ICI looking at selling stake in IFI

The British giant, ICI, is believed to be actively examining the sale of its 49 per cent stake in Irish Fertilizer Industries (IFI), which has reported a sharp fall in profits for last year due to a downturn in fertiliser prices.

ICI has sold all its other fertiliser interests internationally and is now believed to be seeking a purchaser for its IFI stake. The remaining shares in the company are held by the State, through NET. It is unlikely that the State would be interested in buying ICI's share of IFI.

The sharp fall in fertiliser prices has hit IFI, with pre-tax profits falling to £6.95 million for the year to last September, compared to £18.66 million in 1996. Turnover dropped by 3.2 per cent to £156.43 million, although the company says it has maintained its share of the

home and export markets. The outlook remains poor for this year, according to managing director, Mr Tom Jago, with fertiliser prices falling further. This would hit profitability again in 1998, he said, although the company was confident that prices had now hit bottom and would start to recover from next year in what was a notoriously cyclical industry.

Companies across Europe have been hit by the sharp fall in prices in 1996 and 1997, and the market has been affected by oversupply. According to Mr Jago, this should lead to the closure of some of the bigger European plants and a drop in supply which would feed through to higher prices.

IFI points out that, against this difficult backdrop, it has held on to its 40 per cent share of the Irish market, its share of about 4.5 per cent of the European market and managed to decrease its stocks by £4 million to £40 million, despite the chronic oversupply on the market. It employs 630 people in Cork, Arklow, Belfast and its Dublin headquarters and, according to Mr Jago, is committed to continuing its investment programme 'to ensure future prosperity'.

The fall in profitability last year was all the more marked, as 1996 profits would have topped £20 million, but for a £1.7 million restructuring provision. Illustrating this, operating profits fell to £9.22 million last year from £19.85 million for the previous year. A dividend of £1.536 million was declared for the two shareholders, compared to £7.5 million in 1996.

The IFI chairman, Mr Niall Welch, has made no secret of his wish to see the company privatised, although its reliance on one cyclical business area means it would not appear to be an attractive candidate for flotation at the moment. However, the ultimate decision on the ownership structure now rests with the two shareholders, NET and ICI, which are believed to have had contacts over the further ownership in recent months.

The Tanaiste, Ms Harney, is to meet the IFI board at its annual meeting in Belfast later this week and, according to a recent answer to a parliamentary question, 'will avail of the opportunity to ascertain ICI's future intentions towards their shareholding in IFI'.

ICI cannot make any comment on any investment or divesture, a spokesman said yesterday. But he added that ICI had already divested itself of its British fertiliser interests at the end of last year to a US concern, Terra.

The company spent £25 million on capital investment last year, most of which went on a new nitric acid facility at its Belfast plant.