UK group Imperial Chemical Industries (ICI) on Friday appointed National Starch executive Charles Knott as the new chairman and CEO of Quest International, its fragrance, flavours, and food ingredients business. The announcement comes three days after ICI warned of a drop in first-quarter trading profits for both Quest and National Starch.
Knott joins Quest after running the National Starch businesses in Asia for six years under the title of COO and president. He replaces 25 year ICI veteran Paul Drechsler who left the company with immediate effect last week when full details regarding the impact of Quest's loss of contracts last year from its plant at Naarden in the Netherlands were revealed.
ICI warned last week that significant raw material cost increases in National Starch, together with a weakness in Quest Food sales in Europe, would have an impact on the group as a whole. As a result the company predicted that Q1 profit before taxation, before exceptionals and goodwill amortisation, would reach £50m, falling somewhat short of the £66m figure achieved for the same period last year.
Despite improved pricing in the Q1 that reflect the increase in petrochemical-based raw material prices , ICI reported that the benefits will not be felt immediately and that Q1 trading profit for National Starch is expected to be around £39m, compared to £55m in 2002.
Equally cheerless news came from the Quest camp where ICI reported that sales in Q1 are expected to be some 10 per cent below 2002. As stated at the time of the Q2 2002 results, Quest experienced production problems at its Naarden, Netherlands facility, as a result of systems changes. In response, a series of actions were initiated to tackle these production problems and restore customer service levels. ICI forecasts a one-off cost impact of less than £5m in the current year relating to these problems.
However, Q1 sales for the European food business are now expected to be around 20 per cent lower than the comparable period last year, mainly as a result of business lost following the customer service problems in 2002. This is the main additional contributor to a forecast reduction in Quest's Q1 trading profit from £29m in 2002 to around £9m this year.
ICI reported a series of actions to combat the current difficulties that include innovation programmes to accelerate sales growth with Quest's top 200 customers in Europe, establishing a new leadership team in the Foods business, and cost reduction plans in the areas of marketing, IT and discretionary expenses.