Half year 2024 results

Group performance in line with expectations reflecting more stable market conditions and operational progress

Croda International Plc (“Croda” or the “Group”) announces its half year results for the six months ended 30 June 2024.

Sequential improvement in Group sales (v H223) driven by Consumer Care and Industrial Specialties

• Consumer Care growing in all regions at constant currency
• Weaker than anticipated sales in Life Sciences impacted by lower Crop Protection demand; Pharma sales up 3% vs H223 ex CV19 lipids despite continued destocking in consumer health
• Positive sequential sales growth in Industrial Specialties enhancing efficiency of manufacturing model
• New and Protected Product (NPP) sales up to 36% (H123: 34%), reflecting higher demand for innovation 

Sequential improvement in adjusted operating margin (ex CV19 lipids) driven by higher sales volumes, increased capacity utilisation, price discipline and robust cost control

• 16.6% adjusted operating margin (H123: 20.0%); 1.6 percentage points higher than H223 (ex CV19 lipids)
• £106.1m IFRS profit before tax (H123: £128.7m)
• £127.3m adjusted profit before tax (H123: £174.3m) or £133.8m at constant currency

Strong cashflow with working capital inflow and lower capex; continued balance sheet strength

• Free cash flow up 69% to £122.7m (H123 (restated): £72.8m); £43.5m working capital inflow
• Net debt fell to £507.9m (31 Dec 23: £537.6m); resilient balance sheet 1.4x levered
• Interim dividend maintained at 47.0p (H123: 47.0p); focused on delivering returns from recent investments

Portfolio well positioned for earnings growth

Consumer Care growing in key markets with increasing demand for sustainable ingredients 

• Strong Beauty Actives growth especially in China driven by sales to local and regional customers
• Sequential improvement in Beauty Care sales due to more stable demand and regained sales in USA
• F&F continuing to grow ahead of ‘tier one’ peers
• Home Care innovation driving double-digit percentage sales growth

Life Sciences impacted by lower Crop Protection demand and destocking in consumer health; higher sales in strategic Pharma platforms

• Sales of delivery systems for nucleic acid and protein-based drugs growing as customer pipelines expand
• New drug delivery technologies coming to market; e.g. novel lipid-based adjuvants contributing sales
• Innovating to develop sustainable Crop Protection solutions despite continued destocking

Continued operational progress

• Strengthening senior team with appointments of Group Chief Financial Officer and President Life Sciences
• New organisational structure delivering customer, employee and efficiency benefits
• Robust cost control expected to benefit Group margin by about half a percentage point this year

Steve Foots, Chief Executive Officer, commented:

“Group performance was in line with expectations in the first half year, with further progress in Consumer Care, key strategic Pharma platforms and Industrial Specialties. The Group returned to year-on-year growth in the second quarter, helped by more stable market conditions, price discipline and continued operational progress. Our sales of innovative products increased to record levels and robust cost control is enabling us to deliver improving operating margins.

“We’ve seen continued momentum in higher growth areas where we have focused recent investment, testament to our strategy to realign the portfolio towards the megatrends shaping our industry. In particular our strong relationships with local and regional customers is driving growth as they innovate and grow quickly. And with customer pipelines continuing to expand across biologics, vaccines and nucleic acid-based drugs, our strategic focus areas in Pharma will support accelerating growth for Croda in due course. 

“We are focused on strengthening the Group through implementing our strategy with cost and capital discipline, to deliver strong earnings growth in the future and significant value for our shareholders.”

Outlook

We are encouraged by first half performance in Consumer Care, key strategic Pharma platforms and Industrial Specialties, with improving operating margins driven by higher sales volumes, price discipline and robust cost control. However, with a weaker than anticipated performance in Life Sciences due to continued destocking in Crop Protection and consumer health, and no signs of an immediate recovery in Crop Protection, we now expect Group adjusted profit before tax to be between £260m and £280m in full year 2024 at constant currency.