Interim Management Statement

RNS Number : 4126W

Croda International PLC

07 November 2014

 



7 November 2014

Croda International Plc

Interim Management Statement

IMPROVING ORGANIC SALES GROWTH

Croda International Plc ("Croda") today announces its Interim Management Statement for the period since 1 July 2014.

Trading

Although market conditions remain challenging in many parts of the world, underlying sales trends improved during the third quarter with growth in both core market sectors. The organisational changes introduced earlier in the year are driving better market focus and customer alignment which are helping to deliver improved top line growth.

On a constant currency basis, Group sales increased 4.0%, including 0.6% from acquisitions, reflecting positive momentum in both Consumer Care and Performance Technologies. We saw accelerated underlying growth in New and Protected Products (NPP) during the quarter. Adverse currency translation of 7.3% impacted sales by £19.2m so that reported turnover declined 3.3% to £259.0m (2013: £267.9m) despite the improving underlying trends.

Operating profit was down 6.4% to £58.1m (2013: £62.1m) impacted both by adverse currency translation of £3.5m and an estimated £2.0m currency transaction cost in the quarter.

Pre-tax profit was broadly flat on a constant currency basis but declined to £55.1m (2013: £58.7m) on a reported basis.

Consumer Care constant currency sales were up 4.2%. This was driven by Health Care, where the strong growth in excipients continued, and was boosted by the first meaningful sales of pharmaceutical grade Omega-3. Personal Care continued to improve and returned to underlying sales growth during the quarter. Crop Care also grew in the quarter despite difficult market conditions in Latin America. NPP growth accelerated as we continued to focus the business closer to our customers through new technologies, R&D centres and customer academies. Return on sales fell slightly to 30.0% (2013: 31.4%) due to currency and mix effects.

Performance Technologies performed very strongly in the quarter with constant currency sales growth of 8.2% and all business areas exceeding 4% underlying sales growth. The performance was driven by particularly strong growth in Asia as our strategy to invest in faster growing emerging markets continued to deliver benefits. Return on sales increased to 17.1% (2013: 15.6%).

Industrial Chemicals sales and profits were significantly down in the quarter as weak commodity prices and adverse currency transaction effects reduced margins on our by-product sales in addition to low levels of toll processing business. As a result reported sales were down 14.5% and profits reduced to £0.5m (2013: £2.4m).

Financial Position

Underlying cash generation was again strong. After paying the interim dividend in the quarter amounting to £41.8m and investing £15.6m in capital projects, net debt rose by only £18.0m to £219.7m.

Commenting on the outlook, Martin Flower, Chairman of Croda said:

"This is an encouraging performance given the improved underlying sales trends across our eight core markets. We continue to benefit from the global organisational changes introduced earlier this year, which together with our ongoing focus on R&D and innovation, are improving both our market alignment and customer contact. Whilst market conditions are challenging and the fourth quarter is always the smallest in terms of sales, we remain confident that Croda will continue to make further progress."

For further information please contact:

Steve Foots	Group Chief Executive	01405 860 551
Sean Christie	Group Finance Director	01405 860 551
Charlie Armitstead	Pendomer Communications	020 3603 5224

The company will host a conference call at 8.00am today.

Please dial [phone] and quote "Croda International" to gain access to the call.

Additional Information

£m	3 months to 30 September	3 Months  to 30 September	% Change	% Change Constant
	2014	2013	Reported	Currency
Consumer Care	140.7	145.4	-3.2%	+4.2%
Performance Technologies	90.1	89.5	+0.7%	+8.2%
Industrial Chemicals	28.2	33.0	-14.5%	-8.7%
Revenues	259.0	267.9	-3.3%	+4.0%
Consumer Care	42.2	45.7	-7.7%	-1.5%
Performance Technologies	15.4	14.0	+10.0%	+14.3%
Industrial Chemicals	0.5	2.4	-79.2%	-75.0%
Adjusted operating profit1	58.1	62.1	-6.4%	-0.8%
Operating margin	22.4%	23.2%
Interest	(3.0)	(3.4)
Adjusted profit before tax1	55.1	58.7	-6.1%	-0.2%

Q3 sales trends Constant Currency Underlying Acquisitions currency translation Total Consumer Care +4.2% +0.0% +4.2% -7.4% -3.2% Performance Technologies +7.9% +0.3% +8.2% -7.5% +0.7% Industrial Chemicals -12.0% +3.6% -8.4% -6.1% -14.5% Total +3.4% +0.6% +4.0% -7.3% -3.3%
£m 9 months  to 30 September 9 Months to 30 September % Change % Change Constant 2014 2013 Reported  Currency Consumer Care 432.5 458.2 -5.6% +1.6% Performance Technologies 272.4 274.8 -0.9% +5.7% Industrial Chemicals 91.5 97.6 -6.3% +0.1% Revenues 796.4 830.6 -4.1% +2.8% Consumer Care 137.4 144.8 -5.1% +1.0% Performance Technologies 49.8 48.2 +3.3% +7.1% Industrial Chemicals 3.2 8.3 -61.4% -54.2% Adjusted operating profit1 190.4 201.3 -5.4% +0.2% Operating margin 23.9% 24.2% Interest (10.0) (9.4) Adjusted profit before tax1 180.4 191.9 -6.0% -0.1%
9 month sales trends Constant Currency Underlying Acquisitions currency translation Total Consumer Care +1.3% +0.3% +1.6% -7.2% -5.6% Performance Technologies +4.5% +1.2% +5.7% -6.8% -0.9% Industrial Chemicals -5.7% +5.8% +0.1% -6.4% -6.3% Total +1.6% +1.2% +2.8% -6.9% -4.1%

¹ Continuing operations before exceptional items, acquisition costs and amortisation/write off of intangible assets arising on acquisition

 

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