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ICI pleases investors
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July 22, 1999: 5:51 a.m. ET
Good earnings, job cuts boost chemicals stock 8 percent
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LONDON (CNNfn) - Britain's Imperial Chemical Industries stock soared Thursday, after the company unveiled better-than-expected second-quarter earnings and plans to cut 600 jobs.
ICI shares jumped 8 percent to 733 pence in London trading as investors applauded a 5 percent increase in second-quarter profit before interest, tax and one-time items, to 197 million pounds.
Revenue in the quarter was virtually flat at 3.387 billion pounds, versus 2.416 billion in the same quarter last year. Earnings per share for the period jumped 63 percent to 14.7 pence, although the gain was heavily distorted by the effect of one-time gains.
ICI, Britain's bellwether chemicals stock, boasted of an improvement in operating conditions during the latest three month period, after what it admitted was "a slow start to the year".
The 600 jobs that will disappear are the result of an investigation the company began in February, and will come mainly from headquarters operations in Britain and the United States. The company will take a 53 million pound charge to cover the severance costs, but the restructuring is expected to add 25 million pounds annually to profits beginning in 2001.
The stock market was also applauding the dent made in ICI's huge debt burden, incurred when it bought the specialty chemicals activities of Unilever for almost 5 billion pounds in 1997.
At the end of June, debt was down to 3.2 billion from 4.2 billion pounds at the end of last year. The company expects to wipe another 400 million pounds from that figure when the sale of its industrial paints business to PPG goes through.
Since the Unilever deal, ICI has been trying to re-invent itself as a higher-margin specialty chemicals company, and has been divesting base chemicals activities. The sale of its polyurethane and tioxide business to Huntsman of the United States closed on June 30.
Still on the auction block is its acrylics business, although the company hopes to complete a sale by the end of this year.
The process has not been smooth however, and the stock has retreated from a high of almost 1,250 pence in early 1998, sharply underperforming the U.K. market. 
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ICI
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