Croda’s underlying sales grew by 7% to £1.7bn in 2025, when ignoring currency moves. Growth of 8% in Consumer Care and Life Sciences more than offset a 2% decline in Industrial Specialities.
Underlying operating profit of £295mn (consensus: £292mn) was up 8%, helped by improved profitability in Croda’s largest divisions.
Free cash flow fell 5% to £162mn, with last year benefitting from a £48mn receipt relating to earlier sales of Covid 19 vaccine ingredients. Net debt fell slightly to £524mn.
Croda expects organic sales growth of 3-6% this year, with underlying operating profit in-line with market expectations of £321mn. The Board expects similar sales growth through to 2028, where it’s targeting an underlying operating margin of over 20% (2025: 17.4%).
The annual dividend was raised by 1p to 110p per share.
The shares rose 4.5% in early trading.
Our view
Croda put in a reasonable performance over 2025 despite challenges in some of its end markets. Reassuring guidance for 2026, as well as medium-term targets that broadly align with consensus forecasts helped to lift sentiment on the day. It also provided us with additional confidence that the investment case that underpinned Croda’s selection as one of HL’s 5 shares to watch for 2025 remains intact.
Croda develops and supplies ingredients for industrial applications, the life sciences, and consumer care brands. It’s a relatively small player in the chemicals sector, so we support the renewed focus on innovative niche products in attractive markets.
Its nimbleness at bringing products to market, combined with a broad manufacturing footprint, facilitate R&D based relationships with local & regional (L&R) customers. These have more specialised end products, which can enjoy higher growth rates.
This can also help Croda navigate trade restrictions and tariffs. In the US, for example, 70% of sales are manufactured there too. Croda’s pivot towards emerging markets should also lower the direct exposure to tariffs, as well as provide further growth opportunities. But with uncertainty about trade relations as high as ever, the risk of further negative impacts on the business is still present.
Looking ahead, Croda’s well exposed to some attractive growth drivers. It’s well known for providing delivery systems for mRNA-based medicines such as Pfizer’s COVID 19 vaccine. Regulatory headwinds in the US have caused some uncertainty for the pharmaceutical industry. But sales in this segment are improving, and we remain positive on the long-term outlook for drug development, which is a key demand driver for Croda’s products in this space.
In consumer care, growing demand for more sustainable cosmetics, flavours and fragrances plays well to Croda’s strengths. Its efforts to adjust to consumer preferences are bearing fruit, but we still see this division as sensitive to economic conditions.
Robust cashflows and reasonable debt levels are other attractions, which should help support the 3.9% yield. But there are no guarantees.
So far, the market has been slow to recognise Croda’s strategic progress and the recovery in many of its end markets. We think 2026 guidance looks achievable, although challenging comparables early in the year mean the scope for an immediate catalyst could be limited. Further out, we do see some potential upside to Croda’s medium-term goals, which could drive an improvement in sentiment. However, these targets remain subject to both execution and economic risks.
Environmental, social and governance (ESG) risk
Chemical companies trend between medium and high risk in terms of ESG. The primary risks facing the sector include carbon emissions from operations, the environmental and social impact of its products, waste management and human capital.
Sustainalytics rates Croda’s management of ESG risks as strong. While it seeks to meet Environmental Management System standards, not all of its plants are certified. Ambitious science-based emissions reduction targets have been set, and progress is positive, but the approach could be improved by a published climate transition plan. On waste, there are robust emergency response plans and recycling programs. The company is seen as a fair and supportive employer with a good approach to health and safety. However, there’s still work to do in terms of long-term talent development in this knowledge-intensive industry.
Croda International key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.