Strengthening Croda in a transitional year; accelerating actions to grow earnings and improve returns

Croda International Plc (“Croda” or the “Group”), the company that uses smart science to create high-performance ingredients and solutions that improve lives, announces its full year results for the year ended 31 December 2024.

Highlights

Strengthening in a transitional year

• Group sales -1% (+2% ex CV19*) at constant currency comprising:
  - Consumer Care sales +7%
  - Growth driven by sales to local & regional (L&R) customers and Fragrances and Flavours (F&F)
  - Growing in all regions (at constant currency) led by Asia

  - Life Sciences sales -14% (-6% ex CV19*); returned to growth in H224 (ex CV19*)
  - Industrial Specialties sales +2%
  - New and Protected Products (NPP) sales +6%

• Adjusted operating margin lower year-on-year; up sequentially in H224
  - 17.2% adjusted operating margin (2023: 18.9%); prior year benefitting from high margin CV19^* sales
  - Adjusted operating margin improved sequentially from 16.6% in H124 to 17.7% in H224, driven by higher sales volumes, price discipline and proactive cost control
  - IFRS profit before tax of £207.8m (2023: £236.3m)
  - £260.0m adjusted profit before tax (2023: £308.8m); £273.1m at constant currency
  
• Strong cashflow with working capital discipline and lower capex; continued balance sheet strength
  - Free cash flow up 9% to £181.1m (2023: £165.5m); £20.9m working capital inflow (2023: £29.1m inflow)
  - Net debt was £532.3m (31 Dec 23: £537.6m); resilient balance sheet 1.4x levered 
  - Dividend increased 1% to 110.0p per share (2023: 109.0p) despite lower earnings

Accelerating actions to grow earnings and improve returns

Driving sales growth by stepping up innovation and maximising value of all recent investments
- Leveraging proximity to L&R customers as markets continue to fragment
- Increasing innovation; New and Protected Products (NPP) now 35% of total sales (2023: 33%) - - Focused on driving returns from period of peak investment including the integration of Solus Biotech

Driving margin recovery by increasing asset utilisation and realigning cost base
- Prioritising sales volumes at eleven key shared sites to increase utilisation and drive operating leverage
- Targeting £25m of permanent cost saving benefits in 2025 to largely offset inflation and incremental costs of strategic investments coming online, as part of an initial two-year £40m programme

Driving improved returns through these actions and prudent management of invested capital
- Investment intensity reducing and capex expected to moderate as growth projects are commissioned

Steve Foots, Chief Executive Officer, comments:

“2024 was another transitional year, following two years of unprecedented demand in 2021 and 2022, with an industry-wide reset from 2023. Consumer Care saw progress in all areas, with another standout performance from Fragrances & Flavours and good growth of New & Protected Products. Life Sciences was impacted by the absence of Covid-19 lipids and weak sales into consumer health markets, but better demand in Crop Protection drove an improved performance in the second half year. Whilst sales growth was lower than we hoped in a subdued demand environment, proactive actions to rebase costs and drive efficiencies enabled us to deliver profits in line with our guidance.

“Our multi-year programme of actions to make Croda more focused and more efficient is beginning to bear fruit with our adjusted operating margin improving half-on-half and strong free cash flow generation. We are accelerating our efforts with an enhanced focus on costs and efficiency which, combined with increased innovation and the growth potential of recent investments, underpin our confidence in delivering earnings growth and improving returns in the future.”

Outlook

With sales volumes higher in 2024 and price/mix headwinds likely to diminish, we expect both Consumer Care and Life Sciences to grow sales in 2025, and operational efficiencies to largely offset inflation and the incremental costs of investments coming online. Overall for 2025, we expect Group adjusted profit before tax to be between £265m and £295m at constant currency.

Further information:

An investor presentation will be available via webcast at 0900 GMT on 25 February 2025 at www.croda.com/investors.

For enquiries contact:
Investors:        David Bishop, Croda                                                      +44 7823 874428
Reece De Gruchy, Croda                                               +44 7826 548908

Media:             Charlie Armitstead, FTI Consulting                                +44 7703 330 269