**UPDATE: Croda Profit Falls As Subdued Markets Drag On Sales**
LONDON (Alliance News) – Specialty chemicals company Croda International PLC Tuesday reported a fall in 2014 pretax profit, with sales falling as weak consumer demand in key markets hit its personal care business, commodity markets volatility dragged back its industrial chemicals unit and the strength of sterling weighed on its reported results.
FTSE 250-listed Croda said its pretax profit for the year to the end of December was GBP229.4 million, down from GBP250.1 million a year earlier.
Sales for the year fell to GBP1.05 billion from GBP1.08 billion a year earlier, hit by a fall in its personal care sales and by industrial chemicals revenue, as well as the strength of sterling which weighed on overseas sales when translated into the currency. At constant currencies, sales for 2014 rose to GBP1.11 billion.
The biggest fall in revenue came in its personal care and industrial chemicals divisions, with revenue higher in the life sciences arm and flat in its performance technologies business.
Revenue in the personal care arm, which focuses on ingredients for cosmetic products, fell 6% to GBP369.1 million, down from GBP392.7 million last year, as the group was hit by a challenging trading environment in the first half, characterised by a stagnant European market, subdued consumer demand in its mature and emerging market operations and by adverse currency fluctuations.
Conditions improved in the second half and the first half weakness was somewhat offset by strong sales growth in its differentiated and higher margin ingredients lines. But Croda said the continued weakness in Western Europe and, particularly in the first half, in North America hit demand for mass market consumer products, dragging down revenue for its personal care ingredients.
Industrial chemicals revenue fell to GBP117.8 million from GBP128.6 million, hit by lower sales on the back of weak commodity prices, in particular for its co-stream products.
Revenue in its life sciences business increased to GBP204.5 million from GBP200.5 million, boosted by a strong performance in its health care segment, with robust sales for its speciality excipients and Omega 3 products. Its crop care unit performed well in Asia, but sales were flat in North American and Western Europe and fell in Latin America owing to economic pressures on the region’s agricultural industry and extreme weather conditions.
Performance technologies revenue was flat at GBP355.2 million for the year, with its lubricants and Geo Technologies business trading well in spite of challenging economic conditions in some key markets. Trading in Asia was strong, while Europe and North America growth was more subdued and Latin American growth fell below expectations.
Despite the fall in profit and revenue, the group slightly raised its final dividend to 36 pence per share from 35.5 pence, bringing its total dividend for the year to 65.5 pence, up 1.6% on the 64.5 pence paid a year earlier.
“After a challenging first half of 2014 in difficult market conditions, we delivered improved revenues across all core sectors in the second half of the year. This reflected accelerating innovation, improved trading outside Western Europe, and the early benefits of our new organisational structure,” said Martin Flower, Chairman of Croda.
Flower added the group has started 2015 in line with its expectations. It expects demand in Europe to remain subdued but said Croda is focusing on profitable sales growth.
N+1 Singer said the results were broadly in line with its forecasts, saying Croda has performed solidly in a challenging market.
It noted Croda saying the year has started in line with expectations, but said it would not be surprised to see consensus estimates for 2015 trimmed slightly given the subued market environment the company faces.
By Sam Unsted; [email protected]; @SamUAtAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
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