Although it is facing adverse economic conditions, Imperial Chemical Industries is hopeful about the future ahead of its interim results announcement next Thursday.
Yet the outlook seems bleak. Competitors Rhodia, BASF and Bayer have all warned that their profits will be lower than expected, and analysts at Goldman Sachs and Deutsche Bank downgraded the sector. As well as the US and European downturn, they cited the high cost of the companies’ raw materials.
Analysts believe ICI will not be spared this pain and they were particularly worried about the group’s National Starch business. It represents 31% of ICI’s sales and has slumped by 14%.
Presenting ICI’s results for the first quarter, chief financial officer Tim Scott, a CIMA-qualified accountant, revealed pre-tax profits of #85m, down 6%.
But he said ICI’s performance compared favourably to that of its competitors.
‘We do believe our first-quarter results demonstrate a solid performance given the trading conditions, although we are obviously not satisfied with the decline in profits,’he said.
He added that the company was taking steps to ensure it would bring margins back to solid levels. ‘We are not sitting on our hands waiting for the economic environment to improve, we are addressing a number of issues and I believe we are well positioned for the current business climate,’ he said.
Scott was appointed CFO in January. He succeeded Alan Spall, who retired at the annual general meeting in May.
At the agm, CIMA fellow Brendan O’Neill, the company’s chief executive, said ICI had set growth targets of 5% to 7% per year and that there were growth prospects in emerging markets.
The company website is at www.ici.com.
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