Croda to pay dividend as business remains solid

Croda said it would pay its £65m final dividend as the chemicals company reported resilient trading during the Covid-19 crisis.

The FTSE 100 company said it was financially strong enough to pay the 50.5p a share dividend subject to approval at Thursday's annual general meeting.

In a trading update Croda said business in the first quarter of 2020 was as expected and in line with a year earlier. The company said current demand for its products was solid.

The company said conditions in some markets were patchy but that its order book was solid and in line with normal conditions. Croda said there was uncertainty about how the coronavirus would affect future sales.

Croda said its balance sheet was strong with committed funding of £1.1bn at the end of March and no material debt maturities until 2023. Unlike some large companies, which have cancelled shareholder payments to conserve cash, Croda has decided to pay its next dividend.

"Croda has operated for many years with a prudent leverage and dividend distribution policy," the company said. "After careful consideration of the position of all stakeholders and treating all groups consistently and fairly, the board has decided to pay the final 2019 ordinary dividend of 50.5 pence per share.

"The liquidity and business profile of the group is strong. We have undertaken extensive scenario testing, factoring in a variety of potential outcomes, which indicate that the group has sufficient liquidity to absorb an extended period of uncertainty."

Business in Asia during the first quarter was hit by China's shutdown but sales in north Asia were flat. Sales increased in North America but fell in Latin America. Demand weakened in European personal care and performance technologies but Croda's life sciences business grew well.