Shares in chemicals firm Croda (CRDA) slumped nearly 5% to £45.94 as the US/China trade dispute jammed up sales in its Personal Care division, leading to a decline in half year profits.
That makes Croda the day's biggest faller among FTSE 100 companies.
Croda reported a 2.7% fall in pre-tax profit to £166.2m for the six months to 30 June with earnings per share showing a similar reverse to 95.6p.
TRADE WAR HITS PERSONAL CARE
Personal Care is Croda’s largest division in terms of sales, and this unit has been particularly hit by the tit-for-tat battle between Washington and Beijing.
The division provides raw materials for things like deodorants, shower gels, cosmetics, skin and hair care products.
Divisonal sales slipped 3.6% to £246.8m with the company pointing out ‘significant uncertainty, weighing heavily on consumer confidence, together with new legislation on cross-border selling in China.’
Croda chief executive Steve Foots warned that the US market will remain ‘subdued’ for its Personal Care division, although he anticipates progressively recovery in its Asian markets.
Macroeconomic issues like the current trade dispute can inflict material damage on big exporters like Croda. The East Yorkshire-based firm generates 96% of its revenue, and exports 80% of its products, outside of the UK.
STRONG GROWTH IN LIFE SCIENCES
The dip in Personal Care offset strong growth in its Life Sciences business, which overcame headwinds from the US China dispute and a delayed planting season in the US to report a 13% rise in sales to £184.3m.
READ MORE ABOUT CRODA HERE
Croda’s half year results aren’t helped by tough comparatives from last year, when Personal Care and Life Sciences delivered bumper profits to beat expectations.
But the firm said Life Sciences is expected to show ‘continued progress’ and if the current ‘challenging economic conditions’ remain unchanged, it anticipates a slight improvement in performance in the second half of the year versus the previous year.