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Vaccine rush boosts Croda profits

Broad growth for chemicals company, which has strong pharmaceutical and consumer product exposure, as it continues the acquisition run
Vaccine rush boosts Croda profits
  • Half-year dividend increased 10 per cent
  • Life sciences division leads the way with adjusted profit doubling on last year

Over $100m (£72m) of sales related to Covid-19 was a cherry on top for Croda International (CRDA) in the first half, which saw profits climb by half on last year, and 35 per cent on 2019. The company is bullish on the rest of the year as well, saying full year profits would be “significantly ahead of current expectations”. 

The chemical company has boosted its half-year dividend after a strong first half, driven by its Covid-19-exposed healthcare division, new acquisitions, as well as the broader sales growth in sectors such as cosmetics and crop additives. 

Croda manufactures lipid nanoparticles, which are used to deliver mRNA vaccines like the Moderna and Pfizer/BioNTech Covid-19 vaccines. It also bought Avanti last year to expand the life sciences division, and this added 23 per cent to sales in the first half. 

Chief executive Steve Foots said it was a “record first-half performance”, driven by both the acquisitions and organic growth.

To balance out this larger business – two more businesses worth around £50m were added to the portfolio in the first half – Croda has announced most of the performance technologies and industrial chemicals divisions “could be included in the scope of any potential divestment” after a strategic review. 

These two divisions contributed around a third of first-half sales, or £277m, although their share of adjusted profit was much smaller, at 15 per cent.

Croda said it expected growth to continue in the second half, despite demand for Covid-19 ingredients being uncertain outside the next few months. Demand for vaccines – particularly Moderna and Pfizer – remains high, however, with countries like Australia promising Moderna deliveries into 2022. Buy. 

Last IC View: Buy, 6,542p, 12 May 2021

CRODA INTERNATIONAL (CRDA)  
ORD PRICE:8,252pMARKET VALUE:£ 11.6bn
TOUCH:8,250-8,252p12-MONTH HIGH:8,432pLOW: 5,652p
DIVIDEND YIELD:1.2%PE RATIO:46
NET ASSET VALUE:1,176p*NET DEBT:52%
6 months to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
202067314584.139.5
202193420411043.5
% change+39+41+31+10
Ex-div:09 Sep   
Payment:05 Oct   
*Includes intangible assets of £1.3bn, or 928p per share