Croda praises staff for exceptional commitment during pandemic

The Snaith-based FTSE 100 firm, which counts Boots, Unilever, Procter & Gamble and L’Oreal as customers, has not furloughed any employees, reduced their pay or used Government liquidity facilities.

All of its 19 principal manufacturing sites have remained in operation and the firm said its raw material supply chains are secure.

The firm said: "We have supported our customers and suppliers, given financial assistance to the communities closest to our sites, and sustained our track record of paying regular dividends to shareholders."

In half year results for the six months to June 30, Croda said its business model had shown strength during challenging Covid-19 conditions.

Core business sales were 5 per cent lower and the group reported resilient margins despite lower volumes Adjusted operating profit was 10 per cent lower and pre-tax profit was down 13 per cent at £145m.

Following a challenging second quarter, Croda said trading has stabilised, but visibility is limited and the timing of a recovery remains unclear.

It anticipates that consumer markets that have been significantly impacted by lockdowns will recover more quickly than industrial end markets.

Steve Foots, Croda's chief executive, said: "Today we are seeing China is furthest away from the height of the global pandemic so it's coming out of it first.

"We are seeing personal care sales rebounding, which is encouraging."

He said a lot will depend on government lockdowns, which will affect how much people socialise and leave their houses.

"People put lipstick on, people put suntan lotion on, they're going to the hair salon. We expect that to come back pretty well," he added.

"If you look at SARS many years ago, we saw that rebound coming back pretty quickly after the SARS pandemic. We think we are through the worst in consumer markets and we would expect that to recover over the next few quarters."

Mr Foots praised colleagues for their hard work during the crisis.

"The response and commitment of all our employees to serve our customers during the Covid-19 pandemic has been exceptional and the strength of Croda's business model has been clearly demonstrated," he said.

"Whilst customer demand has inevitably been impacted by the crisis, the strength and breadth of our portfolio, global footprint and flexible manufacturing have all helped to reduce its impact.

"This has enabled us to deliver a resilient performance with only a modest reduction in sales, a resilient margin and healthy cash generation. With a strong balance sheet, low leverage and robust liquidity, we have continued to pay our regular dividends, invest in future organic growth and secure a technology-rich acquisition in our fast growing life sciences business.

"Despite current trading conditions remaining volatile, our strategy is unchanged and, by focusing on the future during these challenging times, we can accelerate delivery to enhance future growth and profitability."

The group said that the overarching priority during the pandemic was the safety of staff and customers.

"We have done everything possible to protect them through this period. We've done a good job and that will develop loyalty and good will," said Mr Foots.

"People won't forget what companies do for them and their families and we have done everything possible to protect them. Some companies can't do that because they're in survival mode.

"We paid a dividend. We feel like we treated everyone fairly and equally. We didn't need Government support and we protected the financial security of our employees. We are trading pretty well through the crisis."