ICI earnings hit by computer fault

A COMPUTER serving four ICI factories in Holland failed to live up to expectations, sending production of its specialist flavours division plummeting. Customers were unable to receive products that are essential ingredients for their sweet and dairy beverages.

The Naarden complex in Holland, part of ICI's Quest division, worked seven days a week to overcome the production problems. Some of the manufacturing was relocated to other sites but it still lost earnings of £4m in the three months ending June.

There will be a further trading profit impact of £10m in the second half, the chemical giant revealed today.

These problems helped keep pre-tax profits before exceptional items and goodwill at an unchanged £125m in the second quarter compared with the same quarter last year. ICI shares promptly fell 25 1/2p to 275p.

The group said, despite its problems with the Quest division, 'the improved trading conditions seen in the second quarter, and ICI's robust overall performance in challenging circumstances, have sustained our belief that prospects for the year are satisfactory'.

Interest cover has improved to 5.2 times for the quarter from 4.0 last time as the interim dividend is cut to 3p against 5.19p last time.

Some $160m (£106m) of the proceeds of $430m from the sale of its investments in Huntsman International were received during the quarter. The remainder is expected before the end of May 2003.

The disposal Synetix, which also has a 'for sale' sign over it, is continuing 'satisfactorily'.