Speciality chemicals firm Croda said it has made an encouraging start to 2018 after a “standout” performance from its personal care division.
The Snaith-based FTSE 100 firm said core business sales rose 4 per cent on a constant currency basis in the first three months of 2018, supported by strong growth across the group’s consumer businesses.
The group said the top line momentum seen through 2017 continued into the first quarter of 2018.
Personal Care was the standout performer and Croda reported “excellent” sales growth in this division.
Constant currency sales in Personal Care rose 7.6 per cent. Croda said demand was strong in all three business units – Beauty Actives, Beauty Effects and Beauty Formulation. Growth was driven equally by volume and price, with successful recovery of higher raw material costs, particularly in Beauty Formulation.
Demand from multi-nationals increased, with a further improvement in New and Protected Product sales.
The group also reported robust sales growth in Life Sciences, where constant currency sales rose 4.1 per cent. Sales volume continued to grow in Crop Protection and Seed Enhancement, the former benefiting from increased collaboration with multi-national and local customers, with the latter driven by demand in vegetables and film coatings.
Croda said the acquisition of Plant Impact has introduced rich opportunities in biostimulants.
Health Care saw good sales growth, helping offset the loss of sales from the group’s former North American API contract.
Constant currency sales in Performance Technologies rose by 0.2 per cent. Croda said it made further progress in shifting its focus to higher value products, leading to significantly lower volume but higher prices, moving the sector towards its medium term return on sales target of 20 per cent.
The firm said it successfully recovered raw material price increases during the quarter.
Currency translation reduced sales by 5.3 per cent, with reported currency sales for the group 2.7 per cent lower.
Croda’s CEO Steve Foots, pictured, said: “We are focused on our strategy of ‘Growing the Core’, driving top line growth at industry leading margins to achieve superior returns, and ‘Stretching the Growth’, accelerating delivery across our markets.
“I am pleased with the encouraging start to 2018, with momentum in our consumer businesses and continued progress towards our profitability goal in Performance Technologies. We are on track to deliver our expectations,”
Analyst Adam Collins at Liberum said: “Today‘s first quarter sales update indicates a disappointing constant foreign exchange growth rate of 2.6 per cent.
“For 2018 our assumption currently is growth of 4.6 per cent. The main culprits in the first quarter were the Performance Technologies Division at 0.2 per cent, where we had been warned about some tough comps, and the relatively small Industrial Chemicals Division at minus 10 per cent, which is notoriously cyclical but had been doing ok.
“It is fair to say there would appear to be an improving mix with these results as relatively high margin Personal Care and Cropcare are growing, whilst low margin Industrial Chemicals heads back, but top line momentum ex-Personal Care is niggling, especially given the relatively high rating and good recent price performance.”