Quest knocks ICI results

Imperial Chemical Industries (ICI) yesterday warned that technical problems at one of its food flavour plants in Holland would wipe £10m (€15.83m) off second-half profits, reports The Guardian.

According to the report in the UK newspaper the disclosure relating to subsidiary Quest International​ sent ICI​ shares down 9 per cent at one stage in a nervous market although the company insisted that the computer-related difficulties had been ironed out.

The report continues that the Naarden complex, part of ICI's Quest division, was forced to switch production of flavourings for ice cream and alcoholic drinks to other sites. But customers were left waiting and £4m of earnings were lost in the three months to the end of June.

This dented ICI's interim figures leaving pre-tax profits before exceptional items and goodwill at £125m, unchanged on 12 months earlier.Chief executive Brendan O'Neill said lessons had been learned from the experience and he hoped the problems would "not conceal a lot of good results"​ around the group.

He pointed out that there had been a significant return to growth in North America after several slower quarters and group prospects for the year remained "satisfactory"​.

Quest, which accounts for 10 per cent of ICI's business, saw its profits drop by 38 per cent. Some of this was attributed to Naarden but there was also a slowing of sales compared with last year.

The company said the position looked worse than it was because there had been an exceptional second quarter in 2001 when orders soared by 9 per cent.

Yesterday it cut its dividend to 3p from 5.19p and Merrill Lynch downgraded ICI shares from "buy" to "neutral" on the back of the Quest problems, which were described by the investment house as a "serious dent to 2002 forecasts".