SHARES in chemicals combine ICI firmed 17p to 793p on market hopes that a near-50 per cent collapse in third-quarter profits may mark the nadir in the group's misfortunes during the current downturn in the chemicals industry cycle.
Third-quarter profits were almost halved from £248 million sterling to £131 million on barely changed turnover of £2.67 billion. Overall, first nine months profits were 34 per cent lower at £498 million on turnover up £250 million at £7.96 billion.
The sharp fall in third-quarter profits was mainly due to a profitability collapse in industrial chemicals reflecting sharply lower [selling prices, particularly in polyester, titanium dioxide and chlorine.
Rising oil prices also hit margins.
But chairman, Sir Ronnie Hampel there was growing evidence that the widespread de-stocking since mid-1995 "has largely come to an end". Sales volumes increased in nearly all businesses in the third quarter.
If the group's industrial chemicals operations are facing a more benign climate in 1997, its paints business is already chalking up record profits due to acquisitions in the Americas and a strong advance in the British and Asian decorative markets. Third-quarter paint profits soared 78 per cent to £57 million contributing strongly to a 61 per cent increase in first nine months profits to £127 million.
The group's retrenchment programme, designed to lift profitability, involved 950 job losses worldwide in the third quarter lifting the first nine months total to 2,500. Another 500/700 jobs are expected to go in the final quarter.
Sir Ronnie, commenting on the outlook, warned that the pace of economic activity worldwide remained "uneven" and no significant change was expected before the end of the year.
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