Consumer care division strong performer for Croda
NATURAL chemicals producer Croda International has reported a slump in pre-tax profits despite growing sales in its consumer care division.
The Goole-based firm, which supplies some of the world’s best known skincare and cosmetics companies such as L’Oreal, Chanel, Clarins, Estee Lauder and Procter & Gamble, said profits from continuing operations for the six months ended June 30 were down 13.8% to £43.6m.
Turnover dropped marginally 3.6% to £447.5m compared to £464.1m the year before.
Last month the manufacturer announced the closure of its Teesside plant with the loss of up to 125 jobs. Previously, it had confirmed that its Merseyside plant was also to close.
The two closures will create cost savings of around £5m a year from 2010.
Croda said that the impact of fall in glycerine prices and significant year-on-year declines in industrial specialities had depressed overall performance, although the division was showing signs of recovery by breaking even in the second quarter.
However, the division’s poor performance was offset by Croda’s consumer care business.
Consumer Care sales rose 16.6% to £237.1m (2008, £203.4m) and operating profit increased by 21.4% to £53.4m with return on sales increasing to 22.5%.
All markets saw sales and profit progress though crop care growth slowed in the second quarter and basic fatty acid and glycerine sales into consumer care were well down. Health Care demand remained robust throughout the world.
Martin Flower, Croda’s chairman, said: “Our core consumer care business continues to demonstrate resilience with another period of strong growth in sales, profits and margins.
“The group’s strategy is to continue to capitalise on the compelling opportunities for future growth and drive further progress in this division. While the industrial specialities business has been hit hard by the recession, there are now signs of a recovery in demand.”
He continued: “We expect this improvement to continue with a return to profitability in the second half. For these reasons, combined with the benefits coming through from our initiatives to reduce costs and generate cash, we are confident of making good progress in the rest of the year.”
