The Croda International Plc (LON: CRDA) share price rose 4.63% after releasing its financial results for the six months ended 30 June 2023. The company noted that its revenues had fallen 21.9% to £880.9 million from the £1,127.3 million recorded in a similar period last year.
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The positive investor reaction to today’s earnings report was unexpected, given the multiple declines reported by Croda regarding most financial measures. For example, the company’s operating profits fell 54.9% to £130.2 million from £288.6 million in H1 2023.
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The chemicals company had a rough start to the year amid a realignment as demand from COVID-19-related customers drastically reduced. Still, analysts at Berenberg have a favourable view of the company’s prospects as they expect it to return to sales growth in 2024.
Croda’s pretax profits fell by a more significant margin of 79.8% to £128.7 million from £636.5 million. However, the company noted that its consumer care division reported flat sales compared to a robust period last year, demonstrating the unit’s resilience.
Sales in the life sciences division were up 8%, excluding a $62m prior period Covid-19 lipid sales. However, sales in the Industrial Specialties division fell by 20% dragging the company’s revenues lower and impacting its overall profitability.
Croda revealed that it had taken temporary cost measures to protect its profitability. The company’s shares had fallen drastically on 9 June 2023 when it issued a profit warning due to the challenging business environment. However, the shares have recouped almost all of their losses to date.
Steve Foots, Croda’s CEO, commented: “The speed and scale of the post-Covid stocking and subsequent destocking has been unprecedented, leading to a decline in first-half sales volume and also impacting profit margin. Despite this difficult market backdrop, it is a testament to the strength of the Croda business that Consumer Care delivered sequential improvement on the second half of 2022, driven by customer demand for innovation and sustainability. Excluding the impact of Covid-19 lipid sales in the prior period, we also saw growth across all areas of Life Sciences.”
*This is not investment advice.
Croda share price.
The Croda share price rose 4.63% to trade at 5960.0p, from Monday’s closing price of 5696.0p.
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