LONDON -- Recently appointed ICI plc CEO John McAdam said the company would initiate a "significant program to improve cost effectiveness," including job cuts and other moves, following a sharp decline in first-quarter earnings.

ICI reported first-quarter net profit of L32 million (approximately $51.2 million), a decline of 21% from the first quarter of 2002. Sales for the quarter fell 4.6%, to L1.409 billion ($2.254 billion).

McAdam said the cost-cutting program would focus primarily on ICI's Paints business, although the business reported first-quarter operating profit of L27 million ($43.2 million), an 8% increase from the prior-year period. Paints sales fell 6%, to L481 million ($770 million). The company said it would initially eliminate about 700 employment positions as part of the cost-cutting program. News reports said most of the cutbacks -- about 430 jobs -- would affect the Paints business. The reports said most of the job eliminations would affect employees in the U.K. and Europe.

McAdam said, however, that following a review of major strategic options, ICI has decided that it will not seek to divest businesses as a way to improve its performance or reduce debt.

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