- 2023 underlying sales fall 11%
- Pre-tax profit slides by 70%
- Firm sees further margin pressure
Specialty chemical group Croda International (CRDA) posted a disappointing set of full-year 2023 results impacted by continued destocking by customers and a weak trading environment.
The shares gave up 2.7% to £47.70 making them the worst performers in the FTSE 100.
SALES DOWNTURN
Sales for the year to December were down 19% from £2.09 billion to £1.69 billion, although this was partly due to the sale of the majority of the firm’s Performance Technologies and Industrial Specialties businesses.
On an underlying basis, sales were down 11% with Consumer Care down 1%, Life Sciences down 5% due mainly to weakness in crop protection, and Industrial Specialties down 35% reflecting destocking and reduced demand.
Pre-tax profit was down 70% from £780 million to £236 million although again once adjusting for the previous year’s £356 million profit the underlying fall was less steep with profit down 33% to £309 million in line with guidance.
The firm insisted the megatrends it is experiencing, such as demand for sustainable and lower-carbon ingredients together with growth new pharma delivery systems including vaccine adjuvants, are ‘intact’ and it was well positioned for a recovery in its markets.
‘Our performance this year reflects the prolonged destocking and weaker macro environment that has followed two record years post the pandemic’, commented chief executive Steve Foots.
Foots added: ‘Despite the financial impact of this ongoing uncertainty, the technology trends that will drive our future growth have not changed with a continued transition to sustainable ingredients and biologics. We have successfully realigned our portfolio with these megatrends and our strategy is delivering with continued customer demand for innovation and sustainable ingredients.’
LOWER MARGINS AHEAD
The firm said Consumer Care had started the year well and it was ‘cautiously optimistic about the improving demand trend we experienced in January’.
In Life Sciences, it expects the non-Covid Pharma business to grow but destocking to continue in Crop Protection, while demand in Industrial Specialties is expected to remain weak.
The group operating margin for 2024 is expected to be two to three percentage points down on last year, in other words between roughly 16% and 17%, due to depressed sales volumes in two of its highest-volume businesses, Crop Protection and Industrial Specialties, hampering the recovery of higher input costs.
Commenting on the results, Neil Shah, head of content and strategy at Edison said: ‘2023 was one of the most difficult years in living memory for the chemicals industry. The general macroeconomic situation has been difficult; disruptions to supply chains have raised costs; and – most significantly – buying trends after the pandemic have reduced demand: customers stocked up on chemical products just after the end of the pandemic and have not yet exhausted this stock.’
