Tioxide sale will make ICI less cyclical
15 Jan 2000
Tioxide, the titanium dioxide-producing subsidiary of ICI, is to be floated within the next 18 months as part of the group's drive towards less cyclical businesses. The company weathered the recent pricing storms badly, with several divisions posting operating losses for 1996.
The decision came after the company was hit by the cyclical downturn in TiO2 pricing, said chief executive Charles Miller Smith. The industrial chemicals division, Tioxide's parent, saw its operating profit slashed by more than three-quarters, to £109million, while turnover slipped 5 per cent to £4.05billion. The high oil price and strong pound also contributed to this downturn.
Tioxide was originally formed as a joint venture between ICI and Cookson, and became a wholly-owned subsidiary of ICI in 1990. It has annual sales around £600million, and assets worth some £700million. Its main customer is ICI's paints and pigments division, accounting for about a third of its sales.
Over the past year, ICI's pre-tax profits tumbling 37 per cent, to £603million, on revenues up 2 per cent at £10.5billion. Paints posted a 60 per cent rise in operating profit, to £171million, mostly from acquisitions; while the increased margins and market share in the polyurethanes business boosted operating profits from materials by 6 per cent to £206million.
The company is also saving money from its `Value Opportunity' cost-cutting programme, with around £150million saved in 1996. The programme is now on course to save the company over £400million per year by the end of 1997, Miller Smith claimed.
* Expansion is already underway in ICI's acrylics division. The company has bought Shell's technology to convert C3 feedstocks into methyl methacrylate, developed at the Shell's Amsterdam R&D site, is now ready for commercialisation. ICI plans to use the technology at its Teesside plant.
