25th Feb 2025 09:29
(Alliance News) - Croda International PLC on Tuesday said actions to rebase costs and drive efficiencies helped deliver profits in line with its guidance, despite a muted demand environment.
The Yorkshire-based speciality chemicals firm said pretax profit fell 12.1% to GBP207.8 million in 2024 from GBP236.3 million a year prior, on revenue of GBP1.63 billion, down 3.9% from GBP1.69 billion.
Basic earnings per share fell 7.3% to 113.5 pence from 122.5p. The adjusted operating profit margin decreased to 17.2% from 18.9%.
Adjusted operating margin did improve sequentially however from 16.6% in the first half to 17.7% in the second half, driven by higher sales volumes, price discipline and proactive cost control.
Croda said it is driving margin recovery by increasing asset utilisation and realigning the cost base. The firm is prioritising sales volumes at eleven key shared sites to increase utilisation and drive operating leverage, and is targeting GBP25 million of permanent cost saving benefits in 2025 to largely offset inflation as part of an initial two-year GBP40 million.
Free cash flow increased 9.4% to GBP181.1 million from GBP165.5 million. Net debt was broadly stable standing at GBP532.3 million at December 31, down from GBP537.6 million the year before.
By division, sales in Life Sciences dropped 16% and in Industrial Specialties by 1.1%, but rose in Consumer Care by 3.8%.
Consumer Care growth was driven by sales to local & regional customers and Fragrances and Flavours. Growth was seen in all regions (at constant currency) led by Asia.
Excluding CV lipids, Life Sciences reported a return to growth in the second half of 2024, Croda said.
Chief Executive Steve Foots described 2024 as a "another transitional year, following two years of unprecedented demand in 2021 and 2022."
"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."
In response, shares in Croda were down 1.9% at 3,142.00 pence each in London on Tuesday morning.
Looking ahead, Croda expects 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, Croda expects group adjusted pretax profit between GBP265 million and GBP295 million at constant currency. This would be growth of as much as 13% from GBP260.0 million reported in 2024, which was down 16% from GBP308.8 million in 2023.
The full-year dividend was increased modestly by 0.9% to 110.0p from 109p.
By Jeremy Cutler, Alliance News reporter
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