HIGHER oil prices, the strength of the pound and lower chemical prices would continue to hurt ICI during the first half of 1997, the group has predicted.

But prospects for the chemical giant, which is one of East Lancashire's biggest employers, were rosier for the latter six months, its chairman Sir Ronald Hampel said as the group reported a major drop in annual earnings to the end of December.

Pre-tax profits slumped to £498 million from £927 million previously.

Despite the fall in earnings, ICI is increasing the total dividend payout to shareholders by 2p to 32p on earnings per share of 37.9p against 73.9p.

Sir Ronald commented: "1996 was a difficult year for the global chemical industry, with significant downward pressure on prices and margins.

"The economic outlook for 1997 is better. It is believed the major destocking that took place during 1996 has come to an end but the effects of higher oil prices, currency and the lower industrial chemical prices will continue to be felt in the first half year.

"We expect the second half of 1997 to show some improvement."

Converted for the new archive on 14 July 2000. Some images and formatting may have been lost in the conversion.