Croda Says Business Stable as Skin-Care Makers Order More Often
Croda International Plc (CRDA), the maker of sunscreen for Nivea, said business in the third quarter has remained stable with demand for cosmetic and health-care ingredients proving resilient to a consumer slowdown.
The company is “comfortable” with analyst estimates for the full year and sees no reason to adjust its outlook, Finance Director Sean Christie said in a phone interview today from Croda’s headquarters in Goole, England. Analysts predict about 236 million pounds ($370 million) in pretax profit for 2011, according to the average of 12 estimates compiled by Bloomberg.
Croda’s customers, including Procter & Gamble Co. (PG), reduced order sizes three years ago, and they continue to refrain from “taking big punts on building stockpiles,” Christie said. The company’s client base is diverse, and its products are used in everyday consumer staples like anti-frizz shampoos and moisturizers, as well as in agrochemicals and car lubricants.
“The reality is that skin-care is a pretty defensive component of females’ weekly budget,” said Adam Collins, a London-based analyst at Liberum Capital Ltd.
Croda fell was down 1.2 percent at 1,664 pence as of 4:14 p.m. in London trading, paring a drop of as much as 3.9 percent earlier in the day. The stock fell 3.8 percent yesterday because of concern that an economic slowdown may hold back industry sales. The shares have gained 3 percent this year.
“It’s not an easy market out there, but we’ve put a lot of effort into pricing,” said Christie. “We’ve done everything we need to do. We’re still producing some pretty good figures.”
Beauty-care company Clarins is seeing a slowdown in parts of Europe, Reuters said in a report late yesterday, citing comments by Chief Executive Officer Philip Shearer. Estee Lauder Cos. rebounded by as much as 2.1 percent in New York Stock Exchange composite trading today from a drop yesterday of 6.4 percent.
Akzo Nobel NV (AKZA), Clariant AG (CLN) and BASF SE (BAS) are among European chemical companies expanding in personal-care ingredients as they move away from more cyclical markets. BASF bought cosmetic- products supplier Cognis for $3.8 billion last year.
The ingredients market is less susceptible to declines in consumer spending than the related fine-fragrance and perfumery industries, Christie said. In contrast to the last recession, which companies entered with inflated stockpiles, clients are ordering smaller amounts and more frequently.
“There’s no stock in the system now, and we’re seeing all our customers living hand-to-mouth, watching what happens,” Christie said.
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