Chemical Shares
The less buoyant tone of the market was set by ICI, whose disappointing report discomfited the bulls. Pre-tax profits were down by 10 per cent and earnings amounted to only 16 per cent to cover the 12+ per cent unchanged dividend. These earnings include three points of capital allowances, so that the dividend cover remains thin. When the company starts to feel the benefit of its heavy capital investment of 1965, which was no less than £180 million, shareholders can look forward to further expansion, but will 1967 be the year when profits grow fat? Some brokers who are doubtful are switching into LAPORTE INDUSTRIES, which in 1963 declared that it would double its income over the following five years. For the first two and a half years of this period expansion has been at the target rate and the directors are confident that earnings will con- tinue to rise in the remainder of the period. At 20s. Laporte Industries yield 5.6 per cent against the current yield of 5.9 per cent on ICI at 43s. 9d. I would advise a cautious attitude towards chemical shares for the time being.
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