Croda profit drops as personal care business hit by Sino-US trade spat

Speciality chemical company Croda International posted a drop in first-half pre-tax profit on Wednesday as market conditions were subdued, impacted by the trade dispute between the US and China and "increased macroeconomic uncertainties".

In the six months to the end of June 2019, pre-tax profit edged down 2.5% to £170.6m, with sales from the core business up 2.4% from the same period a year ago to £657.9m. Croda attributed the drop in profit to a higher interest charge following increased investment, the acquisition of Biosector and the special dividend.

Operating profit was 0.5% higher at £179.4m and basic earnings per share ticked down to 98.2p from 100.2p in 2018.

The group hailed an "excellent" performance in its life sciences division, driven by strength in the health and crop care platforms, with sales up 13%. However, the personal care business saw weakness in the US and North Asia as customers became more cautious in purchasing, mostly due to the Sino-US trade spat, with continued growth across the rest of the sector. Sales were down 3.6%.

Meanwhile, Croda's performance technologies segment saw sales fall 6% due to soft markets in automotive and polymers.

Chief executive officer Steve Foots said: "We have delivered a resilient performance in challenging market conditions and against strong prior year comparatives, testament to Croda's focused strategy. Although personal care was significantly impacted by the US/China trade dispute and new sales legislation in China, we saw growth across the rest of the sector.

"An excellent performance in life sciences ensured overall progress in consumer markets, whilst performance technologies slowed in line with the wider industry, due to softer end markets in automotive and polymers."