1,300 more axed as ICI battles

SPECIALITY chemicals giant Imperial Chemical Industries is to cut a further 1,300 jobs worldwide over the next two years with 275 of them to go in the UK.

The group, which announced 1,400 job cuts earlier this year, said the latest losses were part of a restructuring and efficiency drive that will cost £180m. But it should cut annual costs by £60m from 2004.

ICI, posting third-quarter profits above market forecasts, also said sales for October were 'slightly below prior year levels' as it struggled with the global economic slowdown.

More than half the job losses will be in the USA with the remainder in Europe. The firm's Plymouth factory, which makes chemicals for the electronics industry, is to close with the loss of around 45 jobs. The other British job losses will be spread across several locations. ICI employed 40,000 worldwide at the end of September.

Third-quarter pre-tax profits fell to £108m from £122m a year earlier. That beat analysts' forecasts of £90m-£105m, and the stock rallied 39p, or 12%, to 362p.

The figures were knocked by a 4% fall in sales in North America and flat European sales. Only Asia showed an increase, of 2%. However cost savings, including the initial 1,400 redundancies, meant gross margins were maintained.

The restructuring and efficiency drive - with emphasis on the supply chain - will include £120m in charges, with a further £60m from existing capital budgets. It is expected to save £20m next year, £45m in 2003 and £60m a year thereafter.

With £3.1bn of debt to be serviced, interest cover rose to 3.6 times in the quarter, compared with 3.1 a year ago. This has been achieved largely because worldwide interest rates have fallen. On Wednesday, the group said the sale of its 30% stake in US-owned Huntsman International, which it had hoped would bring in £300m, may be delayed beyond next year. In 1999, ICI sold 70% of its commodities division to Huntsman for £1.7bn.

The paints division was the most successful in the quarter. Although the terror attacks on the US cost the group an estimated £12m in sales, it still achieved sales growth of 1%. Trading profit rose to £57m from £56m in the previous period.

Chairman Charles Miller Smith said: 'The tragic events of 11 September have increased uncertainty about the outlook for quarter four, although current indications are that sales for October will be slightly below prior year levels. Whatever the environment, our results to date support the view we expressed in July that ICI will continue to perform well, relative to the industry, for the full year.'