Croda H1 sales soar 39% to £934m amid vaccine lift

Croda International HQ in Snaith, East Yorkshire

Shares of Snaith, East Yorkshire-based speciality chemicals giant Croda International rose 7% to around £83.65 on Tuesday after it said its first-half sales soared 38.8% to £934 million and it reported record adjusted H1 profit before tax of £229.5 million, up over 50% on 2020 and 35% on 2019.

Statutory profit before tax rose 40.9% to £204.1 million.

Croda said interim ordinary dividend will rise 10% to 43.5p “continuing an unbroken trend of increasing returns over nearly 30 years.”

Croda’s shares have risen about 40% over the past 12 months to give it a current stock market value of more than £11 billion.

Announcing results for the six months to June 30, 2021, Croda said it enjoyed continued success in building its Life Sciences platform, with “outstanding” performance in Health Care and continued “sales growth of vaccine adjuvants and speciality excipients, supplemented by over US$100m of lipid system sales for COVID-19 applications.”

In its outlook, Croda said: “The first half year has seen a strong performance across the group, reflecting the global recovery in demand, the accelerated implementation of our strategic priorities and increased investment.

“We expect underlying growth across all sectors to continue in the second half year, driven by consumer demand, whilst the customer restocking seen in the first half is expected to moderate.

“Together with the benefit of recent acquisitions opening up new fast growth markets, we expect continued strong demand for lipid systems and are increasing guidance for sales this year to at least US$200m.

“We now expect 2021 full year adjusted profit before tax to be significantly ahead of current expectations.

“Subject to there being no material change in current market conditions, we expect a similar phasing of profit between the first and second half periods as seen in previous years.

“Demand for COVID-19 solution ingredients remains uncertain beyond the short term and the current level of sales could moderate; however, we expect to see an ongoing expansion in the range of applications for lipid systems in vaccines and therapeutic drugs over the medium term.

“Across the wider group, the combination of our differentiated business model, healthy innovation pipeline and recent investment is expected to underpin performance and continue to generate increased value for all our stakeholders.”

Croda CEO Steve Foots said: “Our record first half performance reflects the impact of our strategic acceleration and investments, supported by improving customer demand across all regions and sectors.

“This has been delivered through excellent growth in our existing businesses, successful delivery from our recent acquisitions and continued success in building our Life Sciences platform.

“With the strategic review of our Performance Technologies business well underway, we continue our transition to becoming a pure play consumer facing ingredients company.

“I am excited by Croda’s increasing opportunities in emerging technology platforms and faster growth markets, where demand for sustainable solutions will drive our progress going forward.

“We are investing in organic and inorganic expansion, continuing our relentless innovation and focusing on sustainability across everything we do.

“This is creating new avenues for future growth, delivering significant value for our shareholders.”

On the Performance Technologies review, Croda said: “In May, we announced a strategic review of the Performance Technologies and Industrial Chemicals (PTIC) businesses to establish what ownership structure would best serve this part of Croda’s business going forward, creating a stronger platform for its future growth while allowing more capital to be deployed into the higher returning Consumer Care and Life Sciences businesses.

“PTIC is an excellent, world leading business, delivering industry leading margins across the cycle.

“We have now defined a perimeter and scope for those PTIC activities which can form the strongest possible portfolio as a separate business and are non-core to Consumer Care and Life Sciences.

“We have concluded that up to an equivalent of 75% of the revenue of the current PTIC portfolio could be included in the scope of any potential divestment and are now assessing how the full potential of these assets can best be delivered, with the review expected to conclude by the end of 2021.”