ICI swings its weight behind EMU

ICIhas admitted that it will be 'prejudiced' against suppliers who are not willing or able to quote prices in the single European currency by the 1999 deadline. Announcing the group's annual results which showed a dramatic drop in profits chief executive Charles Miller Smith added that this prejudice would also extend to firms which have not ironed out all the 'Millennium bugs' in their computer systems.

The single currency will work to ICI's advantage, Miller Smith said it will help drive down raw materials prices, as well as reducing the effect of currency movements, which in 1997 cost the company some £190 million in profits. When the company compiles its list of suppliers post-EMU, priority will therefore be given to those who are ready for the new currency. 'Some non-EMU companies may be included for other reasons,' he added, 'but it'll be a case of us opting them in.'

Miller Smith described 1997 as 'an extraordinary year', noting that the industry had changed more over 12 months than it had in the previous 40 years. However. the year also saw ICI's pre-tax profit plummet by 36 per cent, to £603 million, while sales climbed 5 per cent to £11.1 billion.

The company's paints and speciality chemicals divisions all turned in strong performances with improvements in profits, but the results were held back by the performance of the bulk chemicals portfolio, which took the brunt of the currency hit. Low prices wiped another £250 million from profits. The industrial chemicals division much depleted since the heyday of bulk chemicals slipped £20 million into the red from the previous year's £60 million profit, mainly due to reduced export demand, higher input costs, and expenses incurred in maintaining the cracker and aromatics plants.

Capital expenditure declined dramatically, as the company moved towards less capital intensive businesses. 'We would expect the 1998 expenditure to be well down on the £623 million we spent in 1997,' commented finance director Alan Spall.

Spall stressed that ICI intends to sell off the whole industrial chemicals business as it focuses on its new speciality chemicals core. 'We want to find the right home for them and I want the money,' he quipped. The sale also means that the company will sell off its 32 per cent stake in Middlesborough FC. There's no room for sentimentality in the new ICI.