Croda International’s Share Price Fell 3.88% on FY23 Sales Decline

The Croda International Plc (LON: CRDA) share price fell 3.88% after its results for the year ended 31 December 2023 were released. The company reported that its 2023 financial performance was marked by extended destocking and challenging economic conditions. 

The speciality chemicals company revealed that its sales decreased by 11% on a comparable basis due to clients minimising stock levels across various sectors. Sales declined by 1% in the Consumer Care segment, with specific drops of 11% in Beauty Care and 1% in Beauty Actives and Home Care. 

However, there was an 18% increase in the less profitable Flavors & Fragrances (F&F) division. Life Sciences experienced a 5% reduction in sales, excluding revenues from Covid-19 lipid products. Without these, Pharma sales rose by 3%, Seed Enhancement by 9%, while Crop Protection faced a 19% decrease due to ongoing destocking.

Industrial Specialities saw a significant 35% drop in pro forma sales, attributed to continued destocking and diminished demand. The adjusted profit before tax fell 33% to £308.8 million (from a pro forma £463 million in 2022), meeting revised forecasts.

The adjusted operating margin declined to 18.9% (from 25% in 2022), impacted by decreased sales volume, reduced COVID-19 lipid sales, and the adverse effects of robust F&F sales on the product mix. The company took Immediate measures to safeguard profits, with staff costs remaining stable and reductions in freight and energy expenses.

The IFRS profit before tax stood at £236.3 million, down from £780.0 million in the previous year, which included a £356.0 million gain from divestitures. The robust balance sheet continues to support ongoing investments and returns to shareholders.

Working capital improved by £162.9 million, with a 5% increase in free cash flow to £165.5 million (up from a restated £157.4 million in 2022). Net debt rose to £537.6 million (from £295.2 million in 2022) following the acquisition of Solus Biotech, with leverage at 1.3 times.

The annual dividend was raised by 1p, marking 32 consecutive years of dividend growth. Despite the downturn, strategic investments continue, supported by enduring megatrends, positioning the company for a market rebound.

Croda International share price. 

The Croda International share price fell 3.88% to trade at 4728.5p from Monday’s closing price of 4919.5p.