Croda warns on 2014 profit

CRODA International, which is feeling the effects of a strong pound, has warned that this year’s pre-tax profit will be lower than last year’s.
By The Newsroom
Published 22nd Jul 2014, 09:45 BST

However, the company, which makes chemicals used in cosmetics, pesticides and detergents, said it expected to achieve “progress” in its underlying profit.

Croda, whose customers include Unilever, L’Oreal and Procter & Gamble Co, generates only about five per cent of revenue in the UK but reports in pounds. The pound’s strength, mainly against the dollar, has forced the company to issue a string of profit warnings this year.

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Croda’s adjusted pretax profit fell six per cent to £125.3m in the first half ended June 30 from £133.2m a year earlier.

Sales fell 4.5 per cent to £537.4m as revenue fell in all three of its divisions - consumer care, performance technologies and industrial chemicals. Currency translation reduced sales by £38.3m, the company said. Analysts on average had expected a pre-tax profit of £125.2m on revenue of £540.8m.

Croda, which raised its interim dividend to 29.5 pence per share from 29 a year earlier, reported a pretax profit of £250.1m in 2013.

“We believe Croda now needs some currency relief and a return to underlying growth in consumer care,” JPMorgan Cazenove analyst Martin Evans wrote in a note.

Croda’s shares, which have fallen about 10 per cent this year, were unchanged at 2214 pence in early trading on the London Stock Exchange.