Debt reduction has moved to the top of ICI’s agenda, according to incoming chief operating officer Brendan O’Neill. ICI’s debt stands at £4.2bn. This is down from £6bn in 1997, but it hit this year’s results with interest charges of £332m.
The company aims to cut debt to 30 40% of its £3.9bn market capitalisation after 2000. The 1999 target is to reduce debt to £3.5bn.
Most of ICI’s debt arises from its £5bn purchase of four speciality businesses from Unilever to start its transition from bulk to speciality chemicals.
But disposals, although meeting an initial target of raising £3bn, hit the rocks last year with the collapse of the £650m sale of Tioxide after a US anti-trust ruling.
O’Neill said the transition is still on course. Industrial chemicals bottomed out with a loss of £41m in 1998. But ICI’s speciality businesses recorded a £400m profit with margins of 12%.
O’Neill said: ‘Reflect for a moment where ICI’s profits would be today had we not begun the transition two years ago.’
Pre-tax profits across the group fell from £385m in 1997 to £321m last year, on sales down from £11.1bn in 1997 to £9.3bn last year.
Capital expenditure for 1998 fell from £750m to £516m and is expected to fall to around £375m annually. Financial director Alan Spall said this was in line with the strategic reshaping of the business.