Difficult European markets, fragile consumer confidence and a strong pound took their toll on full-year results at Croda (CRDA). Strip out currency effects and the speciality chemicals group's adjusted operating profit still fell 2 per cent to £260m, reflecting tepid demand for expensive consumer care products and the burden of weak commodity prices on its industrial chemicals unit.
Management has responded by refocusing on key growth markets and realigning their product offerings. The group also plans to implement cost-saving measures to mitigate the impact of weaker demand in Europe. But there was some good news: investments in product innovation and emerging markets started to pay off in the second half of the year. This was particularly evident in the life sciences division, which was buoyed by strong sales of Omega 3 products, and performance technologies, where acquisitions, new products and strong demand in Asian markets drove adjusted operating profit up a tenth to £66m.
Looking ahead, innovation remains a major focus for Croda. Management reckon there is huge untapped demand for sustainable chemical-based products. As a result, they plan to double capital investment in the next three years and deliver the group's biggest project to date: producing sustainable 'bio-surfactants' (surface acting agents), primarily for the US market. Broker Morgan Stanley expects EPS to increase by 17 per cent this year to 146p.
| CRODA (CRDA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,801p | MARKET VALUE: | £3.8bn | |
| TOUCH: | 2,798-2,802p | 12-MONTH HIGH: | 2,849p | LOW: 1,965p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 356p* | NET DEBT: | 37% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 1.00 | 192 | 95 | 35.0 |
| 2011 | 1.03 | 238 | 120 | 55.0 |
| 2012 | 1.05 | 238 | 122 | 59.5 |
| 2013 | 1.08 | 250 | 131 | 64.5 |
| 2014 | 1.05 | 229 | 122 | 65.5 |
| % change | -3 | -8 | -7 | +2 |
Ex-div: 30 Apr Payment: 28 May *Includes intangible assets of £245m, or 180p a share | ||||
