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Croda's riding high in the beauty stakes
Green demand helps sales and profits soar Eric Barkas City Editor EVERYBODY – from Bradford to Bangalore to Beijing – wants to look better. Croda International wants to help.
The natural oils, fats and chemical derivatives Croda uses are sought after by beauty companies like L'Oreal, Chanel, Estee Lauder, Clarins, Revlon and Avon. The companies can then market their products as "green" and differentiate them from those using petrochemicals.
Goole-based Croda is in the green niche and is playing the advantage for all it's worth. Figures for 2005 out yesterday showed continuing sales up 8.8 per cent to 305.6m and taxable profits ahead by 14.2 per cent to 49.2m.
If there was a downside it was that Croda warned, like many others, of escalating energy costs.
But the market, after an early blip, took this in its stride.
The shares closed up 8.5p to 500p, a record high. They have risen around 40 per cent in the past year, valuing the company above 600m.
The 2005 performance was driven by the core consumer care division – additives for beauty products in personal care, for healthcare supplements and for household products – which accounts for 68 per cent of turnover and 85 per cent of operating profit.
Sales were up more than 10 per cent and margins grew above 21 per cent.
There was strong growth in North and South America. Asia grew just under 5 per cent as lower sales in the more mature market of Japan weighed on success in the newer markets of India and China.
Croda already has a wholly owned sales company in India and is establishing one in China – the two world markets that are most sought after.
Apart from massive populations, is there real scope for beauty products like those Croda's customers make in countries like India and China?
"Whenever people increase their disposable income one of the first things they spend it on is looking better," chief executive Mike Humphrey says.
"Go and look at a Bollywood movie. There's more slap there than you'll see in London."
The total dividend is raised to 13.35p per share from 12.5p. Mr Humphrey said it "would not be too long" before a successor was found to finance director Barbara Richmond, who is moving to a similar role with the international motor distributor Inchcape.
eric.barkas@ypn.co.uk
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