Global specialty chemical manufacturer Croda International (CRDA) impressed the market with its half-year results and says full year profits will be significantly ahead of market expectations.
Pre-tax profit increased by 41% to £204.1 million, driven by a 39% jump in sales to £934 million. It has proposed to increase the dividend by 43.5p. This good news helped to drive the share price 4.8% higher.
Three key factors have contributed to this strong performance.
First, Croda’s existing business is benefiting from recent investment and innovation, coupled with a rebound in consumer demand and restocking.
Second, the acquisitions of Iberchem and Avanti have both been critical in driving growth.
In July 2020, Croda acquired Avanti, a leader in lipid-based drug delivery technologies for next generation pharmaceuticals.
Croda expects to generate at least $200 million of sales from lipid systems this year, mainly from a Covid 19 vaccine contract. This is an increase to the $125 million estimate that the group communicated to the market in March.
Chemicals firm Croda has an exciting new growth strategy
Last November, Croda bought Iberchem, a Spanish flavour and fragrance firm, for €820 million. This has provided the group with a stronger position in the fast-growing global fragrance market. This segment has made a significant contribution to the latest financial results.
Third, the Life Science division has delivered a strong performance, in part driven by Crop Care where underlying sales grew by double digits. In Healthcare, sales of adjuvants (an ingredient used in vaccines that creates a stronger immune response) grew by more than two thirds.
(By Mark Gardner)
