ICI makes Dulux paint

Paints and chemicals group ICI is to reduce its global workforce by more than 700 by 2005 as part of cost-cutting programme, with 300 positions set to go in the UK.

The company made the announcement as it unveiled profits of �52m ($83m) for the January to March quarter, a 21% fall on the same period last year.

Shares in ICI closed down nearly 7% to 120.5p on Wednesday after the company ruled out any asset sales in the short term and gave a downbeat view of immediate prospects.

The paints division employs about 2,000 people in the UK, with its main bases in Slough, Hull and Stowmarket in Suffolk.

"The economic environment for the rest of 2003 is, at best, uncertain, and it is clear that ICI cannot rely on improved market conditions to aid profit growth," the firm said.

Last month ICI shares fell nearly 40% in one day after it warned that first-quarter profits would be sharply lower.

The company was hit by rising raw material costs at its National Starch unit and weak sales at its Quest Food unit, which makes food flavourings.

Union anger

The job losses - from ICI's global workforce of 36,600 - are part of a restructuring programme which is designed to make savings of �30m a year by 2005.

This is a prime example of how not to announce redundancies Derek Simpson, Amicus

Of the 700 jobs being lost, about 300 will be in the UK, 300 across the rest of Europe, 70 in North America and 30 from the rest of the world.

ICI said it would take an exceptional charge of about �53m for the restructuring.

Derek Simpson, joint general secretary of the union Amicus, said he was shocked at the way ICI had announced the job cuts and would be demanding immediate meetings with the company.

"ICI have chosen to make their announcement via the stock exchange and have held no consultation with workers or unions," he said.

"This is a prime example of how not to announce redundancies."

No sales - for now

Last month, Brendan O'Neill stood down as ICI's chief executive and was replaced with John McAdam, the head of the company's paints business.

Some investors had expected Mr McAdam to announce the sale of some of ICI's businesses.

But ICI's finance director Tim Scott said it was not the right time for such a move.

"We've looked at that option. But it doesn't make sense to divest at this stage any of our major businesses," he told the Reuters news agency.

"We would be selling (the businesses) on the basis of very poor performance. We think we can improve that."