Croda International, the Snaith, East Yorkshire-based FTSE 100 specialty chemicals giant, reported first-quarter sales up 8% to £442 million — and said it intends to apply a tariff surcharge to cover any associated incremental costs.
Croda shares rose about 8% to around £29.50 to give the firm a stock market value of roughly £4.2 billion.
“As widely reported, the recent introduction of trade tariffs and increased geopolitical tensions have made the global economic outlook more uncertain,” said the East Yorkshire firm.
“Although our well-balanced local manufacturing and procurement model helps to mitigate our direct exposure to tariffs, we are assessing the likely impact, talking to our customers and intend to apply a tariff surcharge to cover any associated incremental costs.
“Whilst we recognise that the political and economic environment has become less predictable, the group’s encouraging start to the year means that our Full Year 2025 outlook is unchanged.
“As things stand, we continue to expect to deliver £265m to £295m group adjusted profit before tax at constant currency.”
Croda said sales in Consumer Care were up 8%. It said Fragrances & Flavours continued to deliver strong sales growth. Beauty Care and Home Care delivered mid-single digit percentage sales growth driven by higher sales volumes.
Croda said year-on-year sales were down slightly in Beauty Actives against a good comparator period but were up strongly on a sequential basis compared with the final quarter of 2024.
Reported sales in Life Sciences were up 10%. Crop Protection and Seed Enhancement both delivered strong sales growth. Croda said Pharma sales were also higher “with growth in our strategic focus areas in biopharma more than offsetting continued challenges in consumer health and veterinary markets.”
Reported sales in Industrial Specialties grew by 6%.
REACTION:
Derren Nathan, head of equity research, Hargreaves Lansdown: “Speciality chemical producer Croda has seen its recovery gain further momentum in the first quarter with volumes driving high-single digit sales growth.
“But given the prevailing macro-economic confusion that’s been brought about by exchanges in the rapidly evolving trade-war, investors will be more focussed on the outlook. Croda’s focus on bespoke formulations means it’s deeply embedded with its customer base. Its broad manufacturing footprint also helps to provide some mitigation against tariffs.
“The company’s planning to pass on any incremental costs to customers too and with alternative sources of supply limited in many cases, it may be something clients will just have to accept.
“After a robust start to the year, the outlook remains unchanged, which is likely to come as a relief to shareholders who have seen the stock price fall 19% so far this year. But it’s a little too early to give the all-clear. Croda’s game plan rests heavily on improved utilisation within its plants, so things could unravel quickly if demand takes a dip.
“Some end products, such as those in the life-sciences division, are less sensitive than others to economic conditions, but in the consumer segment things could still become challenging. The weakness in the valuation offers an opportunity to gain exposure to a quality company with a focussed strategy, but in the short-term, the ride could get more bumpy yet.”