Full year 2022 results

Powerful operating model and consistent execution deliver record performance

Sales up 11% at over £2 billion, with successful input cost inflation recovery reflecting strength of business model

Growth across Consumer Care and Life Sciences, driven by price/mix 24% higher
Strong performance in Asia, Western Europe and Latin America

Adjusted operating profit up 10%, exceeding £500m for the first time

Profit growth across all three sectors
Return on sales broadly flat at 24.7% (2021: 24.8%) - improved mix from divestment and lower remuneration charge offset by normalising Life Sciences margin and adverse operating gearing

IFRS profit before tax up 90% to £780.0m (2021: £411.5m), including £356.0m gain on divestment

Improved free cash flow of £167.4m (2021: £153.6m), with moderating raw material prices starting to benefit working capital

Increase in full year dividend of 8% to 108.0p (2021: 100.0p)

Portfolio repositioned - aligned with emerging megatrends

Completed divestment of majority of Performance Technologies and Industrial Chemicals (PTIC)

Creates stronger margin, higher return, less cyclical, greater IP and lower carbon intensive business

Reinvesting proceeds to drive future growth

Enhanced organic capital investment programme, supported by government co-investment in Pharma
Agreed acquisition of Solus Biotech for c£232m, expanding fast growth Beauty Actives business in Asia

Robust sector performances

Consumer Care performance demonstrating increased resilience

Record sales and adjusted operating profit delivered; encouraging growth in F&F
Lower second half year volume and margin, primarily due to destocking and supply constraints

Life Sciences building on exceptional prior year

Further strong progress, driven by excellent Crop Protection performance
Extensive pipeline of non-Covid delivery systems driving growth in Pharma, offsetting reduction in lipid systems for Covid-19 applications

Steve Foots, Chief Executive Officer, commented

“2022 has been a milestone year for Croda as we continued our transition to a pure play Consumer Care and Life Sciences business, evolving our portfolio to be more closely aligned to the emerging megatrends driving our markets. For the first time, we delivered over £2 billion in sales and £500 million in adjusted operating profit, reflecting progress across all areas of our business. Consumer Care is increasingly resilient, supported by encouraging growth in our F&F business, whilst Life Sciences has built on an exceptional prior year, with an exciting project pipeline in Pharma and a stand-out performance in Crop Protection.

“These record results have been achieved whilst managing a challenging environment. This demonstrates the power of our business model, our consistent execution, an increased resilience, following our recent portfolio changes, and the increasing importance of our products in our markets. We have a disciplined investment approach which is driving both organic and acquisitive growth.

“The increased depth, breadth and resilience of Croda’s business and the significant opportunities that we see in our high-growth markets underpin our confidence for the year ahead.”

Outlook

Though early in the year, the Group is trading in line with expectations. We expect the customer destocking that has been particularly apparent in North America to come to an end in the first half year, supporting continued sales growth this year in Consumer Care. In Life Sciences, we expect good sales growth in Crop Care and the non-Covid related Pharma business to offset the previously indicated decline in Covid-19 vaccine demand. Group performance in 2023 will be more second half weighted than in the prior year, reflecting the divestment of the majority of PTIC in June 2022 and the phasing of lipid systems shipments to our principal Covid-19 vaccine customers.
The combination of our differentiated business model, enhanced investment programme and exciting innovation pipelines in sustainable ingredients and drug delivery will continue to deliver consistent, superior returns.