First-half organic sales rose 4.6% to £881m
Second-quarter sales growth rose to 8.8%, up from 0.8% in the first quarter
Derren Nathan, head of equity research, Hargreaves Lansdown:
“There were no major flashes or bangs in the speciality chemical company Croda’s first-half results, which landed broadly in line with market expectations. Nonetheless, momentum was encouraging, with Consumer Care leading the way, with organic growth of 8%. There’s further evidence here that the focus on innovation, particularly when it comes to reinvigorating the group’s range of active beauty ingredients, is bearing fruit. All divisions improved sales sequentially, with Life Sciences moving from a 3.4% decline to growth of 4.1%. The smaller Industrial Specialties division remained in negative territory across both quarters, as lower sales from legacy supply contracts outweighed growth in higher-value core markets.
The improving sales mix and continued delivery of cost savings are also boosting the bottom line, with underlying operating profit increasing 6.7% to £156m and the margin expanding half a percentage point to 17.7%. At this point in the year, full-year targets for 3-6% organic sales growth and improved profitability look well within reach, and if current momentum continues, consensus forecasts of £1,770m sales and £312m of operating profit could yet prove conservative. But with geopolitical uncertainty still in the mix, management is taking a cautious approach by keeping guidance unchanged rather than testing a stronger blend just yet.”
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