Croda International (CRDA) H1 2024 earnings summary

Executive summary

• Group performance in H1 2024 was in line with expectations, with sequential improvement in sales and operating margin versus H2 2023, despite a 7% year-over-year revenue decline; Consumer Care led the recovery, while Life Sciences and Industrial Specialties also improved sequentially.

• Innovation remained a core focus, with New and Protected Products (NPP) reaching record levels at 36% of total sales and over 50 patents filed in H1; NPP sales in Consumer Care grew 11% at constant currency.

• Free cash flow rose 69% year-over-year, supported by working capital inflow and disciplined cost control.

• Significant portfolio transition post-pandemic, with focus on growth investments, divestment of industrials, and leadership in sustainable and biotech ingredients.

• Interim dividend maintained at 47.0p per share, reflecting continued focus on shareholder returns.

Financial highlights

• Group sales were £815.9 million, down 7% year-over-year; adjusted operating profit fell 23% to £135.6 million; operating margin was 16.6%, down 3.4 percentage points year-over-year but up 1.6 points sequentially (ex-COVID lipids).

• Profit before tax was £127.3 million, down 27%, with a £6.5 million currency headwind.

• Free cash flow reached £123 million, up 69% year-over-year; net debt reduced to £508 million, with leverage at 1.4x EBITDA.

• Adjusted EPS was 68.8p, down 26%; ordinary dividend per share maintained at 47.0p.

• Capex for H1 was £70 million, in line with full-year guidance of £150 million.

Outlook and guidance

• Adjusted profit before tax for 2024 is expected between £260 million and £280 million in constant currency, reflecting ongoing weakness in Life Sciences and no immediate recovery in Crop Protection.

• Sequential improvement in operating margin anticipated, with group margin expected at the upper end of the 16–17% range for the full year.

• Currency translation expected to have a further £5 million adverse impact on adjusted PBT in H2 2024 if current rates persist.

• Capex for 2024 expected to be ~£150 million; net finance costs at the top end of £15–20 million range.

• Consumer Care and Pharma expected to maintain positive momentum; only modest improvement expected in Crop Protection.