REG - Croda International - Third Quarter Trading Update

Croda InternationalAnnouncement

09/10/2023 07:15

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RNS Number : 0520P  Croda International PLC  09 October 2023

9 October 2023

 

Croda International Plc

 

Third Quarter Trading Update

 

Croda International Plc ('Croda' or 'the Group') today provides an update on
trading from 1 July to 30 September 2023 ('the third quarter' or 'the
period').

 

Customers have continued to reduce their ingredient inventories in consumer
care, crop and industrial end markets, due to a combination of destocking and
a weaker demand environment. This has continued to depress sales volumes and
our overall performance for the period was therefore weaker than originally
anticipated.

 

In Consumer Care, sales volumes in the Beauty Care business were lower than
expected in July and August with North America not recovering from quarter
two. Beauty Care sales volumes have however improved in September and we
expect the recovery to continue through the remainder of the year, albeit now
from a lower base. Second half operating profit margin is expected to be lower
than the first half year due to the negative leverage impact of low volumes
and adverse business mix. Customer appetite for innovation remains high, with
continued demand for ingredients differentiated by sustainability. F&F
sales remain strong, Home Care sales are improving sequentially, and positive
price/mix continues to offset low volumes in Beauty Actives.

 

In Life Sciences, sales have weakened further in Crop Protection and
improvement is now expected to commence in the first half of next year. Seed
Enhancement continues to perform well with incremental future opportunities
being driven by regulatory change. The Pharma business continues to make
exciting progress with its industry-leading position in biologics delivery and
recent partnerships helping to further strengthen its pipeline of
opportunities. We expect shipments of lipid systems to our principal Covid-19
vaccine customers to occur as planned and non-Covid sales to remain resilient
as customer innovation pipelines continue to develop.

 

Industrial Specialties continues to be adversely affected by weak industrial
demand globally and is not expected to be profitable in the second half of the
year.

 

With no indications of a significant rebound to come in the fourth quarter,
Croda now expects full year 2023 Group adjusted profit before tax to be
between £300m and £320m (previously £370m-£400m).

 

Several cost measures have been implemented since June this year to protect
profitability. Actions include tighter budgetary control of fixed costs and
optimising production through plant shutdowns and reduced shift patterns, at
the same time as increasing sales activity to meet ongoing customer demand for
innovation. We are also seeking efficiency savings from simplifying business
processes and ways of working. Croda remains well positioned to rebound when
the macro environment improves.

 

Capital discipline is being maintained by managing down inventory and
challenging non-committed, non-safety-critical capex projects, whilst striking
a balance with continuing to invest in future growth.

 

Croda will report full year results for the year ending 31 December 2023 on 27
February 2024.

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) No 596/2014 (as it forms part of Retained EU
Law as defined in the European Union (Withdrawal) Act 2018). The Market Abuse
Regulation requires us to state the person responsible for making this
announcement who is Steve Foots, Chief Executive Officer.

 

Conference call:

There will be a conference call for covering analysts at 0800 BST this morning
with dial-in details below. Participants are encouraged to dial in early as
they will need to register with the operator.

·      Operator assisted dial-in: +44 (0)33 0551 0200; passcode "Croda"

 

For enquiries contact:

Investors:          David Bishop,
Croda
+44 7823 874428

Press:               Charlie Armitstead,
Teneo
+44 7703 330269

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