now employs only 4,000 staff in this country.
The latest round of cutbacks comes on top of the 2,500 jobs that ICI has shed in the past three years. That redundancy programme cost the group £220m but has also led to savings of £140m a year.
A spokesman said, however, that whereas the previous rationalisation programme was implemented as a matter of necessity, the latest round was being carried out from a position of strength in order to make ICI "best in class" against its competitors.
Although the restructuring plan will take six years to complete, the bulk of the cost will be incurred during the first three years. ICI said there would be a cash cost of £260m to implement the savings. In addition to this, it will put in £80m of capital expenditure.
The job cuts will take place across the board and affect manufacturing plants and support functions, such as finance, personnel and IT.
News of the fresh cutbacks came as ICI reported an 8 per cent rise in underlying pre-tax profits to £91m for the first three months of the year, driven by strong performances from its paints, National Starch and Quest flavourings and fragrances divisions. ICI shares rose 7 per cent to 395p, making it the best performing stock in the FTSE 100.
Paint revenues were up 7 per cent despite Easter falling outside the period and a large proportion of Dulux's revenues coming from sales of white paint, which is cheaper than the coloured variety.
But ICI's industrial chemicals division, which includes its PTA plant in Pakistan, saw trading profits fall significantly. ICI tried but failed to sell the business last year and would still dispose of the business if an acceptable price was offered.
ICI said the sale of its Uniqema business, which makes fatty acids used for making detergents, lubricants and personal healthcare products, was progressing well with strong expressions of interest from a number of potential buyers.
The sale is expected to fetch between £200m and £400m. Potential bidders are thought to include Cognis, a spin-off from the German detergents group Henkel, which is now owned by Goldman Sachs, and Permira. Several Asian companies are also believed to have submitted bids.Reuse content