Croda International Plc – Results for the six months ended 30 June 2020

Highlights:

Our response to COVID-19

Our priorities have been to protect the health and safety of our employees and balance the needs of all our stakeholders fairly. The response and commitment of all our employees has been exceptional, with almost all able to work effectively, either on site or from home. We have not furloughed employees, reduced pay or utilised government liquidity facilities. All our 19 principal manufacturing sites have remained in operation and raw material supply chains secure. We have supported our customers and suppliers, given financial assistance to the communities closest to our sites, and sustained our track record of paying regular dividends to shareholders. Through our actions, we aim to live up to our Purpose of using Smart Science to Improve Lives^TM.

Group highlights

Continued strength of business model demonstrated during challenging COVID-19 conditions

· Modest reduction in sales

o  Core Business sales 4.9% lower (-6.0% constant currency (CC))

o  Ongoing delivery of innovation: New & Protected Product (NPP) sales at 27.2% of total (2019: 28.3%)

· Resilient margin despite lower volume and adverse product mix

o  Adjusted operating profit 9.9% lower (-9.4% CC)

o  Return on sales 110 basis points (bps) lower at 24.0%

o  IFRS profit before tax 12.8% lower at £144.9m

· Strong balance sheet and healthy cash generation supporting continued investment

o  Capital investment in capacity expansion, digital platform for customers and expanded R&D

o  Technology-rich Health Care acquisition signed in July – important addition to speciality drug delivery capability

· 2019 final dividend paid in full and 2020 interim dividend maintained at 39.5 pence

Sector highlights

· Life Sciences continued to perform well with limited COVID-19 impact

o  190 bps return on sales expansion to 32.5% with growth in higher value-add niches; sales 0.8% lower  (-1.7% CC)

· Personal Care adversely impacted by consumer slowdown in second quarter but encouraging North Asia performance

o  Resilient return on sales of 30.4% (-290bps) despite adverse volume and mix impact; sales 8.1% lower  (-9.5% CC)

· Performance Technologies progressively impacted by COVID-19 slowdown in industrial markets; strong home care & packaging markets

o  Weaker return on sales of 15.1% (-290bps) due to operating leverage; sales 4.6% lower (-5.6% CC)

Outlook:

Following a challenging second quarter, trading has stabilised but visibility is limited and the timing of recovery remains unclear. Life Sciences will benefit from the phasing of Crop Care sales and continued opportunities in Health Care. We anticipate consumer markets significantly impacted by lockdowns to recover more quickly than industrial end markets. We expect Group margin and cash generation to remain robust.

Steve Foots, Chief Executive Officer, commented:

“The response and commitment of all our employees to serve our customers during the COVID-19 pandemic has been exceptional and the strength of Croda's business model has been clearly demonstrated. Whilst customer demand has inevitably been impacted by the crisis, the strength and breadth of our portfolio, global footprint and flexible manufacturing have all helped to reduce its impact. This has enabled us to deliver a resilient performance with only a modest reduction in sales, a resilient margin and healthy cash generation. With a strong balance sheet, low leverage and robust liquidity, we have continued to pay our regular dividends, invest in future organic growth and secure a technology-rich acquisition in our fast-growing Life Sciences business.

“Despite current trading conditions remaining volatile, our strategy is unchanged and, by focusing on the future during these challenging times, we can accelerate delivery to enhance future growth and profitability.”