ICI chief hints at price increases as profits rise

SHARES IN ICI surged 12 per cent yesterday after the speciality chemicals-to-Dulux paints group eased market jitters with a forecast- beating set of fourth-quarter figures.

Pre-tax profits for the final three months rose 10 per cent to pounds 95m, helping the group to raise full-year profits by 16 per cent to pounds 397m, even though total sales fell by 4 per cent.

John McAdam, the chief executive, said that strong sales growth, price increases and the benefits flowing through from cost-cutting measures had more than offset increased raw material costs. He added that further price rises might be necessary if raw material costs continued to rise. But provided customer demand remained strong, then ICI expected to make further progress towards hitting the targets it set out in 2003 after its former chief executive was ousted and 2,000 staff made redundant after a profits warning.

The fall in sales was largely due to the disposal during the year of the Quest food ingredients business, one of the group's former problem areas. On a like-for-like basis, sales were up 7 per cent. Net debt at the end of the year fell to pounds 920m compared with pounds 1.32bn 12 months earlier.