ii view: chemicals firm Croda rallies on growth hopes

First-quarter trading update to 31 March

• Currency-adjusted revenue up 8% to £442 million

Guidance:

• Continues to expect full-year 2025 adjusted pre-tax profit of between £265 million and £295 million compared with £260 million in 2024

ii round-up:

Croda International (LSE:CRDA) today detailed sales exceeding City estimates, with the speciality chemicals maker reiterating hopes for a potential increase in profits this year.

Currency-adjusted first-quarter revenue to 31 March rose 9% to £442 million, driven by improved customer volumes and gains across all three divisions. Management continues to expect adjusted pre-tax profits for 2025 of between £265 million and £295 million versus last year's £260 million. 

Shares in the FTSE 100 company rose 9% in UK trading having come into this latest news down by a fifth year-to-date. That’s similar to smaller rival Elementis (LSE:ELM) and in contrast to a 2% gain for the FTSE 100 index itself in 2025. 

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Croda operates across the three divisions of consumer care, life sciences and industrial specialities, making chemical ingredients for items ranging from beauty creams to medical drugs and solutions to treat water and protect crops. 

With just under 3% of 2024 sales generated in the UK, Croda also announced plans to apply a tariff surcharge to customers on any items sold overseas and impacted by a trade tariff following the USA’s recent policy change.

Sales at Croda’s life sciences business led the way, gaining 11% from a year ago on a currency adjusted basis to £134 million, and pushed by demand for crop protection chemicals. 

Consumer care sales on the same basis climbed 8% to £255 million with industrial specialities demand rising 7% to £53 million. 

Geographically, sales for the combined Europe, Middle East, and Africa (EMEA) region led, climbing 12%. That was followed by an 8% improvement in Asia, with 4% growth for North America, and including its biggest country of export in 2024, the USA. 

Broker UBS reiterated its ‘buy’ stance on Croda shares post the news. First-half results are scheduled for 29 July.  

ii view:

Started in 1925, Yorkshire headquartered Croda today employs over 5,500 people. The Consumer Care business generated most sales in 2024 at 56%, followed by Life Sciences at 31%, and Industrial Specialities after a previous part business sale, at 12%. Geographically, EMEA generated 39% of 2024 revenue, North America 27%, Asia 23% and Latin America the balance of 11%.  

For investors, the positive impact of the pandemic and ingredient sales for Pfizer’s Covid vaccine has made for tough comparatives. Trade tariffs and a proposed customer surcharge could now hinder future demand. Inflation and the incremental costs of group investments were previously flagged as offering headwinds going forward, while environmental concerns for manmade chemicals remain. 

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On the upside, signs of improving customer demand persist. A management focus on product innovation and reducing costs is ongoing. Diversity in both business type and geographical region exists, while the company boasts a record of more than 20 years of consecutive annual dividend increases, putting the shares on a forecast dividend yield of around 4%.

In all, investors might be interested in exposure to likely areas of growth such as life science drugs and a consensus analyst estimate of fair value above £39 per share. But while the rally following these Q1 results is encouraging, the shares are still not far off a 10-year low, and heightened outlook uncertainty because of US trade tariffs provides reason for continued caution.

Positives: 

• A diverse product and customer base
• A progressive dividend policy 

Negatives:

• Uncertain economic outlook
• Subject to currency movements

The average rating of stock market analysts:

Strong hold