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View from City Road: Watching hard for ICI's next move

Thursday 28 July 1994 18:02 EDT
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The demerger of Zeneca from Imperial Chemical Industries last summer was more to do with transforming the management at ICI than an exercise in flashy financial engineering.

Nonetheless, after a lacklustre year spent in the run-up to demerger, the combined value of a shareholding in Zeneca and ICI has comfortably outperformed the stock market since the official divorce in June 1993.

It is obviously much too early to pass judgement on the degree of transformation at ICI, but first-half figures from the company yesterday provide some hard evidence that the new company is heading in the right direction.

Giving divisional management greater responsibility for improving ICI's previously unsatisfactory return on capital is a key element in the intended cultural revolution at the company.

So far this effort has been focused on cost savings, essentially sacking people and getting rid of loss-makers. That's the easy bit, however. It's going to be fascinating to see if Ronnie Hampel, chief executive, can make the jump to the more creative phase of expanding and growing his business.

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