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Tempus in The Times writes that Croda is not as recession-proof as we thought, reporting weaker than expected third-quarter results. It has reported a stronger start to the fourth quarter, although it still cautioned that it expected its performance in the final three months of the year to be similar to the third quarter. The slowing of profits growth in consumer care, allied to a two per cent fall in its performance technologies unit, which makes things like lubricant additives, initially spooked the market. Still, provided October’s sales rebound continues, there is no reason for investors to lose faith. Croda’s focus on high-value niche markets with innovative technologies gives it pricing power while its strong cash generation and minimal debt burden means it can continue to make bolt-on acquisitions while considering share buybacks.
Martin Flower, Chairman of Croda added: "Quarter four has started well. However, with the market remaining weak, particularly in Europe, and currency headwinds, we expect a similar performance in quarter four to that seen in the third quarter. Looking further forward, the Board remains confident that Croda has the right strategy for continued growth." At the end of the period net debt had been reduced by £5.8m to £202.2m. The Italian business, which is based in Cremona, was sold to a private company located in Italy for a consideration "equivalent to the value of its working capital". Completion of the sale is expected to take place before the year-end. In the first nine months of the year it had a turnover of £25.4m (2011: £32.2m) and made an operating loss of £0.1m (2011: operating profit £4.1m).
Turnover declined in Europe, but experienced growth in all other major regions. Volumes were up 8.9% overall but the strongest growth came in lower value products in Performance Technologies and Industrial Chemicals (which were weak in the third quarter of 2011). As a result average selling prices dropped by 5.7%. Against a "very strong" third quarter in 2011, Consumer Care sales were down 2.7% due to slow Personal Care sales, particularly in Europe. Health Care and Crop Care both saw sales increase in the three month period. Performance Technologies sales were up 2.5% at £94.7m (2011: £92.4m). Industrial Chemicals performed strongly with sales up 16.1% to £20.9m (2011: £18.0m). Profits in this sector increased 40.0% to £2.1m (2011: £1.5m). In a statement the firm said: "Despite the soft trading environment in Europe and the currency headwinds, our operating profit for the year to date at £193.5m is 8.2%, ahead of a strong 2011 comparative period. This continues to vindicate our strategy of concentrating on high value, niche markets with innovative technologies, supplying to customers both large and small around the world."
Speciality chemicals manufacturer Croda Interntional has announced the sale of its Italian business as it reported a positive start to the fourth quarter despite the market remaining weak, particularly in Europe. As for the third quarter, trading was robust considering the depressed market conditions, the firm said, with underlying group sales up 3.2% compared to 2011. This, however, was not enough to please investors, who were expecting higher operating profits, with shares down nearly four per cent at 2,116p by mid-afternoon. Operating margins climbed to 23.3% from 22.3% in 2011, and consequently continuing operating profit increased 4.7% to £59.7m (2011: £57.0m) and continuing pre-tax profit increased 4.4% to £59.3m (2011: £56.8m). The falling share price may also have been because of the company's warning that month to month trading has been "volatile", saying sales were in line with expectations in July and August, but that trading weakened in September, which is usually a strong month for the firm.
A good mover this year till 1st. October - now down 11% from peak. The sector seems to have started falling a few weeks earlier, no doubt due to caution expressed in other company Interim Reports. Now looking to reduce this holding and reduce others held in sector - ELM, CAR, YULC. But - am I right? Can't seem to find much reason to hang my hat on. Any advice? Is a Q 3 statement due soon?
Croda: UBS ups target from 2,325p to 2,350p, neutral rating kept.
Croda International Buy 10-Sep-12 £121,450.00 Sean Christie 5,000 @ 2,429.00p
In the Telegraph, Croda, the speciality chemicals firm is given high praise for its technology driven sales offering, which includes ingredients for use in lipstick and other cosmetics. The firm’s shares trade on nearly 18 times earnings, which is high, and 'given the backdrop', the recommendation is hold.
Outlook Assuming no significant change in market conditions in the near term, we remain confident that our ability to bring innovative products to market and the expansion of our presence in emerging economies will enable us to make further progress in the second half of 2012.
Commenting on the results Martin Flower, Chairman, said: "These are a robust set of results which have been achieved despite challenging trading conditions in Europe. Against strong 2011 comparatives and adverse currency translation, both core business segments have made further progress. It is particularly pleasing to see Performance Technologies delivering improved margins and continuing to demonstrate the benefits of increased innovation. The acquisition of IRB is an important strategic step and follows our commitment to look for leading edge technologies and R&D capabilities that will accelerate growth in our core business. Croda's resilient track record of growth rests on our consistent ability to bring innovative, high margin products to market and expand our presence in emerging economies. Assuming no significant change in market conditions in the near term, we remain confident that this strategy will enable us to make further progress in the second half of 2012."
Interim results Croda traded well in the first half of 2012 and delivered a robust performance against strong 2011 comparatives. Sales increased 2.4% to £572.9m (2011: £559.6m) despite the combined challenge of weak demand in Europe and adverse currency translation. The Group's progress during the period was largely driven by continued success with innovative, higher margin products which boosted overall returns. As expected, less differentiated products and by-products were relatively weak, but with stronger sales in the higher margin products, our overall return on sales increased to 23.3%. In contrast to the difficult trading conditions in Europe, we experienced strong demand in most business areas in North America, while in Asia and Latin America we made further progress in focussing on higher margin differentiated products. Average prices increased by 4.2%, primarily driven by price increases in Europe plus some mix effects. Operating profits rose 6.7% to £133.7m (2011: £125.3m) and pre-tax profit before exceptional items increased 6.3% to £132.6m (2011: £124.8m). Earnings per share from continuing operations increased 8.1% to 66.9p (2011: 61.9p).
http://www.investegate.co.uk/Article.aspx?id=201207240700103132I
The chemicals sector was the best performing category on Tuesday afternoon on the back of decent performances by Croda International and Elementis. Croda, the FTSE 100 manufacturer of speciality and oleochemical products, was trading around 2.5% higher after JP Morgan Cazenove upgraded the stock from 'neutral' to 'overweight' this morning. "Croda's notable characteristic through the last downturn was one of resilience, and we see no evidence to suggest that this attraction is likely to wane," said JPMorgan analyst Martin Evans. "The company's targeted 10 per cent growth through the cycle, while participating in high margins, product innovation and growth markets, should reassure investors," he said.
Credit Suisse initiates underperform on Croda International, target price 2100p http://www.stockmarketwire.com/article/4366522/FLASH-Credit-Suisse-initiates-underperform-on-Croda-International-target-price-2100p.html
In the Telegraph, the Questor column puts speciality chemicals maker Croda firmly under the microscope. It makes many of the ingredients for cosmetics like lipstick and yesterday reported sales up 4.7% in the first quarter. The shares have been going great guns this year, up nearly 30% since December. That rise has left them at an earnings multiple of 16.7 times 2012 forecast earnings. Questor says hold
Nightmare Scenario: Fears of a European slowdown cap Croda shares at current levels.
Dream Scenario: The markets continue to view Croda as an exciting blue chip growth play in the chemicals sector.
Shares in Croda have occupied a rising trend channel on the daily chart since November. The rising 100-day moving average currently at 1,938p provides rising support for the price action, and while this stays in place, upside for the shares is indicated towards a November resistance line projection at 2,300p.
On February 21st speciality chemical producer Croda International announced profit before tax of £60m in the final quarter of 2011, a rise of 22.7% compared to the same period of 2010. For 2011 as a whole the company's pre-tax profits rose 25.9% as compared to 2010, reaching £242.2m by the end of December. Total sales for the year were £1.068bn compared to £1.002bn in 2010, a 6.6% rise. The Consumer Care division saw a rise in sales of 11.2% over 2011; with Industrial Specialities, sales gain up to 1.8% during the year. The final quarter saw sales at Industrial Specialties fall 4.8%, as comparatives with 2010 and a European slowdown hurt performance. Consumer Care sales in the quarter gained 9.1%system for the power plants to ensure they comply with safety and licensing requirements. Croda's 25% plus profits gain for 2011 tops off an exceptional performance from the speciality chemicals group, and further underpins its attractions as a blue chip growth play. This along with the solid and ongoing uptrend in the shares since Autumn 2011 marks Croda out as a buy for Galvan Research.
Canaccord Genuity initiates sell on Croda Group, target price 1,900p.
In the Telegraph Questor is crowing over its recommendation for Croda, the speciality chemicals firm. Since the first tip in 2008 the stock has gained 445% and is now a candidate for entry into the FTSE 100 when the reshuffle is announced in March. Croda’s stellar rise has left it at 15.6 2012 earnings with a yield at 2.7%. Questor thinks the shares may “take a breather” and suggests holding for now. For investors already into the stock, the suggestion is to sell half the position to take profits.
Croda International (CRDA) announced that pre-tax profits for the year ended 31st December 2011 were 25.9% higher than in 2010, at 242.2 million pounds. The speciality chemicals developer saw a strong performance from its consumer care division, through increased exposure to emerging markets. To reflect its strength the group raised its full year dividend by 57.1% to 55p and has also completed a 50 million pound share buyback programme. Croda shares gained 92p to 2,123p.
Croda supplies chemicals used in the agriculture and consumer care materials, notes the Scotsman. Its products are used in high-value face creams and in some high-growth healthcare markets, allowing it to share in the growth its cosmetics customers, like Estee Lauder, are seeing in China. As a group, Croda comprises many units focusing on specialty niches, rather than being a bulk or integrated chemicals business. Indeed, its management argues it should not be viewed as a single £1 billion-turnover business but instead as a group of hundreds of small entrepreneurial enterprises. Croda has proved adept at strengthening relationships with customers, focusing on product development rather than just price. Croda reported a 30 per cent rise in profits and is increasing prices to pass on higher costs of raw materials. The paper recommends to buy.
Citigroup downgrades Croda International from hold to sell, target price cut from 2000p to 1500p
Good exposure: http://www.dailymail.co.uk/money/markets/article-2033129/INVESTMENT-EXTRA-Investors-look-chemical-reaction-likes-Croda.html