Dulux paint maker ICI has undergone a cost-cutting drive

The UK-based maker of Dulux paint said pre-tax profit was �118m ($215m) in the three months to the end of June, 20% up on the same period 12 months ago.

But Britain's biggest chemicals firm said it would have to raise prices during the second half of 2004 to counter rising costs.

In morning trade in London, ICI's share price was up by more than 7%.

Food flavourings

ICI said prices would go up as raw material costs increased on the back of rising oil prices.

"If these (rises) are achieved, we expect full-year 2004 results to reflect satisfactory progress towards the strategic plan targets we announced in the autumn of 2003," said chief executive John McAdam.

There have been a series of disappointments over the past two years for the firm, after tough economic conditions and problems at key divisions affected its performance.

ICI, which employs more than 35,000 people worldwide, cut around 1,400 jobs last year as part of a drive for cost savings worth �70m.

As well as petro-chemicals, ICI's other main businesses after the restructuring in 2003, are paints, Quest (food flavourings and fragrances) and Uniqema (lubricants, personal care and performance technology).