Croda International (CRDA) H2 2024 earnings summary

Executive summary

• Sales declined 4% on a reported basis (down 1% at constant currency), with profits in line with guidance due to cost control and efficiency measures, despite the absence of high-margin CV19 lipid sales.

• Adjusted operating profit was £280m, with adjusted PBT at £273m constant currency (£260m reported), and margin at 17.2%.

• Free cash flow rose 9% to £181m, and the dividend increased by 1p to 110p per share, maintaining a strong balance sheet.

• Strategic focus on local/regional customers, innovation, and operational efficiency to drive future growth.

Financial highlights

• Group sales were £1.63bn, down 4% reported or 1% at constant currency; excluding COVID lipid sales, sales were up 2%.

• Adjusted operating margin fell from 18.9% to 17.2%, at the top end of guidance, with sequential improvement from 16.6% in H1 to 17.7% in H2.

• Free cash flow increased to £181m, and net debt reduced to £532m, with a leverage ratio of 1.3x–1.4x adjusted EBITDA.

• Currency translation reduced sales by £52.1m and adjusted operating profit by £13.9m due to Sterling strength.

Outlook and guidance

• 2025 guidance for group-adjusted PBT is £265m–£295m at constant currency.

• Consumer Care and Life Sciences expected to grow in 2025; Industrial Specialties to remain flat.

• Price mix headwinds are expected to diminish, with operational efficiencies offsetting inflation and incremental costs.

• No significant H1/H2 seasonality expected in 2025; capex expected at ~£135m.