30th Jul 2024 09:45
(Alliance News) - Croda International PLC on Tuesday reported a weaker first-half performance, although it said the business is on track for future growth with investments delivering greater efficiencies and capacity.
The Yorkshire, England-based chemical company said in the six months that ended June 30, pretax profit fell 18% to GBP106.1 million from GBP128.7 million the previous year.
Revenue declined by 7.4% to GBP815.9 million from GBP880.9 million, while cost of sales fell 10% to GBP448.7 million from GBP498.4 million.
Croda maintained an interim dividend of 47.0 pence per share.
Net debt increased by 45% to GBP507.9 million from GBP349.3 million.
"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," Croda said.
To ensure future growth, the company has realigned its portfolio and invested in research and development to capture the benefits of trends toward sustainable ingredients and demand for high levels of innovation in biologics.
In addition, plans are in place to invest GBP175 million from 2021 to 2025 to add multi-purpose manufacturing capacity. So far GBP120 million has been invested as part of the programme with the US and UK governments together providing an additional GBP75 million.
Croda said: "A new organisational structure has been in place since the start of 2024 which makes Consumer Care and Life Sciences fully accountable for strategy and performance. The new organisation has clarified accountabilities, is ensuring we deliver more quickly and effectively for our customers and has simplified our structure for employees."
The new, more efficient structure, is set to deliver annual cost savings of GBP9 million from 2025.
In light of the weak half-year results, guidance for the full year was lowered by Croda, with management now expecting to generate full-year adjusted pretax profit between GBP260 million and GBP280 million at constant currency, down from GBP260 million to GBP300 million. At the lower end, this would reflect a 15% decline from GBP308.8 million in 2023.
Croda shares were down 3.7% to 3,953.00 pence each in London on Tuesday morning.
By Elijah Dale, Alliance News reporter
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