View from City Road: ICI getting the chemistry right
Friday 26 February 1993
The hope for shareholders is that this spirit will continue in the two new companies. Ronnie Hampel, chief executive-elect of the bulk chemicals business, sounds positively enthusiastic when he talks about the scope for a global restructuring of the chemicals industry, which ICI is already leading with its asset swaps with Du Pont and BASF. He is also more realistic than his predecessors about its prospects of bucking the cycle. The pounds 565m of pre-exceptional profits earned in 1992 look poor relative to pounds 259m in 1982, the last trough.
Mr Hampel admits that the group's belief that it could thrive by building strong, regional bulk chemical businesses was wrong. And, while the pursuit of higher added- value has produced some successes - notably paints and pharmaceuticals - he is right that the jam was spread too thin. Mr Hampel's ICI will be far more conscious of costs and global market positions.
David Barnes, who will head Zeneca, will also be thinking globally. His approach is likely to be to look for alliances and joint ventures to give access to new products, rather than acquisitions. But his claim that the current drug pipeline is more exciting than it has been in years has yet to be tested by the market. Growth of more than 30 per cent in three new drugs sounds impressive, but, with average annual sales of less than pounds 170m each, they are hardly blockbusters yet.
That, coupled with ICI's conviction that the recession is close to its trough, means new ICI could have better prospects in the medium-term than Zeneca. In the short-term, it will be hampered by an uncovered dividend this year and probably next - which Zeneca's rights issue will in effect fund - which could inhibit its ability to grow.
With a pounds 1.3bn rights overhanging the market the share price is bound to come under pressure, at least until the terms of the issue are clear. ICI has left itself vulnerable to market movements by delaying the cash call until June.
- 1 Keira Knightley topless: Usually conservative actress does own take on #Freethenipple campaign for Interview Magazine
- 2 Oil tanker with $100 million cargo goes missing off Texas coast
- 3 George Galloway left with severe bruising after attack in Notting Hill by man 'shouting about the Holocaust'
- 4 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
- 5 Lady al-Qa’ida: On the trail of Dr Aafia Siddiqui, the world’s most wanted prisoner
YouTube video posted by Isis militants shows 'execution of 250 Syrian soldiers'
Keira Knightley topless: Usually conservative actress does own take on #Freethenipple campaign for Interview Magazine
Oil tanker with $100 million cargo goes missing off Texas coast
George Galloway left with severe bruising after attack in Notting Hill by man 'shouting about the Holocaust'
A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Scottish independence TV debate: Pumped-up Alex Salmond bounces back in bruising second round against Alistair Darling
Do you realise just how foolish the UK looks?
With Douglas Carswell joining Ukip, my party has taken another giant step forward
- < Previous
- Next >
iJobs Money & Business
£35000 per annum: Harrington Starr: Network Engineer (CCNP, CCNA, Linux, OSPF,...
£50000 per annum: Harrington Starr: DevOps Engineer (Systems Administration, L...
£60000 - £70000 per annum: Harrington Starr: A prestigious leading professiona...
£50000 per annum: Harrington Starr: Financial Technical Consultant (C++, C#, F...