Eurozone economies may be staring into the abyss, but our stylish continental cousins still need to look good. That's why Croda's ingredients, used to make anti-wrinkle creams and other cosmetics, are selling well, and why second-quarter results beat consensus forecasts. Still, the shares leapt 7 per cent in response to these figures and trade at record highs - stretching the valuation and weakening the case for our buy tip.
Sales were flat in the second quarter year on year, but margins improved and underlying operating profit grew 5 per cent to £67.9m; another record. The consumer care unit stood out. Second-quarter sales there rose over 2 per cent year on year and profit climbed 6 per cent to £48.5m, led largely by crop care - Croda's fastest-growing business since buying Uniqema from ICI in 2006. That's unlikely to change, either, since feeding the world's rapidly expanding population is one of the major mega-trends currently at play. Margins improved at performance technologies, too, growing second-quarter profit by 10 per cent despite weaker sales of lubricants, coatings and polymers in Europe. Industrial chemicals was a blot on the landscape, though - but, given its size, the 30 per cent year-on-year slump in quarterly profit there hardly registered.
Deutsche Bank expects full-year pre-tax profit of £264m, giving EPS of 134p (from £242m and 123p in 2011).
CRODA (CRDA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,379p | MARKET VALUE: | £3.33bn | |
| TOUCH: | 2,377-2,380p | 12-MONTH HIGH: | 2,390p | Low: 1,498p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 231p* | NET DEBT: | 64% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 560 | 125 | 61.9 | 24.8 |
| 2012 | 573 | 133 | 66.9 | 26.8 |
| % change | +2 | +6 | +8 | +8 |
Ex-div: 29 Aug Payment: 04 Oct *Includes intangible assets of £205.6m, or 147p a share | ||||
