22nd Jul 2014 07:45
LONDON (Alliance News) - Croda International PLC Tuesday said its pretax profit fell in its first half and it again warned of lower pretax profit for the full year as reduced demand in Europe and currency translation losses hit the company.
The speciality chemicals company said its pretax profit fell 6.0% to GBP125.1 million for the six months ended June 30 from GBP133.1 million in the previous year, as sales fell 4.5% to GBP537.4 million from GBP562.7 million.
"Our performance in the first half of the year was behind our initial expectations as weak consumer demand in Europe impacted the business, particularly in Personal Care," Chairman Martin Flower said in a statement. "While we still expect to achieve underlying profit progress in 2014, as outlined in our pre-close trading statement, pre-tax profits are now expected to come in below those attained in 2013."
The company said its results were also hit significantly by currency translation, which reduced sales by GBP38.3 million and operating profit by GBP11.4 million as the sterling and euro showed relative strength versus other currencies.
In the second quarter, the company's sales fell 5.8% to GBP263.4 million from GBP279.6 million due to weaker underlying sales in Europe, and its adjusted pretax profit fell 12% to GBP60.1 million from GBP68.1 million. The pretax profit figures were adjusted to exclude exceptional items, acquisition costs and amortisation/write off of intangible assets arising on acquisitions.
However, the company said it is continuing with its progressive dividend policy and has increased its interim dividend by 1.7% to 29.5 pence.
Croda added that five out of its eight core sectors achieved their underlying sales growth targets in quarter two, with strong underlying revenue growth from its New and Protected Products division, leading to improved margins in both divisions.
In June, the company warned that it now expects to report lower pretax profit than previously hoped in both its second quarter and in 2014 as a whole, due to the strength of the pound and weakness in its industrial chemicals business.
At the time it said that the recent further strengthening of sterling had wiped GBP6.5 million off its second quarter pretax profit compared with the year-earlier period, and about GBP1.5 million compared with the first quarter.
It said that if sterling remains at current levels for the whole of 2014, the impact would be to wipe about GBP19 million off the GBP251.4 million pretax profit it reported in 2013.
Croda International shares were down 1.6% to 2,179.00 pence on Tuesday, one of the worst fallers in the FTSE 250.
By Tom McIvor; [email protected]; @TomMcIvor1
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