Interim Management Statement

RNS Number : 3766F

Croda International PLC

24 April 2014

 



24 April 2014

Croda International Plc

AGM and Interim Management Statement

PROFITABILITY IMPROVED DESPITE ADVERSE CURRENCY TRANSLATION

Croda International Plc today announces its Interim Management Statement for the period since 31 December 2013.

Trading

The modest but improving growth trend in underlying sales seen in the second half of 2013 continued through the first quarter of 2014, despite the disruption caused by the severe weather in North America and difficult economic conditions in South America. On a constant currency basis, Group turnover was up 2.9% with acquisitions contributing 1.6% to this total. However, adverse currency translation of 6.1% meant that reported sales in sterling were down 3.2% to £274.0m (2013: £283.1m).

Group operating profit increased 1.0% to £68.7m (2013: £68.0m). Operating margins increased to 25.1% (2013: 24.0%), reflecting favourable product mix. Return on sales increased to 33.3% (2013: 31.1%) in Consumer Care and to 19.0% (2013: 17.0%) in Performance Technologies as both divisions continued to benefit from strong underlying demand for high value products. Industrial Chemicals' return on sales reduced to 4.7% (2013: 9.1%), reflecting the integration of Sipo and weaker commodity margins generally.

Pre-tax profits increased slightly to £65.2m (2013: £65.1m) with a stronger underlying performance offset by a £3.5m impact from adverse currency translation.

On a divisional basis, underlying Consumer Care sales decreased by 0.6%. Crop Care was impacted by heavy snow in North America during January and February and weak sales into Eastern Europe. Weak sales in North America and challenging economic conditions in South America were the main reasons behind modest underlying sales declines in Personal Care. Health Care growth was strong in almost all geographies. A further 0.5% contribution to sales growth came from acquisitions.

Underlying sales in Performance Technologies were up 3.7%, continuing the improved trend seen in the final quarter of 2013. Business in Asia was particularly strong. All business areas apart from Home Care saw good sales growth. The Sipo acquisition added an additional 1.7% to turnover.

Underlying Industrial Chemicals sales were up 2.7% and again, Sipo added a further 7.2% to the growth.

Financial Position

There has been no significant change in Croda's financial position during the period. Interest costs in the quarter were slightly higher than 2013 due to the consolidation of 100% of Sipo's debt.

Underlying cash generation was again strong in the quarter, with net debt falling £13.6m to £188.6m after paying over £20m into the UK pension fund in January.

Outlook

We expect the modest improvement in underlying sales growth seen in the first quarter to continue. However, adverse currency translation is expected to remain an issue and consequently, second quarter performance is likely to be similar to that seen in the first quarter. The Board is confident that the Group has the right strategy in place to continue to drive profitable underlying growth.

For further information please contact: Steve Foots/ Sean Christie Croda International Plc Charlie Armitstead/ Rosie Oddy Pendomer Communications

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Croda International Plc

Unaudited income statement for continuing operations

31 March 2014

	3 months to	3 months to
	31 March	31 March
	2014	2013	Change
Revenue
Consumer Care	148.4	158.4	-6.3%
Performance Technologies	93.8	93.9	-0.1%
Industrial Chemicals	31.8	30.8	+3.2%
	274.0	283.1	-3.2%
Adjusted operating profit1
Consumer Care	49.4	49.2	+0.4%
Performance Technologies	17.8	16.0	+11.3%
Industrial Chemicals	1.5	2.8	-46.4%
	68.7	68.0	+1.0%
Net bank and loan interest payable	(2.3)	(1.7)
Net retirement benefit scheme financing	(1.2)	(1.2)
Adjusted profit before tax1	65.2	65.1	+0.2%
Operating margin	25.1%	24.0%
Analysis of turnover uplift for continuing operations:

			Constant	Currency
	Underlying	Acquisitions	Currency	translation	Total
Consumer Care	-0.6%	+0.5%	-0.1%	-6.2%	-6.3%
Performance Technologies	+3.7%	+1.7%	+5.4%	-5.5%	-0.1%
Industrial Chemicals	+2.7%	+7.2%	+9.9%	-6.7%	+3.2%
Total	+1.3%	+1.6%	+2.9%	-6.1%	-3.2%

^{1 Continuing operations before exceptional items, acquisition costs and amortisation/write off of intangible assets arising on acquisition.}

 

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