Earlier this month, Croda International (CRDA) bought a pharmaceutical company that specialises in the delivery of drugs through lipids for $185m (£146m). The all-cash acquisition, done with a three-year loan, shows the confidence the chemicals company has despite the effect of Covid-19 on the economy. The new addition, Avanti Polar Lipids, will also help Croda sell its ingredients for “early-stage pharmaceutical research”, the company said.
Croda’s principal earnings divisions are diverse, ranging from cosmetics ingredients to automotive parts. Neither industry has set the world on fire this year, although the group said its Asian sales were recovering as early as March. Since the last Covid-19 update in April, Croda’s geological diversity has also been helpful: its largest market is Europe, although North America is not far behind.
Whether the management of the outbreak in both those regions is reflected in sales will be clear in the first half results coming out on 23 July. Consensus forecasts (compiled by FactSet) put first half earnings per share at 85.74p, down 12 per cent on the first half of 2019. Last year had its own challenges, with the weaker North American market and automakers already struggling. Even with sales flat and profits down in 2019, the company handed out an increased dividend. Consensus has the final dividend increasing again, so the interim could creep up again despite the conditions.
