ICI last night warned of weak markets and further price rises, despite a positive start to the year.

The chemicals and paint group said pre-tax profits before exceptional items in the first quarter were 33 per cent ahead of the same period last year, at £84m.

The Dulux paint company, which employs more than 500 people on Teesside, said price rises and savings from its restructuring had contributed to improvements in sales, profits and cashflow.

But it said the outlook for the rest of the year was less certain.

Sales growth had slowed as the first quarter progressed, suggesting weakness in a number of the company's markets.

Further price increases would be necessary to offset continued rises in raw material costs, ICI said.

The company has been trying to recover from a disappointing two years in which tough economic conditions and problems at key divisions affected its performance.

ICI said that, with regional and industrial trading profit well ahead of last year and corporate and other costs £2m higher, comparable group trading profit was 17 per cent ahead of last year. After the effect of exchange rate movements and disposals, quarterly group trading profit rose eight per cent to £111m.