ICI cuts 700 Dulux jobs in first phase of radical shake-up

For free real time breaking news alerts sent straight to your inbox sign up to our breaking news emails

Sign up to our free breaking news emails

Please enter a valid email address

Please enter a valid email address

SIGN UP

I would like to be emailed about offers, events and updates from The Independent. Read our privacy policy

ICI is to shed 700 jobs in the first phase of a radical overhaul of the ailing speciality chemicals group which is likely to see further significant cutbacks later this year.

The bulk of the job losses announced yesterday will be in the company's Dulux paints division rather than its two big speciality chemicals divisions. Falling profits and rising cost pressures at the two divisions led to the ousting of chief executive Brendan O'Neill last month.

John McAdam, who replaced Mr O'Neill as chief executive, described the 700 job cuts as a "short-term initiative" while he works on a "radical and rigorous" cost review of the entire group. The results of the review will be made public in July along with ICI's interim results.

ICI shares fell 5 per cent on disappointment at the lack of news on disposals and a warning that the outlook remained uncertain. But Mr McAdam pointed out that he had only been in the job for three weeks and that divestments of individual businesses did not make sense because of the low prices they would fetch in current circumstances.

However, he did not rule out disposing of parts of ICI in future. "Disposals are not on the agenda at the moment but you never say never. Going forward, there may be businesses that we decide are less speciality than others that we no longer want to concentrate on."

He was philosophical about the share price reaction to his first announcement, saying that ICI would only win back the confidence of investors "when we start running the business better and not surprising the market with bad news".

The 700 job cuts will cost ICI £53m in one-off charges but generate £30m in savings. A total of 460 will be in paints and the remainder will be in ICI's three speciality chemicals businesses – Quest, National Starch and Uniqema. There will be 300 job losses in the UK, which now only accounts for 15 per cent of the group's 36,600 workforce, and 300 jobs in Continental Europe.

First-quarter profits fell 21 per cent to £52m, in line with last month's guidance, but a £73m provision to cover the fall in value of shares in ICI's employees share ownership trust left the group nursing a bottom-line loss of £32m.