For the future: new investment,greater security of employment, bigger exports
Addressing stockholders at the 47th Annual General Meeting of Imperial Chemical Industries Limited, held in London on May 20th, the Chairman, Mr Jack Canard, said: "You will have received the Annual Report for 1973 and I do not need to add much in the way of general comment on a very successful year the best in ICI's history. Group profits speak for themselves: at £311 million before tax they were more than double those in 1972, and by a long way the highest we have ever achieved."
Invaluable Strengths "For virtually the whole year the tide was going our way, with demand for our products running at a very high level in the United Kingdom, and throughout the world as a whole. We were able to turn this situation to good account because the policies and investments of previous years had given us invaluable strengths.
"We had the production capacity we needed, with nearly all plants working smoothly near their designed rate of output or above it.
"We had them arkets: our spread of manufacturing interests overseas, and our world-wide export outlets, meant that, while still serving customers in this country, we could benefit from the higher prices and opportunities elsewhere. More than half our profits and fifty-seven per cent of our sales were made overseas, and our exports rose by thirty-eight per cent. To Common Market countries they increased by sixty three per cent, and, whereas we do not claim this as a result of joining the EEC, the figure should be of interest to anyone who doubts the value to industry of Britain's membership.
"We had the products the outcome of a vigorous research and Capital programme. And we had the human resources people of many skills and nationalities, progressively accounting for higher output per head and narrowing the productivity gap between ICI and the best of its competitors.
"These strengths are worth emphasising now because they will continue to be important to the Group's prosperity. When
I talk of the Group's prosperity, I am not thinking just of the dividends we pay or the • salaries we earn. I am thinking also of the jobs we provide, our contribution to the United Kingdom's national revenue, and our contribution to the balance of payments a net £220 million last year. I am thinking, too, of the massive research effort we must mount in order to discover products such as our heart drugs, which have brought to some millions of people throughout the world the chance of a prolonged and more active life. I am pleased that, in these ways, the Company has contributed to the increase in wealth and health of this country and of the many countries in which we operate. The performance of our companies in Europe, Canada, the United States, Australasia and elsewhere has paralleled our activities here."
Progress and Prospects in 1974 "I am glad to tell you that our progress has been maintained. Our first quarter results have just been announded. Total sales were £661 million, that is thirty-six per cent higher than in the first quarter last year; sales in the United Kingdom were £273 million, an increase of twenty-four per cent, and those overseas were £388 million, a forty-five per cent increase. Profits before tax were £122 million, and this compares with £63 million for the corresponding quarter of last year and £92 million for the fourth quarter. Exports from the United Kingdom increased most of all and totalled £154 million, far and away the highest figure in the history of the Company.
"The important thing about theseres ults is that they show how we have been able to benefit from our world-wide business and so to ride adverse conditions at home. Our market here, although it remained surprisingly good, was restricted by the energy crisis and three-day week, but we have many other markets; and because we had our own electrical generating capacity for a large part of our needs, we could maintain a high volume of output at home to supply these markets.
"As for the rest of 1974, the picture is far from clear. It is impossible to predict with any certainty the precise level of demand for our products, both at home and abroad, and our prosperity is dependent on the maintenance of high output. We are concerned particularly that world trade stays at a high level and that the volume of trade is not adversely affected by the financial problems resulting from the higher prices of oil and other raw materials. One certainty is that our bill for raw materials will be higher than last year's by about £180 million in the United Kingdom alone. We shall hope to recover these extra costs in higher selling prices at home and overseas, but there is no guarantee of this. I spoke last year about the disparity between the prices we could charge in the United Kingdom, restricted by the Government's counterinflation legislation, and the prices we could get overseas. Nothing has happened to alter this situation in fact, for many products the disparity has grown as free market prices have climbed. Our current investment plans have been made on the assumption that prices here cannot be held below world prices for much longer, but, if the distortion is allowed to continue, it is bound to affect our plans."
Contribution to Economy "These are some of the factors and possibilities that must be taken into account when considering our performance during the remainder of 1974. The year has started well, and we believe that overall it will be a good one. However, views differ over the level of trade generally during the second half of this year. We are optimistic about the future and we have already sanctioned a number of major projects this year, despite the uncertainty which the Government has created for private industry.
"Over the years, ICI has made an evergrowing contribution to the national economy and, if left to get on with the job, I believe it will continue to do so, providing new investment, and hence greater security of employment, and even bigger export earnings."
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