An achievement to be proud of
SirJack Callard on ICI's1974 results
Addressing stockholders at the 48th Annual General Meeting of Imperial Chemical Industries Limited, held in London on April 2nd, the Chairman, Sir Jack Callard, said : '1974 was another record year, with total sales up by 36 per cent to almost £3,000 million and profit before taxation and grants up by 46 per cent to 2455 million. I believe that this achievement, in a year when there was no shortage of troubles and difficulties for industry generally, is something we can all be proud of.'
Profits and Inflation 'Pre-tax profit of £455 million is a very large sum, but it has to be seen against the needs of this very large business and the very high level of taxation and the very high capital employed.' 'We must also allow for the serious effect of inflation. A set of supplementary statements in the Report based on the purchasing power of the pound at 31st December 1974 shows, among other things, that pre-tax profit becomes £332 million instead of £455 million when the distorting effect of inflation is eliminated.' 'The total Group taxation, less grants, amounted to £187 million and the amount due to the United Kingdom Government was alone enough to provide 30 per cent of the capital cost of the total school building programme, or about one-third of the capital costs of the hospital building programme over the next twelve months.'
'The role of profits in creating benefits for all is still widely misunderstood, and only if we earn
after taxation a reasonable level of profit for reinvestment can we continue to make headway in this highly competitive and inflationary world.'
ICI Increasingly International 'In 1974, just over 40 per cent of our sales were in the United Kingdom, while just on 20 per cent were in exports from the United Kingdom and the remaining 40 per cent arose from manufacture overseas. The advantages we get from our wide spread of business were never more evident than in 1974.'
'With a 58 per cent rise in exports, we became the country's largest exporter and we made a positive contribution of £280 million towards the balance of payments.'
'It is also important to note that ICI's exports to the "Eight" exceeded its imports by 195 million. Our experience supports the view, which we have constantly expressed, that membership of the European Economic Community is advantageous to the Company, to all employed in it, to those who invest in it, to so many who buy from it; — in effect to all of us.'
Capital Expenditure 'Our aim is to maintain a steady level of investment despite ups and downs in the economic cycle. This is why we plan to sanction more than £400 million worth of capital projects during 1975. Well over half of this new investment will be in the United Kingdom, and more than two-thirds of that sum is intended for Development Areas.'
The Industry Bill 'The Industry Bill contains some provisions which could prove damaging to British industry. The provisions that cause the greatest concern are parts of the disclosure of information clauses. Over the years, ICI has developed a good system of regular discussions with Government; and we have developed with our employees good consultation procedures. We are all in favour of improving such arrangements, and we are continually doing so. But some of the information that may have to be disclosed under the proposed legislation is commercially very valuable and, therefore, highly confidential. Overseas competitors would give their back teeth to get it, as we would to get theirs. It is very much in the interests of us all that commercially valuable information should not be put at risk. The confidentiality provisions of the Bill need substantial reinforcement.'
Prospects for 1975 'During the first three months of this year, sales volume in the United Kingdom has varied considerably between groups of products. Some of our customers are having to accept short-time working and some redundancies. For us this situation is reflected most noticeably in reduced sales of fibres and plastics, which in turn affect the output of intermediates derived from our petrochemical activities on which they are based, and on dyestuffs which are consumed by the textile industry. Reductions in stocks held by consumer industries explain this in part, but how far this is the explanation we do not yet know. By contrast, our agricultural, explosives and pharmaceutical businesses continue to trade at satisfactory levels. Sales overseas, both of exports from this country and of locallymanufactured products, are suffering from a reduction in demand and the pressure on prices which weakening demand induces.
The effect on Group profits for 1975 is difficult to predict because of the many external factors which may influence demand, but although we are cushioned by our wide spread of products and the geographical spread of our sales and manufacture, we cannot escape the effect of a downturn in the volume of world trade. In addition, there is little evidence that cost inflation in the United Kingdom has been brought under control and so long as inflation in this country remains higher than in other countries, such as Germany and the United States of America, our competitive position is bound to suffer. We hope that trading prospects will improve as the year proceeds, but it is unlikely that profit in 1975 will be maintained at this same level as in 1974:
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