Croda’s wrinkles breakthrough smoothing way to higher sales

The Snaith-based company, which provides ingredients for international beauty firms such as L’Oreal and Estee Lauder, said anti-wrinkle, anti-ageing creams are a huge growth area.

Croda has created a new high end plant cell product called Senestem, which promises a breakthrough in anti-wrinkle technology.

Keith Layden, Croda’s chief technology officer, said: “We take cells from a plant and we reconvert it to its stem state. Then you can do anything you want with it. It’s very clever, rather like human stem cells. Plants produce a lot of chemicals to protect themselves and we take advantage of that.”

The plant stem cells are said to stimulate the skin to produce collagen, which keeps the skin elastic and less prone to the wrinkles that come with old age and sun exposure.

“The collagen in the skin breaks down with age, but these plants cells stimulate the skin to produce collagen,” said Mr Layden.

Croda, which is now in the FTSE 100 list of leading UK companies, is in talks about Senestem with both multi-nationals and smaller companies.

The group’s chief executive Steve Foots said: “We’re selling it to our biggest customers and there will be branded products coming out in the next few months. It’s a niche area in a fast-growing market.”

Personal grooming is becoming increasingly important as the population ages and typically it is the “grey pound” that can afford the higher prices.

“It’s not just women, it’s men too. Male grooming is a big growth area. Older men are spending more on their face and hair,” said Mr Foots.

He added that one of the major benefits of Senestem is it is completely sustainable as the products are produced in the laboratory rather than from actual plants.

This means there is no need to harvest the plants and chop down parts of the rainforest or other environmentally unsound practices.

Mr Foots was speaking yesterday as Croda announced a six per cent rise in underlying pre-tax profits to £133.1m during the six months to June 30.

This was driven by a three per cent increase in consumer care operating profits to £99m, a five per cent increase in performance technologies to £34.5m and a 33 per cent rise in industrial chemicals to £5.6m.

Growth was held back by the group’s exposure to the European auto market and lower sales at its crop care business.

Lower interest rates, lower borrowing and reduced pension funding interest boosted profits.

Total sales rose 1.3 per cent to £562.7m

Sales in performance technologies, fell slightly, hit by weakness in the European automotive sector.

Crop care sales also fell as a result of the late start to the corn planting season.

The crop care division makes chemicals that go into pesticides, fungicides and insecticides and is a part of Croda’s consumer care division.

Croda said the fall in crop care sales has bottomed out and it expects both crop care and the performance technologies division to return to growth during the rest of the year.

Analyst Rae Ellingham at Charles Stanley said: “Further progress is expected to be made in the second half with the issues affecting demand, weather conditions and automotive industry weakness, viewed as cyclical rather than structural.

“Improving trends in personal and health care are expected to be complemented in the second half by a return to growth in crop care and in performance technologies.

“With growth in the key consumer care division held back by weather related issues but improving trends in personal and health care in evidence, Croda is putting in place steps to improve operating profit and growth in margins.”

Mr Foots said that while the group does not expect market conditions in Europe to improve in the near term, neither does it expect a repeat of the reduction in market demand seen in the second half of 2012.

“In consumer care, we anticipate that crop care will return to growth for the rest of the year, complementing the improving trends in personal care and health care seen in the second quarter. We also expect to see a return to sales growth in performance technologies compared to 2012.

“As a result we believe we will report further progress throughout the remainder of the year.”

The interim dividend will be raised by 8.4 per cent to 29p, up from 26.75p.

The increase is in line with the rise in earnings per share during the half.

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