Chemicals firm Croda (CRDA) has missed earnings expectations, sending its share price down 2.9% to £49.14. Fourth quarter sales growth of 1% was lower than the 1.7% expected by investment bank UBS.
There has been a notable slowdown in growth from Croda’s Personal Care division, which specialises in ingredients used in skincare and haircare products.
The division delivered 3.2% sales growth in the fourth quarter versus UBS’ estimates of 4.5%. In comparison, Croda achieved 4.9% growth in this division during the third quarter of 2018.
Return on sales for the Personal Care division slipped from 33.3% in 2017 to 32.9% as a whole for 2018, which Croda attributed to a broader sales mix.
Across the group, full year sales rose 2.9% to £1.39bn and pre-tax profit jumped 6.2% to £331.5m.
The Personal Care division’s slower growth overshadows news that Croda will return £150m through a special dividend of 115p per share as a result of stronger cash generation. On top of the special dividend, Croda has hiked its ordinary dividend per share by 7.4% to 87p per share.
Elsewhere, Croda has decided to stockpile goods and secure additional warehouse capacity ahead of Brexit.
‘With 96% of sales and 80% of production outside the UK, the overall impact of the UK leaving the European Union is expected to be limited for Croda,’ reassures the company.
Croda has been investing in its business to accelerate product innovation, add new technologies and boost intellectual property.
It has also signalled a willingness to make acquisitions, saying it is looking for mid-sized businesses that may complement growth in its key markets.