Profit warning at chemicals giant as customer demand slumps

East Yorkshire-based chemicals business, Croda International, has issued a profit warning as customers continue to slash their ingredient inventories in consumer care, crop and industrial end markets.

It says this is due to a combination of destocking and a weaker demand environment.

The business, which has today published an update on trading from 1 July to 30 September 2023, says it has been hit by lower sales volumes with overall performance for the period weaker than originally anticipated.

With no indications of a significant rebound to come in the fourth quarter, Croda now expects full year 2023 group adjusted pre-tax profits to be between £300m and £320m (previously £370m-£400m).

Croda says cost measures have been implemented since June to protect profitability.

Actions taken include tighter budgetary control of fixed costs and optimising production through plant shutdowns and reduced shift patterns, at the same time as increasing sales activity to meet ongoing customer demand for innovation.

The business adds it is also seeking efficiency savings from simplifying business processes and ways of working.

But the company stresses it remains well positioned to rebound when the macro environment improves.

Croda will report full year results for the year ending 31 December 2023 on 27 February 2024.