Croda International (CRDA) felt the force of President Trump’s imposition of 25 per cent duties on Chinese chemical imports and the roll-out of new legislation on 'Daigou' cross-border selling in China. While the chemicals group’s life sciences division grew 13 per cent at constant currencies, its personal care and performance technologies divisions experienced respective growth contractions of 3.6 per cent and 6 per cent.
Croda chief executive Steve Foots noted an unusually elastic response to price changes across its slowing divisions. Personal care prices rose 2 per cent and volumes fell 6 per cent, while performance technologies prices lifted by between 1 and 2 per cent, with a corresponding volume fall of 8 per cent. June, a normally busy period for Croda, was “very quiet”, which has made the business more cautious going into its second half, he added.
The group’s free cash flow improved by over 50 per cent to £94.5m, owing to lowered capital expenditure, an improvement in cash profits and better working capital management. Mr Foots attributed the improvement in part to “unpredictable and erratic destocking” related to the US and China, which will take two to three months to work through the business. Croda typically only requires between £70m and £75m in capital to run the business. Its leverage ratio increased to a multiple of 1.5 from 1.2 last year – Croda will aim to reward shareholders should this drop below one, which could happen next year, Mr Foots said.
Bloomberg consensus forecasts estimate full-year 2019 earnings per share of 197p, up from 194p last year.
| CRODA INTERNATIONAL (CRDA) | ||||
| ORD PRICE: | 4,668p | MARKET VALUE: | £6.01bn | |
| TOUCH: | 4,668-4,674p | 12-MONTH HIGH: | 5,415p | LOW: 4,399p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 26 | |
| NET ASSET VALUE: | 669p* | NET DEBT: | 70% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 703 | 171 | 97.5 | 38 |
| 2019 | 715 | 166 | 95.6 | 39.5 |
| % change | +2 | -3 | -2 | +4 |
| Ex-div: | 22 Aug | |||
| Payment: | 02 Oct | |||
| *Includes intangible assets of £449m, or 349p a share | ||||
