The feelgood factor keeps Croda in peak condition

The Snaith-based company, which is poised to join the FTSE 100, said pre-tax profits rose 26 per cent to £242.2m in the year to December 31, driven by strong growth in health and personal care products.

New chief executive Steve Foots said that despite the economic hardship, people are still spending money on making themselves feel better about their appearance.

“We’re not seeing any sign of trading down anywhere,” he said. “People are still spending money on beauty and anti-ageing creams, lotions, shampoos and conditioners.”

Mr Foots believe that consumers are more willing to trade down on food than beauty products.

“People want to look good,” he said. “It’s the feelgood factor, like lipstick during the war.”

Croda’s best performance was in Latin America where sales grew by 11 per cent and Europe, where sales grew by nine per cent.

Sales in North America grew by a more modest four per cent after the group parted company with a major distributor.

In Asia, a deliberate decline in marketing in the industrial specialities business held sales back to an increase of three per cent.

Mr Foots said the Latin American market is keen on high end personal care products.

“In Brazil women apply products far more often than in India and China,” he said. “It’s a question of disposable income. In India and China they have less, but that will change.”

At the moment Europe accounts for 44 per cent of Croda’s business, North America is 24 per cent and emerging markets account for 32 per cent.

Mr Foots believes that emerging markets could make up half the business in the next six years.

Croda is famous for its innovative new product launches and this year these will include anti-ageing product Resistem, which uses plant stem cell technology to reduce wrinkles, redness and promote a glowing complexion.

Croda, which supplies companies such as L’Oreal, Chanel, Clarins, Estée Lauder, Boots and Procter and Gamble, said all the big major cosmetics industries are looking at Resistem.

Another new product is Crodasone Cystine which straightens hair without the need for high temperature hair straighteners.

“You apply it and it gives you smooth, sleeker hair. You also have to reapply it – we like that,” said Mr Foots.

Croda, which is very cash-generative, raised its final dividend by 20 per cent to 30.25p, taking its total dividend to 55p per share.

Mr Foots said the company is looking at small acquisitions of between £5m to £10m and up to £40m, particularly companies that have technologies that Croda lacks.