Why one-time bellwether ICI has become a bit of an old plodder


Imperial Chemical Industries is not the power it was. At one time it was regarded as the bellwether of British industry and its profits were an important event in the City calendar.

Times change. Even before ICI bowed to Lord Hanson's own brand of persuasiveness and demerged its drugs side it had slipped from its pedestal.

The likes of the General Electric Co were seen as more representative of industry and ICI lost some of its corporate fascination.

Its shares have tended to reflect its changed status. And, as expected, they have been overshadowed by Zeneca, its drugs offspring.

As Zeneca has enjoyed the stock market's addiction to drugs - and experienced pulsating rounds of takeover speculation - its shares have romped ahead. ICI's have plodded along and rest wearily much closer to their 12-month low than high.

Zeneca was floated off on a one-for-one share basis. Ignoring the drug side's cash call at the time of the break-up, its shares are nearly twice the value of ICI. On demerger day three years ago Zeneca was 632p; ICI 608p. The price before the split was 1,244p.

There is not much chance of an upward re-rating on Thursday when ICI produces interim figures. They will be poor.

Two decades ago such a setback would have been taken badly. This time it should not create more than a few ripples, so long as ICI keeps the fall within market expectations.

NatWest Securities is looking for pounds 198m in the second quarter which will leave six-month profits at around pounds 400m, a 22 per cent fall.

The group has already warned of a decline. "With certain important product markets showing a greater than initially expected price and volume weakness, the downturn will inevitably be starker than management had first anticipated," says analyst Lucas Herrmann at NatWest.

Profits for the full year are estimated at pounds 830m (against pounds 951m). For next, a recovery to pounds 1.05bn has been pencilled in.

Thorn EMI is likely to suffer a similar fate when it demerges next month. Once again the idea is to allow the glamorous side of the business - music - to stand alone, free from the encumbrance of a rather staid rentals division.

There has been continuing speculation an overseas bidder will barge into the comfy divorce proceedings. But it now looks as though the split will not suffer outside interference and the rumoured predators seeking the showbiz operation are content to wait until the decree absolute.

The group is due to produce quarterly figures today although with the break-up so close they are likely to be something of a sideshow. The banking profit season starts on Friday. Lloyds has for years had the distinction of kicking off and even with TSB in tow it retains its frontal role. The season is likely to produce another bankers' profits feast with Lloyds TSB offering pounds 1.15bn against pounds 1.01bn.

Many banking forecasts have been upgraded ahead of the results season. Salomon Brothers looks for figures "on the high side of consensus expectations".

SmithKline Beecham, the drugs giant, has quarterly figures due tomorrow; around pounds 325m against pounds 298m is the popular guess. On Wednesday Lloyds Abbey Life, controlled by Lloyds TSB, should produce interims of pounds 215m (pounds 197.1m). Reuters, the information group, contributes to the profits round with year's results. Around pounds 330m against pounds 288m is on the cards.

BT, originally expected last week, is another big gun firing. It, too, has quarterly figures on Thursday and, rather like ICI, is likely to suffer the indignity of a profit fall. The market is looking for a three month out-turn of about pounds 850m against pounds 874m.

Last week, with few major results to occupy them, shares spent the first three days sinking and the last two making up some of the lost ground.

New York provoked turmoil, which encouraged crazy talk of another crash, reminding a few old-stagers of advice from a former Stock Exchange chairman, Lord Ritchie.

After a particularly crunching session, when the FT 30 index, the market measurement at the time, had fallen 30 points and there was emotional talk of looming stock market disaster he was asked what the small investors should do.

"Put your head down and let it all wash over you," he replied. Any private investor who followed such advice last week would have emerged with his portfolio not too badly bruised.

There was without doubt deep concern among some small investors, with unit trust withdrawals prompting some fund managers to seek to unload stock.

Footsie ended 17.8 points down and even the supporting 250 index, hit harder than the blue chip index, looked more confident. But the market remains fragile, Low summer share trading means it is at the mercy of the swings and roundabouts of the futures market as well as icy overseas blasts.

New York is no longer the influence it used to be. Even so, when the world's biggest market sneezes London (and the rest) shiver. Alan Greenspan's hint that US interest rates are unlikely to go up in the near term should be reinforced tomorrow when he addresses the Senate. So there could - just possibly - be more freedom for domestic rates. This week's home- produced statistics include retail sales for June and the preliminary GDP estimate.

They could influence the Chancellor's thinking when he has his monthly chin-wag with the Governor of the Bank of England next week.

There is no doubt the Chancellor still yearns for lower rates and another cut is a distinct possibility. Germany may be obliged to reduce its rates; so even the eventual but seeming inevitable US increase could be accommodated.

Cheaper money would help the market achieve some of the more optimistic forecasts. However there are signs of expectations being reduced. Societe Generale Strauss Turnbull has lowered its year-end Footsie estimate to 3,850 points against 3,900-4,100.

The Banksy image in Folkestone before it was vandalised
Life and Style

Sales of the tablet are set to fall again, say analysts

football West Brom vs Man Utd match report: Blind grabs point, but away form a problem for Van Gaal
Arts and Entertainment
Gotham is coming to UK shores this autumn
tvGotham, episode 2, review
Arts and Entertainment
Bloom Time: Mira Sorvino
tvMira Sorvino on leaving movie roles for 'The Intruders'
Brian Harvey turned up at Downing Street today demanding to speak to the Prime Minister

Met Police confirm there was a 'minor disturbance' and that no-one was arrested

Arts and Entertainment
George Lucas poses with a group of Star Wars-inspired Disney characters at Disney's Hollywood Studios in 2010

George Lucas criticises the major Hollywood film studios

Chris Grayling, Justice Secretary: 'There are pressures which we are facing but there is not a crisis'

Does Chris Grayling realise what a vague concept he is dealing with?

Life and Style
A street vendor in Mexico City sells Dorilocos, which are topped with carrot, jimaca, cucumber, peanuts, pork rinds, spices and hot sauce
food + drink

Trend which requires crisps, a fork and a strong stomach is sweeping Mexico's streets

ebooksAn unforgettable anthology of contemporary reportage
Life and Style
The charity Sands reports that 11 babies are stillborn everyday in the UK
lifeEleven babies are stillborn every day in the UK, yet no one speaks about this silent tragedy
Blackpool is expected to become one of the first places to introduce the Government’s controversial new Public Space Protection Orders (PSPOs)

Parties threaten resort's image as a family destination

Life and Style
Northern soul mecca the Wigan Casino
fashionGone are the punks, casuals, new romantics, ravers, skaters, crusties. Now all kids look the same
Life and Style

I Am Bread could actually be a challenging and nuanced title

Nigel Farage has backed DJ Mike Read's new Ukip song
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Customer Service Executive / Inbound Customer Service Agent

£18 - 23k + Benefits: Guru Careers: We are seeking a Customer Service Executiv...

ASP.NET Web Developer / .NET Developer

£60 - 65k + Benefits: Guru Careers: We are seeking a ASP.NET Web Developer / ....

Operational Risk Manager - Asset Management

£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...

Project Coordinator - 12 month contract

£27000 - £32000 Per Annum: Clearwater People Solutions Ltd: Our large charity ...

Day In a Page

Oscar Pistorius sentencing: The athlete's wealth and notoriety have provoked a long overdue debate on South African prisons

'They poured water on, then electrified me...'

If Oscar Pistorius is sent to jail, his experience will not be that of other inmates
James Wharton: The former Guard now fighting discrimination against gay soldiers

The former Guard now fighting discrimination against gay soldiers

Life after the Army has brought new battles for the LGBT activist James Wharton
Ebola in the US: Panic over the virus threatens to infect President Obama's midterms

Panic over Ebola threatens to infect the midterms

Just one person has died, yet November's elections may be affected by what Republicans call 'Obama's Katrina', says Rupert Cornwell
Premier League coaches join the RSC to swap the tricks of their trades

Darling, you were fabulous! But offside...

Premier League coaches are joining the RSC to learn acting skills, and in turn they will teach its actors to play football. Nick Clark finds out why
How to dress with authority: Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear

How to dress with authority

Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear
New book on Joy Division's Ian Curtis sheds new light on the life of the late singer

New book on Ian Curtis sheds fresh light on the life of the late singer

'Joy Division were making art... Ian was for real' says author Jon Savage
Sean Harris: A rare interview with British acting's secret weapon

Sean Harris: A rare interview with British acting's secret weapon

The Bafta-winner talks Hollywood, being branded a psycho, and how Barbra Streisand is his true inspiration
Tim Minchin, interview: The musician, comedian and world's favourite ginger is on scorching form

Tim Minchin interview

For a no-holds-barred comedian who is scathing about woolly thinking and oppressive religiosity, he is surprisingly gentle in person
Boris Johnson's boozing won't win the puritan vote

Boris's boozing won't win the puritan vote

Many of us Brits still disapprove of conspicuous consumption – it's the way we were raised, says DJ Taylor
Ash frontman Tim Wheeler reveals how he came to terms with his father's dementia

Tim Wheeler: Alzheimer's, memories and my dad

Wheeler's dad suffered from Alzheimer's for three years. When he died, there was only one way the Ash frontman knew how to respond: with a heartfelt solo album
Hugh Bonneville & Peter James: 'Peter loves his classic cars; I've always pootled along fine with a Mini Metro. I think I lack his panache'

How We Met: Hugh Bonneville & Peter James

'Peter loves his classic cars; I've always pootled along fine with a Mini Metro. I think I lack his panache'
Bill Granger recipes: Our chef's heavenly crab dishes don't need hours of preparation

Bill Granger's heavenly crab recipes

Scared off by the strain of shelling a crab? Let a fishmonger do the hard work so you can focus on getting the flavours right
Radamel Falcao: How faith and love drive the Colombian to glory

Radamel Falcao: How faith and love drive the Colombian to glory

After a remarkable conversion from reckless defender to prolific striker, Monaco's ace says he wants to make his loan deal at Old Trafford permanent
Terry Venables: Premier League managers must not be allowed to dictate who plays and who does not play for England

Terry Venables column

Premier League managers must not be allowed to dictate who plays and who does not play for England
The Inside Word: Brendan Rodgers looks to the future while Roy Hodgson is ghost of seasons past

Michael Calvin's Inside Word

Brendan Rodgers looks to the future while Roy Hodgson is ghost of seasons past