Sales hit at chemicals giant as customers slash stock levels

Chemicals business, Croda International, says its pro forma sales are down 6% as customers reduce inventory levels in consumer, crop, and industrial markets.

The East Yorkshire-based company, which has today published its half year results for the six months ended 30 June 2023, reports group sales of £880.9m (H1 2022 pro forma: £936m). Adjusted profit before tax fell to £174.3m (H1 2022 pro forma: £256m).

Steve Foots, chief executive officer, said: “The speed and scale of the post-Covid stocking and subsequent destocking has been unprecedented, leading to a decline in first half sales volume and also impacting profit margin.

“Despite this difficult market backdrop, it is testament to the strength of the Croda business that Consumer Care delivered sequential improvement on the second half of 2022, driven by customer demand for innovation and sustainability.

“Excluding the impact of Covid-19 lipid sales in the prior period, we also saw growth across all areas of Life Sciences.

“With continued low visibility, we are taking some actions to protect profitability ahead of conditions returning to normal, while continuing to leverage our strong balance sheet to invest in future growth.”

Croda adds that with customer destocking in Consumer Care, Crop Protection and Industrial Specialities continuing into the second half of the year, it continues to expect full year 2023 group adjusted profit before tax to be between £370m and £400m.

The business says it will leverage its strong balance sheet to sustain ongoing investment in its repositioned portfolio and will focus on “fast-growing niches, to create significant future value.”

Croda emphasises that its innovation pipelines remain robust, with customers continuing to invest in new product development.