Croda unveils cost-savings plan as falling margins dent profits

(Sharecast News) - Specialty chemicals group Croda met its profit guidance in 2024, though numbers were weighed down by a drop in annual sales and weaker margins, with the company targeting £25m of cost savings in 2025. The company said it was accelerating actions to grow earnings and improve returns, such as driving margin recovery by increasing asset utilisation and realigning cost base.

Croda reported an adjusted pre-tax profit of £273.1m at constant currency for the 12 months to 31 December, down 11.6% on the year before but in line with the £260m-280m guidance range.

The adjusted operating margin fell to 17.2% from 18.9%, with the prior year benefitting from high-margin sales of lipids for Covid-19 vaccine applications.

Annual sales were down 0.8% at constant FX at £1.63bn, with 7% growth in Consumer Care sales to £920m offset by a 14% plunge in Life Sciences to £504m as a result of the absence of Covid-19 lipids and weak sales into consumer health markets. The smaller Industrial Specialties division grew sales by 2% sales to £203.8m.

"Whilst sales growth was lower than we hoped in a subdued demand environment, proactive actions to rebase costs and drive efficiencies enabled us to deliver profits in line with our guidance," said chief executive Steve Foots.

The board proposed a 1p per share increase to the full-year dividend to 110p.

"Our multi-year programme of actions to make Croda more focused and more efficient is beginning to bear fruit with our adjusted operating margin improving half-on-half and strong free cash flow generation," Foots said.

Looking ahead, Croda pointed to an adjusted pre-tax profit of between £265m and £295m at constant currency this year, coming in short of the current consensus forecast of £309m.