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Thursday, 2 November, 2000, 15:59 GMT
Beleaguered ICI halves dividend
ICI plant in Runcorn
ICI is turning to plants which produce speciality chemicals
Beleaguered chemicals firm ICI is to cut its dividend for only the third time in its 74-year history in a drive to boost profitability.

ICI, a former bellwether stock which has been forced to defend its place among Britain's top 100 listed firms, said dividend payouts to shareholders in 2001 will come in at about half the level of this year's awards.

The firm has not slashed dividends for 20 years, when the cut was seen as a defining moment of the recession which beset Margaret Thatcher's first term as UK prime minister.

But continued dividend increases, coupled with an underperforming share price, have taken the yield on ICI stock to 7.6%, well above the UK stockmarket average.

ICI's share price is about half that of three years ago.

'Accelerate growth'

Charles Miller Smith, company chairman, said that retaining more cash within the company would "accelerate the pursuit of profitable growth".

"The growth resulting from investment in our business will drive future dividend payout," he said.

Pre-tax profit rose more than a quarter to 346m over the first nine months of the year, with growth of 14% over the summer despite weakness in its starch, adhesives and engineering materials arm.

The division was hit by higher raw materials and oil costs.

Sell-offs continue

The disposals programme the company has been pursuing for four years in an effort to stabilise earnings has been furthered by the sale of the firm's 30% stake in Huntsman ICI for an expected 330m.

But "it remains unclear" whether talks over the sale of businesses to Belgian-based company Ineos will be successful, Mr Miller Smith said.

The businesses up for sale are thought to include the industrial chemicals arm Chlor Chemicals which Thursday's statement showed has operated a loss throughout 2000.

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See also:

30 Oct 00 | Business
ICI defends place among leaders
03 Feb 00 | Business
ICI finds the right formula
04 Oct 99 | The Company File
ICI sells acrylics arm
15 Apr 99 | The Company File
Mormon family buys ICI chemicals
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