ICI remains in negotiations over the sale of one of its remaining Teesside operations.

The update was given as it reported a fall in quarterly profits.

The group, which employs 1,000 people on Teesside after a series of sell-offs, said that while "challenging conditions" had persisted since the turn of the year, its performance was improving.

Margins were holding steady and the cost benefits of widespread restructuring last year were beginning to flow through. The group said: "Given the actions we are taking in our markets and on our cost and capital effectiveness, prospects for the year remain satisfactory."

Pre-tax profits fell to £66m in the three months to March 31 before one-off costs, 22 per cent below the same period a year ago but in line with City forecasts.

Comparable sales for the group's international businesses were three per cent lower, as a five per cent jump in Asia was wiped out by a worse performance in Europe and the US.

Group turnover fell to £1.47bn from £1.64bn with the sharpest fall in ICI's lubricants and catalyst division Performance Specialities.

ICI has transformed itself from a high volume chemicals firm into a global speciality products and paints business, cutting 1,300 jobs in November.

Restructuring charges and one-off costs linked with the overhaul saw the group's debts spiral to almost £3bn before a rights issue in February.

ICI said the £808m cash-call had cut debts and it remained in talks to sell its Teesside-based catalyst arm.

This business, Synetix, saw its sales rise in the first quarter but the growth could not prevent sales in performance specialities falling nine per cent to £200m. Sales at ICI's core National Starch arm slipped three per cent to £454m. The group's Quest flavours and fragrances division recorded a two per cent drop with lower sales in fabrics and households.

Analysts have pencilled in pre-tax profits of £416m for the current year.