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Croda International Plc - Year End Results

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Croda International Plc

Results for the year ended 31 December 2019

Strong business model delivers resilient performance in subdued market conditions

Croda International Plc ("Croda" or the "Group"), the speciality chemical company that creates high performance ingredients and technologies relied upon by industries and consumers globally, today announces its full year results for the year ended 31 December 2019.

Highlights:

 

 

Full year ended 31 December

 

Adjusted1 results

 

 

2019

 

2018

% change

reported rate

% change

constant rate2

Sales - Core Business3

£million

1,265.9

1,268.7

(0.2)%

(2.3)%

Operating profit

£million

339.7

342.5

(0.8)%

(1.8)%

Profit before tax (PBT)

£million

322.1

331.5

(2.8)%

(3.7)%

Basic earnings per share (EPS)

pence

185.0

190.2

(2.7)%

n/a

Return on sales4

%

24.7%

24.7%

0.0%pts

n/a

Free cash flow5

£million

201.7

154.9

+30.2%

n/a

Adjusted results

Resilient performance despite subdued market conditions

  • Core Business sales 2.3% lower and Group operating profit 1.8% lower (both in constant currency)
  • Robust margin maintained - return on sales unchanged at 24.7%
  • Strong cash conversion - free cash flow up 30.2% to £201.7m (2018: £154.9m)
  • New & Protected Product sales (NPP) flat at 28.1% of sales (2018: 28.2%) at constant currency

Sector performance (sales in constant currency)

Excellent performance in Life Sciences, driven by strength of Health Care and Crop Protection platforms

  • Sales up 5.9%, supported by speciality excipients
  • Continued margin growth; return on sales 110 bps higher at 30.6%

Profit maintained in Personal Care

  • Sales 3% lower, driven by North America & North Asia over the first nine months, followed by return to modest growth in fourth quarter
  • Excellent margin retained, with return on sales up 50 bps to 33.4%

Performance Technologies impacted by slower industrial markets

  • Sales 7.3% lower, with poor first half for automotive demand developing into a broader market slowdown in the second half year
  • Lower volume impacted margin, with return on sales down 260 bps at 16.1%.

 

 

Full year ended 31 December

Reported results (IFRS)

 

2019

2018

% change

Sales

£million

1,377.7

1,386.9

(0.7)%

Operating profit

£million

319.9

328.8

(2.7)%

Profit before tax (PBT)

£million

302.3

317.8

(4.9)%

Basic EPS

pence

172.8

181.4

(4.7)%

Ordinary dividend per share (declared)

pence

90.0

87.0

+3.4%

Special dividend per share (declared)

pence

-

115.0

n/a


Reported results (IFRS, reported currency)

  • Sales 0.7% lower, including small benefit from weaker Sterling translation
  • Operating profit 2.7% lower due to lower sales and higher charges for exceptional items and amortisation of intangible assets arising on acquisition
  • Exceptional charge of £10.7m to deliver cost saving actions (2018: £4.9m, relating to UK defined benefit pension scheme past service cost)
  • Basic EPS reduced by 4.7% to 172.8p (2018: 181.4p)
  • Full year dividend increased by 3.4% to 90.0 pence.

Outlook

Performance expected to be underpinned by:

  • Healthy innovation pipeline
  • New capacity coming on stream to support organic growth - including biosurfactant plant now operational in North America
  • Continued progress through recent technology acquisitions
  • Reinvestment of cost savings in future growth opportunities.

Steve Fotos, CEO, Commented:

"In 2019, we delivered a resilient performance with a strong margin maintained and increased cash flow, despite subdued market conditions. This is testament to Croda's focused strategy and strong business model.

"An excellent performance in Life Sciences was reflected in sales growth and margin improvement. Sales in Personal Care were significantly impacted by a slower US market and by new legislation in China, but conditions improved in line with our expectations in the final quarter, and sector profitability increased further. Performance Technologies slowed in line with the wider sector, due to weak industrial demand.

"In the year ahead, subject to trading conditions remaining similar, we expect to make further progress in our consumer markets, whilst demand in industrial markets is expected to remain weak but stable. Our growth will be second half weighted.

"With our new Purpose, Smart Science to Improve LivesTM, we will continue to increase the positive impact our products deliver for our customers and their consumers. We will also reduce the negative impact our activities have on our fragile world. The combination of a healthy innovation pipeline, recent investments, cost saving benefits and a robust business model is expected to underpin performance."