Croda raises expectations on BioNTech/Pfizer contract

As we have witnessed elsewhere, the ripple effects of the pandemic can sometimes provide a boost to corporate earnings. Croda international (CRDA) said that its supply contract, which provides critical inputs for the BioNTech/Pfizer vaccine, is set to be more lucrative than previously expected. The UK chemicals group said that the contract would generate sales of at least $125m (£89.5m) in 2021, up a quarter on earlier estimates as the vaccine partnership has increased planned production.

The announcement accompanied a solid, if unspectacular, set of full-year figures, with flat sales leading to a 4 per cent decline in adjusted operating profits to £320m.

Management cited record results at the life sciences division, where growing activity in drug development and agriscience fed through to revenue growth of 14.8 per cent, and a 160-basis point increase in return on sales to 32.2 per cent.

Shareholders can look forward to a final dividend of 51.5p, but the results also underline the growth potential afforded by several dozen drug delivery projects in train, so we remain bullish at 6,320p. Buy.

Last IC view: Buy, 5,566p, 23 Jul 2020