Strong chemical reaction as Croda International profits leap

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NATURAL chemicals company Croda International reported a big jump in third quarter profits following a strong performance at its consumer care business.

The Snaith-based company said it expects further progress in the current quarter and into next year.

The FTSE 250 company makes chemicals for the cosmetics, healthcare and home care industries.

It supplies ingredients to skin care and cosmetics companies such as L’Oreal, Chanel, Clarins, Estée Lauder, Boots and Procter and Gamble.

The consumer care division traded strongly in the third quarter, with sales up 13.6 per cent and operating profits up 30.8 per cent.

The division reported improved margins on the corresponding quarter in 2010.

Croda said sales and operating profits in all business areas within consumer care were well ahead of 2010.

However, sales in industrial specialities fell 3.5 per cent against the tough comparatives of a particularly strong third quarter in 2010.

The shortfall was in July, with sales in the rest of the period ahead of 2010.

Operating profits in the industrial division were down 6.8 per cent.

A decrease in commodity and by product profitability was partially mitigated by stronger performances elsewhere in the sector.

Total sales rose five per cent to £265.6m in the three months to September 30.

In the year to date, pre-tax profits from continuing operations rose 27 per cent to £182.2m, up from 143.4m a year ago. Croda’s chairman Martin Flower said: “I am pleased to report good turnover and profit progress in the third quarter, driven by sales growth and margin improvement in our core businesses.”

Chemical makers have been battling against the rising cost of raw materials.

Operating profits from continuing operations rose 18.3 per cent to £57.6m.

Interest costs fell, resulting in continuing pre-tax profits increasing 20.8 per cent to £57.4m.

Net debt reduced by £15.5m to £237.8m in the quarter despite completion of a £50m buyback programme in the period.

“Croda continues to trade well and we expect to report further progress in the final quarter and into 2012,” said Mr Flower.

Croda is benefiting from a growing demand for cosmetics.

Wherever possible, it uses renewable natural raw materials, such as wool grease, rapeseed oil, coconut oil and a whole variety of plants.

The company was founded in 1925 to make lanolin from wool grease, a natural by-product of the wool industry.

Now virtually every cosmetic and toiletry company throughout the world uses Croda’s pro- ducts.