Momentum continues through first quarter at Croda

Speciality chemical company Croda International updated the market on its trading during the first quarter on Wednesday, reporting that the topline momentum seen through 2017 continued into the three months to 31 March.

The FTSE 100 firm said constant currency sales for its core business increased 4.0%, reflecting strong volume growth across its consumer businesses.

Personal care was described by the board as the “standout performer”, with the crop care business in life sciences also growing strongly.

Performance technologies reduced sales volume in lower margin products.

Currency translation reduced sales by 5.3%, with reported currency sales for the group 2.7% lower.

Return on sales for the group increased slightly in the quarter, the board explained.

“Constant currency sales in personal care rose 7.6%,” the Croda board said in its statement.

“Demand was strong in all three business units - beauty actives, beauty effects and beauty formulation.”

Growth was reportedly driven equally by volume and price/mix, with successful recovery of higher raw material costs, particularly in beauty formulation.

Demand from multinationals strengthened and innovation continued across the sector, with a further improvement in new and protected product (NPP) sales.

In life sciences,constant currency sales increased 4.1%.

Croda said sales volume in the division continued to grow in crop protection and seed enhancement, with the former benefiting from increased collaboration with multinational and local customers, and the latter driven by demand in vegetables and film coatings.

“The acquisition of Plant Impact has introduced rich opportunities in biostimulants, with a limited adverse profit impact anticipated in 2018 whilst the business is scaled up.

“Health care saw good excipient sales growth, helping offset the loss of sales from our former North American API contract.”

In performance technologies, Croda said the focus was on its transition to higher value products, with constant currency sales growing 0.2%.

“We made further progress in shifting our focus to higher value products, leading to volume being significantly lower but price/mix stronger, moving the sector towards its medium term return on sales target of 20%.

“We successfully recovered raw material price increases during the quarter and IonPhasE has had a positive start following its acquisition in December.”

The board said it continued to invest in disruptive technologies in core markets and market adjacencies during the quarter.

During the period, it completed the acquisition of Nautilus - a marine biotechnology company which had potential applications in personal care actives and other markets, alongside the acquisition of Plant Impact in life sciences.

Croda said its open innovation programme was supplementing internal research and development investment, whilst its smart partnering initiative saw the launch of an “exciting range” of innovative special effect pigments into the premium colour cosmetics market.

“We are focused on our strategy of 'growing the core', driving top line growth at industry leading margins to achieve superior returns, and 'stretching the growth', accelerating delivery across our markets,” said chief executive Steve Foots.

“I am pleased with the encouraging start to 2018, with momentum in our consumer businesses and continued progress towards our profitability goal in performance technologies.

“We are on track to deliver our expectations for the year.”