Croda Drops Most in Five Months on UBS Downgrade: London Mover

Croda International Plc (CRDA), the world’s second-largest cosmetic-ingredient maker, fell the most among companies on the FTSE 100 Index after UBS AG (UBSN) downgraded the stock and called for more consistent earnings growth.

Croda declined as much as 4.1 percent, the biggest intraday slide in five months, and was down 3.8 percent at 2,612 pence at 12:01 p.m. in London. Johnson Matthey Plc (JMAT), a larger maker of specialty chemicals, led the index of the U.K.’s largest 100 publicly traded companies, rising as much as 3.7 percent after UBS upgraded the shares to buy from neutral.

Croda’s stock advance over the last year was accompanied largely by flat or falling earnings, UBS analyst Thomas Gilbert wrote in a note downgrading the shares to sell from neutral. The Snaith, England-based company “needs to at least deliver consistent growth or regain momentum,” as growth in consumer- care materials has fallen below the market trend, he said.

The global market for beauty products expanded 4.6 percent in 2012, led by L’Oreal, Procter & Gamble Co. and Unilever, and the ranks of emerging and wealthy middle classes are expected to almost triple to 2.7 billion consumers by 2020, according to Bloomberg Industries analyst Deborah Aitken. Croda’s products are used in sunblock, skin creams and hair treatments.

Croda, which joined the U.K.’s benchmark stock index last year, rose 31.7 percent in 2012 as it reported record fourth- quarter profit from skin-care formulations. Today’s decline pared the company market value to about 3.65 billion pounds ($5.61 billion), compared with 4.97 billion pounds for Johnson Matthey.

To contact the reporter on this story: Patrick Winters in Zurich at pwinters3@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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