The sale of Irish Fertilizer Industries (IFI) will be concluded in a few months despite the announcement yesterday of heavy losses for its latest financial year, according to its managing director, Mr Tom Jago.
The company recorded pre-tax losses of £10.7 million (13.6 million euros) for the year to September 30th, 1998 compared to profits of £7.1 million in 1997. Turnover for 1998 was marginally up from £156.4 million to £157.8 million.
The company said the poor results were caused by the "dramatic and unexpected fall in fertiliser prices across Europe".
Mr Jago said that, in the last two years, fertiliser prices had fallen by 20 per cent and were now at the same level as the early 1980s. He said that unless significant capacity was removed from the fertiliser industry, the low prices would continue.
However, he said the planned sale of the company would go ahead and finding a buyer should not be difficult. The two shareholders in IFI - ICI, which holds 49 per cent and the State through NET, which holds the balance - have agreed to sell and IBI Corporate Finance is currently forming a list of potential buyers to be presented to them.
Mr Jago said that, while companies not involved in the industry might decide to retract their interest in IFI because of the current state of the market, those in the industry "realise it has its ups and downs" and would still make bids. "I don't think a company will base its decision on the market now. A company is likely to look at the market 10 or 20 years down the line," he said.
He said IFI's search for buyers was continuing and he expected the process would conclude "in the next month or two".
Among the names being mentioned to buy IFI are BASF, Finnish company Kemira, the US company TERRA and IAWS. Mr Jago said he was not aware of any "front runners" at this stage.
Mr Jago said he expected the market in 1999 to improve and said prices should rise. However, he said that, with Europe producing 35 million tonnes of fertiliser a year, at least two to three million tonnes would need to be eliminated to restore "a proper balance to the market".
He added that the £35 million spent by the company on a new state-of-the-art plant in Belfast would help achieve financial benefits. Production at the old Belfast plant was 400,000 tonnes a year, whereas the new plant would produce 500,000 tonnes, said Mr Jago.
He added that the production costs at Belfast would also be substantially lowered. He said delays in commissioning the plant during 1998 had resulted in a "negative financial impact of about £2 million to £3 million".
Mr Jago said a significant reduction in fertiliser stocks was achieved during the year, resulting in a decrease in working capital.
