The Investment Column: The real test lies ahead for ICI chief
Friday 25 July 1997
But while the speed of the as yet uncompleted transformation of ICI from a lumbering bulk business to a nimble speciality chemicals group has surprised the City, Mr Miller Smith has so far only shown he can, albeit deftly, swap one business for another. Now he has to prove he can handle the new beast which has been created.
As an ex-Unilever man, he has a head start, although his ability to steer ICI through the cultural transformation will be hard to gauge this year. Yesterday's half-year numbers were no real guide. What was clear is that ICI is still highly vulnerable to the strong pound and falling chemicals prices, even in the speciality end.
Underlying profits, excluding the bulk chemicals to be sold, fell from pounds 267m to pounds 149m in the half year to June. The pound wiped pounds 90m off profits in the latest period, two-thirds of which was a real economic hit, not just translation effects. A pounds 150m currency cost is forecast for the full year.
Shifting to higher value chemicals will undoubtedly reduce this exposure. Rather than exporting, ICI will manufacture chemicals in its customers' markets, allowing it to produce and sell in the same currency. ICI will also be much bigger in the US, reducing its exposure to sterling.
The interim dividend, to be paid as a FID while stocks last, was maintained. As a less cyclical, speciality group, ICI should trade on a lower yield and could justify not raising its full year payout, though no cut is likely. Analysts forecast profits of around pounds 370m for this year, putting the shares, down 17p to 908p, after profit-taking on a forward multiple of 30 times. That is fair.
Britain's top vet sparks controversy with call for ban on slashing animals' throats in 'ritual' slaughters for halal and kosher meat products
Exclusive: Impact of immigrants on British workers ‘negligible’
Katie Hopkins continues campaign to become Britain's most hated talking head with poorly timed Bob Crow tweet
Ukraine crisis: Russia pledges to 'retaliate against sanctions' as Ukrainian president says Crimea vote will not be recognised
The quiet diplomat: Catherine Ashton - recognised and admired in all the world’s troubled countries, yet ridiculed at home
Grace Dent: Who cares if she spells it Barraco Barner? Gemma Worrall is more employable than some bookish arts graduate
- 2 Family forced to flee home after discovering 'terrifying' nest of spiders in bananas
- 3 First Kiss: Filmmaker gets 20 strangers to make out on YouTube with awkward results
iJobs Money & Business
£1000 per month: Inspiring Interns: The company works with Tier 1 FTSE 100 Ban...
£35000 - £60000 per annum + Bonus + Benefits: Pro-Recruitment Group: You must ...
£60000 - £80000 per annum + BONUS + BENEFITS: Harrington Starr: A top, City ba...
VOLUNTARY ONLY - EXPENSES REIMBURSED : Reach Volunteering: Fantastic opportuni...