Croda International, the Snaith, East Yorkshire-based FTSE 100 specialty chemicals giant, said it is “increasing prices to fully recover input cost inflation” as it manages the impact of the conflict in the Middle East.
In an update on its sales performance in the first quarter of 2026, Croda said: “First quarter sales of £431m (Q125: £442m) were up 1% at constant currency, consistent with our guidance that constant currency sales in the quarter would be similar to the strong prior comparator when sales were up 9% at constant currency.
“Continued growth in Beauty Actives and Fragrances and Flavours (F&F) offset lower sales in Crop Protection which, as we previously guided, is not benefitting from the customer inventory rebuild that positively impacted our performance in 2025.
“The conflict in the Middle East did not have a material effect on our business in the first quarter. Sales in the Middle East accounted for ~5% of Group sales in 2025, most of which were in F&F.
“We are actively and responsibly managing the impact of the conflict, increasing prices to fully recover input cost inflation. Our priorities remain the safety of our employees and maintaining our trusted long-term relationships with our customers.
“Whilst we recognise the elevated uncertainty caused by the Middle East conflict, the full year 2026 outlook that we communicated on 24 February 2026 is unchanged.
“In line with the financial framework to full year 2028 outlined in February, we are confident of delivering an improving performance over the next three years comprising more consistent sales growth, enhanced profitability, growing cashflows and improving returns on capital. Implementation of our transformation programme remains on track and means that a significant proportion of future margin improvement is in our control and not dependent on market recovery.”
Derren Nathan, head of equity research, Hargreaves Lansdown, said: “Speciality chemical developer Croda‘s first quarter trading update paints a picture of stability rather than volatility, and a tough comparison in early 2025 means that 1% sales growth is a respectable result.
“Crucially, the company notes no material impact from the Middle East conflict, as the region accounts for only around 5% of sales. Croda’s bias towards bespoke solutions rather than commoditised additives helps with pricing power, which should help it pass on the broader inflationary impact to its customers.
“Management conceded that the outlook has become more uncertain but is sticking with full-year organic sales growth targets in the 3-6% range. With growth expectations weighted towards the remainder of the year, the potential for disappointments is higher than it was a few months ago.
“While the Board has no influence on geopolitical events, the same isn’t true of company strategy. On that front, the transformation plan, which focuses on cost efficiency and innovation, remains on track.”