Chemicals giant Ciba, which employs 800 people at Low Moor, Bradford, is forecasting a fall in profits this year due to rising raw material costs, currency changes and a slowdown in demand in some international markets.

The Swiss-based group, which took over the former Allied Colloids business in 1998, saw net sales drop to £760.2m from £810m in the three months to March 31, compared with the same period in 2007. Gross profits were eight per cent lower at £213.8m.

Speciality Chemicals' largest operating site at Low Moor produces around 200,000 tons of products a year for the water and paper treatment industries.

It also produces chemicals used in mining, oil extraction and textile processing.

Brendan Cummins, who became chief executive officer in January, said the group had not seen the strong start to 2008 that had been anticipated He said: "Dramatic changes in the currency and raw material environment had an adverse effect on the first quarter results and, although in general we are seeing good underlying growth in many of our markets, we are also clearly starting to feel the impact of the economic slowdown on overall sales growth.

"We expect this trend to continue in 2008, with some markets delivering good growth, and others slowing.

"In the short term, we will address under performing areas of the business and focus on increasing sales prices on an ongoing basis to compensate for the higher raw material costs."

Mr Cummins said over the next 18 months Ciba would substantially cut costs by continuing to streamline its organisational structure.

The slowdown in sales was most apparent in the United States, Canada, Mexico and Europe. Markets in Asia and the Middle East were proving more resilient.

Mr Cummins added: "Our underlying business is performing well, however some of our markets are clearly showing signs of weakening and raw material costs look set to stay at very high levels. Despite this, we expect to see sales growth in local currencies and we are confident that the measures we are taking in the organisation will continue to deliver savings and increase the value we can leverage from our markets."

Ciba's group gross profits were £742m on sales of £2.64bn last year. It will unveil its half-year results for 2008 in August.