Newspaper article The Evening Standard (London, England)

ICI Falls to 19-Year Low as Brokers Fret over Figures; Market Report

Newspaper article The Evening Standard (London, England)

ICI Falls to 19-Year Low as Brokers Fret over Figures; Market Report

Article excerpt


HOW the mighty are fallen! Shares of ICI fell 4 1/4p to a 19-year low of 185 3/4p as brokers continued to fret over prospects for the group following the disclosure yesterday of flat profits and a whopping big hole in its pension fund.

Broker Credit Suisse First Boston has been particularly scathing about the Dulux paint and chemicals group's performance and has slashed its 12-month target price on the shares from 215p to 175p. Pre-tax profits were virtually unchanged at u363 million on the previous year and the group has admitted it has had to scale down its planned annual cost cuts from u60 million to u52 million.

It has been suggested that the pension fund deficit of u688 million was less than some analysts had predicted, but it is still a lot of money. Brokers remain unimpressed.

The growing problem of pension fund deficits is also causing concern among the credit rating agencies.

Standard & Poor's has placed a negative watch on GKN, down 2p at 179 1/2p, Rolls-Royce, 1/4p off at 92 1/4p, and glassmaker Pilkington, 1 3/4p cheaper at 61 3/4p. It sees these as some of the companies worst affected by the pension fund crisis.

Yesterday's interest rate cut failed to inspire City investors. The rest of the market made a soggy start reflecting another fall for the Dow overnight in New York. In thin trading the FTSE 100 index fell 18.0 to 3579.0.

US securities house Morgan Stanley has downgraded most of the UK's utility companies, claiming they are less attractive than many of their European peers. Centrica rose 1 3/4p to 157p despite the American house cutting its target price on the shares from 280p to 225p. It has also reduced the target price of National Grid Transco, 3p lower at 391p, from 540p to 490p. Others to be downgraded include Kelda, steady at 416p, International Power, 3/4p dearer at 87p, Scottish Power, 6p down at 342p, and Scottish & Southern Energy, 1 1/2p lighter at 608p. …

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