Croda’s (CRDA) focus in recent times has been on improving business mix to reflect its “three strong legs of growth”, namely the personal care, life sciences and performance technologies segments. Adverse foreign exchange movements dampened revenue and profit growth, but dig down and it's clear the strategy is paying off, evidenced by 7.7 per cent constant currency growth in adjusted pre-tax profits on sales growth of 3.6 per cent, while the return on sales margin has increased by 50 basis points to 25.4 per cent.
Favourable mix aside, the speciality chemicals group still needs to innovate to drive growth. So it is continuing to partner with universities and small- to medium-sized enterprises (SMEs) through its “stretching the growth” initiative, alongside its in-house research and development (R&D) work.
This has underpinned a steady stream of product launches across a diverse range of areas, from 'Green Caviar' algae-based skincare to crop protection to renewable energy. R&D investments have exceeded £150m over the past three years, but with the commissioning of the group’s new plant in North America, the recent period of significant capital investment is drawing to a close, and as a result free cash flow has improved by 55 per cent to £62.7m.
Bloomberg puts the consensus adjusted EPS at 189p for 2018 (up from 179p in 2017).
| CRODA (CRDA) | ||||
| ORD PRICE: | 4,782p | MARKET VALUE: | £6.29bn | |
| TOUCH: | 4,781-4,785p | 12-MONTH HIGH: | 5,070p | LOW: 3,612p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 26 | |
| NET ASSET VALUE: | 684p* | NET DEBT: | 43% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 707 | 168 | 92.4 | 35.0 |
| 2018 | 703 | 171 | 97.5 | 38.0 |
| % change | -1 | +2 | +6 | +9 |
| Ex-div: | 23 Aug | |||
| Payment: | 3 Oct | |||
| *Includes intangible assets of £401m, or 305p a share | ||||
