Croda International CRDA IMS and announcement of disposal

  Croda International (CRDA) - IMS and announcement of disposal

RNS Number : 0369Q
Croda International PLC
01 November 2012
 



 

1 November 2012

 

 

                           Croda International Plc

                                       

                                       

          Interim Management Statement and announcement of disposal

 

 

Croda International  Plc  ("Croda")  today announces  its  interim  management 
statement for the period  since 1 July  2012 and the  disposal of its  Italian 
business based in Cremona. All figures in this statement, including those  for 
the comparative  periods,  exclude this  business  which will  be  treated  as 
discontinued in the full year accounts.

 

Trading

 

Trading in  the third  quarter  was robust  considering the  depressed  market 
conditions, particularly  in  Europe. Underlying*  Group  sales were  up  3.2% 
compared to 2011.

 

Month to month trading has been volatile: sales were in line with expectations
in July  and  August but  trading  weakened  in September,  usually  a  strong 
month. Adverse currency translation averaged  2.8% but the  exit rate for  the 
quarter was 6.2%. Including the adverse currency impact, continuing sales were
up 0.5% at £256.5m (2011: £255.2m).  As in previous quarters, we saw  turnover 
decline in Europe but experienced growth  in all other major regions.  Volumes 
were up 8.9% overall but the strongest growth came in lower value products  in 
Performance Technologies  and Industrial  Chemicals (which  were weak  in  the 
third quarter of 2011). This meant  that average selling prices fell by  5.7%. 
We fully recovered raw material inflation.

 

Despite an adverse mix, operating margins increased to 23.3% (2011: 22.3%). As
a result, continuing operating profit increased 4.7% to £59.7m (2011:  £57.0m) 
and continuing pre-tax profit increased 4.4% to £59.3m (2011: £56.8m). 

 

Against a very  strong third quarter  in 2011, Consumer  Care sales were  down 
2.7% due to slow Personal Care sales, particularly in Europe. Health Care  and 
Crop Care both saw  sales increase in  the quarter. Return  on sales grew  2.5 
percentage points to 31.4% driven primarily by a number of successful  product 
launches but also due to a lower allocation of central costs as a  consequence 
of the reduced turnover. This resulted  in operating profit growth of 5.7%  to 
£44.2m (2011: £41.8m).

 

Performance Technologies sales were up 2.5%  at £94.7m (2011: £92.4m). We  saw 
growth in  all business  sectors  apart from  Lubricant Additives.  Again,  we 
successfully launched a significant number  of new products but the  strongest 
growth in the quarter  came from existing,  lower margin, less  differentiated 
products. The higher  volumes relative to  Consumer Care led  to an  increased 
allocation of central  costs to  this segment. These  factors reduced  overall 
return on sales to 14.1% (2011: 14.8%)  and resulted in a profit reduction  of 
2.2% to £13.4m (2011: £13.7m).

 

Industrial Chemicals performed strongly with  sales up 16.1% to £20.9m  (2011: 
£18.0m). Profits in this sector increased 40.0% to £2.1m (2011: £1.5m).

 

Despite the soft trading environment in Europe and the currency headwinds, our
operating profit for the  year to date  at £193.5m is 8.2%  ahead of a  strong 
2011  comparative  period.  This  continues  to  vindicate  our  strategy   of 
concentrating on  high  value,  niche markets  with  innovative  technologies, 
supplying to customers both large and small around the world.

 

* Excluding acquisitions, disposals and currency

 

Financial Position

 

Net debt reduced by £5.8m to £202.2m  in the quarter despite a £10.2m  payment 
to the pension fund  as part of  the funding plan  announced with the  interim 
results.

 

There were  no significant  events  or transactions  during the  period  which 
resulted in a material impact on the financial position of the Group.

 

Disposal

 

We are announcing today the sale of our Italian business based in Cremona to a
private company located in Italy for a consideration equivalent to the working
capital value. Completion is  subject to a number  of minor conditions but  is 
expected to take  place before the  year end. The  business was acquired  with 
Uniqema in 2006 and is  focused on the manufacture  of basic products for  the 
Performance Technologies and Industrial Chemicals  sectors. In the first  nine 
months of the  year it had  a turnover of  £25.4m (2011: £32.2m)  and made  an 
operating loss of £0.1m (2011: operating  profit £4.1m). In the third  quarter 
it had sales of £7.8m (2011: £10.4m) and broke even (2011: £0.6m profit).

 

Commenting on the outlook, Martin Flower, Chairman of Croda said:

 

"Quarter four  has started  well.  However, with  the market  remaining  weak, 
particularly  in  Europe,  and  currency   headwinds,  we  expect  a   similar 
performance in quarter four to that seen in the third quarter. Looking further
forward, the Board  remains confident that  Croda has the  right strategy  for 
continued growth."

 

 

For further information please contact:

 

Steve Foots        Group Chief Executive   01405 860 551
Sean Christie      Group Finance Director  01405 860 551
Charlie Armitstead Pendomer Communications 020 3603 5224

 

 

The company will host a conference call for analysts at 8.00am today.

 

Please dial +44 (0) 20 3140 0722 and quote "Croda International" to gain
access to the call.

 

 

 

 

  

 

Additional Information

 

£m                                   Q3                       9 months
                             2012  2011          2012             2011
Consumer Care               140.9 144.8   -2.7% 450.1            437.0  +3.0%
Performance Technologies     94.7  92.4   +2.5% 298.9            291.9  +2.4%
Industrial Chemicals         20.9  18.0  +16.1%  62.8             64.1  -2.0%
Continuing turnover         256.5 255.2   +0.5% 811.8            793.0  +2.4%
Consumer Care                44.2  41.8   +5.7% 140.9            128.6  +9.6%
Performance Technologies     13.4  13.7   -2.2%  46.3             42.5  +8.9%
Industrial Chemicals          2.1   1.5  +40.0%   6.3              7.7 -18.2%
Continuing operating profit  59.7  57.0   +4.7% 193.5            178.8  +8.2%
Operating margin            23.3% 22.3%         23.8%            22.6%       

                                                                             
Interest                    (0.4) (0.2)         (1.5)            (0.7)
Continuing pre tax profit    59.3  56.8   +4.4% 192.0            178.1  +7.8%

 

 

 

Analysis of Q3 turnover uplift
Volume                            +8.9%   +3.5%
Price/mix                         -5.7%   +0.7%
Underlying                        +3.2%   +4.2%
Acquisition                       +0.1%   -    
Currency                          -2.8%   -1.8%
Increase in continuing turnover   +0.5%   +2.4%

 

 

 

 

  

Supplementary analysis for continuing operations

30 September 2012

Unaudited £m

                                       

                                       

                          2012   2012   2012
                            Q1     Q2     Q3
Turnover
Consumer Care            159.1  150.1  140.9
Performance Technologies 102.7  101.5   94.7
Industrial Chemicals      20.1   21.8   20.9
                         281.9  273.4  256.5
Profits
Consumer Care             48.2   48.5   44.2
Performance Technologies  15.8   17.1   13.4
Industrial Chemicals       1.5    2.7    2.1
                          65.5   68.3   59.7
Interest                 (0.7)  (0.4)  (0.4)
                          64.8   67.9   59.3
                          2011   2011   2011   2011     2011
                            Q1     Q2     Q3     Q4     Year
Turnover
Consumer Care            145.7  146.5  144.8  135.1    572.1
Performance Technologies  99.2  100.3   92.4   84.5    376.4
Industrial Chemicals      22.6   23.5   18.0   23.6     87.7
                         267.5  270.3  255.2  243.2  1,036.2
Profits
Consumer Care             41.8   45.0   41.8   42.6    171.2
Performance Technologies  14.6   14.2   13.7   12.8     55.3
Industrial Chemicals       2.7    3.5    1.5    3.5     11.2
                          59.1   62.7   57.0   58.9    237.7
Interest                 (0.2)  (0.3)  (0.2)    0.5    (0.2)
                          58.9   62.4   56.8   59.4    237.5

 

                     This information is provided by RNS
           The company news service from the London Stock Exchange
 
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MSCUASWRUVAROAA -0- Nov/01/2012 07:00 GMT