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24 Apr 2014 07:00
24 April 2014
Croda International Plc
AGM and Interim Management Statement
PROFITABILITY IMPROVED DESPITE ADVERSE CURRENCY TRANSLATION
Croda International Plc today announces its Interim Management Statement for the period since 31 December 2013.
Trading
The modest but improving growth trend in underlying sales seen in the second half of 2013 continued through the first quarter of 2014, despite the disruption caused by the severe weather in North America and difficult economic conditions in South America. On a constant currency basis, Group turnover was up 2.9% with acquisitions contributing 1.6% to this total. However, adverse currency translation of 6.1% meant that reported sales in sterling were down 3.2% to £274.0m (2013: £283.1m).
Group operating profit increased 1.0% to £68.7m (2013: £68.0m). Operating margins increased to 25.1% (2013: 24.0%), reflecting favourable product mix. Return on sales increased to 33.3% (2013: 31.1%) in Consumer Care and to 19.0% (2013: 17.0%) in Performance Technologies as both divisions continued to benefit from strong underlying demand for high value products. Industrial Chemicals' return on sales reduced to 4.7% (2013: 9.1%), reflecting the integration of Sipo and weaker commodity margins generally.
Pre-tax profits increased slightly to £65.2m (2013: £65.1m) with a stronger underlying performance offset by a £3.5m impact from adverse currency translation.
On a divisional basis, underlying Consumer Care sales decreased by 0.6%. Crop Care was impacted by heavy snow in North America during January and February and weak sales into Eastern Europe. Weak sales in North America and challenging economic conditions in South America were the main reasons behind modest underlying sales declines in Personal Care. Health Care growth was strong in almost all geographies. A further 0.5% contribution to sales growth came from acquisitions.
Underlying sales in Performance Technologies were up 3.7%, continuing the improved trend seen in the final quarter of 2013. Business in Asia was particularly strong. All business areas apart from Home Care saw good sales growth. The Sipo acquisition added an additional 1.7% to turnover.
Underlying Industrial Chemicals sales were up 2.7% and again, Sipo added a further 7.2% to the growth.
Financial Position
There has been no significant change in Croda's financial position during the period. Interest costs in the quarter were slightly higher than 2013 due to the consolidation of 100% of Sipo's debt.
Underlying cash generation was again strong in the quarter, with net debt falling £13.6m to £188.6m after paying over £20m into the UK pension fund in January.
Outlook
We expect the modest improvement in underlying sales growth seen in the first quarter to continue. However, adverse currency translation is expected to remain an issue and consequently, second quarter performance is likely to be similar to that seen in the first quarter. The Board is confident that the Group has the right strategy in place to continue to drive profitable underlying growth.
For further information please contact:
Steve Foots/ Sean Christie Croda International Plc
Charlie Armitstead/ Rosie Oddy Pendomer Communications |
Tel: 01405 860551
Tel: 020 3603 5220 |
The company will host a conference call for analysts at 8.00am (BST) today:
Dial-In: +44 (0) 203 426 2888
Please quote "Croda International"to gain access to the call
Croda International Plc
Unaudited income statement for continuing operations
31 March 2014
3 months to | 3 months to | ||
31 March | 31 March | ||
2014 | 2013 | Change | |
Revenue | |||
Consumer Care | 148.4 | 158.4 | -6.3% |
Performance Technologies | 93.8 | 93.9 | -0.1% |
Industrial Chemicals | 31.8 | 30.8 | +3.2% |
274.0 | 283.1 | -3.2% | |
Adjusted operating profit1 | |||
Consumer Care | 49.4 | 49.2 | +0.4% |
Performance Technologies | 17.8 | 16.0 | +11.3% |
Industrial Chemicals | 1.5 | 2.8 | -46.4% |
68.7 | 68.0 | +1.0% | |
Net bank and loan interest payable | (2.3) | (1.7) | |
Net retirement benefit scheme financing | (1.2) | (1.2) | |
Adjusted profit before tax1 | 65.2 | 65.1 | +0.2% |
Operating margin | 25.1% | 24.0% | |
Analysis of turnover uplift for continuing operations: | |||
Constant | Currency | ||||
Underlying | Acquisitions | Currency | translation | Total | |
Consumer Care | -0.6% | +0.5% | -0.1% | -6.2% | -6.3% |
Performance Technologies | +3.7% | +1.7% | +5.4% | -5.5% | -0.1% |
Industrial Chemicals | +2.7% | +7.2% | +9.9% | -6.7% | +3.2% |
Total | +1.3% | +1.6% | +2.9% | -6.1% | -3.2% |
1 Continuing operations before exceptional items, acquisition costs and amortisation/write off of intangible assets arising on acquisition.
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