Croda stockpiles for Brexit; pays £150m special dividend

Croda International HQ in East Riding, Yorkshire

Snaith, East Yorkshire-based speciality chemicals giant Croda International said its 2018 adjusted profit before tax rose 3.5% to £331.85 million, missing analysts estimates.

Croda also said it is stockpiling goods in Europe ahead of Brexit.

Croda shares fell about 3.5p to give the firm a current stock market value of around £6.6 billion, according to Reuters data.

Reported sales for 2018 rose 1% to £1.386 billion.

Croda is proposing a special dividend of 115p per share – an extra return of excess capital to shareholders of £150 million.

The firm will also lift its ordinary dividend per share 7.4% to 87p.

Croda’s customers include Unilever, Procter & Gamble and L’Oreal.

On Brexit, Croda said: “An orderly transition of the UK out of the EU is expected to be manageable for Croda.

“However, given uncertainty over the method and timing of the UK’s exit from the EU, we have progressed contingency plans fora ‘hard Brexit’.

“The objective has been to ensure that we can offer continuity of service and supply to our customers, wherever they are, and regardless of the type of exit.

“Following our risk assessment, we have focused on those areas that could have the most impact on our ability to service customers, in the event that the UK was to leave the EU abruptly, without a transition period …

“We have made minor changes to our trading model within Europe to ensure that our ability to move UK manufactured product onto the continent and vice-versa is not at risk.

“These amendments have included reviewing which ports are best placed to protect service levels, as well as ensuring that we have full EU recognition for imports and exports …

“We are working to mitigate supply issues if there are delays at borders.

“We have secured additional warehousing capacity and are building finished goods inventory in our distribution network in continental Europe.

“To ensure continued effective operation of our UK manufacturing sites, we have also developed a plan to protect critical raw materials …

“UK-held ReaCh registrations may no longer be valid for sale of products in the EU, although the UK government has confirmed that EU-held ReaCh registrations will continue to be valid in the short term for products coming to the UK.

“This risk is mitigated through greater inventory of UK manufactured goods on the continent and through re-registration of UK products sold in the EU.”