ii view: Croda issues sales beat and new growth targets

Fourth-quarter (Q4) and Full-Year (FY) results to 31 December

• Currency adjusted Q4 revenues up 5% to £419 million
• FY adjusted operating profit up 5.6% to £295.3 million
• FY adjusted operating margin of 17.4%, up from 17.2% last year
• FY net debt down 1.6% to £524 million
• Final dividend of 63p per share
• Total dividend for the year up 0.9% to 111p per share

Guidance:

• Now targeting adjusted operating profit margin of more than 20% by the end of FY 2028

Chief executive Steve Foots said:

“Our efforts to drive more consistent growth and transform the business are beginning to deliver results and whilst there is much more to do, our confidence in realising further improvements in performance is highlighted by the three-year financial framework we have set out today."

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ii round-up:

Croda International (LSE:CRDA) today detailed quarterly revenue that beat City forecasts, with the maker of speciality chemicals outlining new financial growth targets to 2028.

Fourth-quarter currency-adjusted fourth-quarter revenue rose 5% to £419 million, exceeding analyst estimates of £403 million. Adjusted profit margin of 17.4% in 2025 compares with 17.2% the year before, driving annual adjusted pre-tax profit up 8.4% to £276.2 million. 

New targets to the end of the 2028 financial year now see Croda chase organic sales growth of 3-6%, with improvement in adjusted profit margin to more than 20%. 

Shares in the FTSE 100 company rose 5% in UK trading having come into these latest results up by a tenth so far in 2026. That’s similar to European rival Basf SE (XETRA:BAS). The FTSE 100 index is up 7% year-to-date. 

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. 

Driven by beauty lotion ingredients, fourth-quarter consumer care sales rose 8.9% on a currency adjusted basis to £239 million.

Life Science related final-quarter sales improved 7.9% on the same basis to £137 million, aided by demand for crop protection ingredients. Industrial chemical sales fell 18.9% to £42 million. 

Adjusted operating profit margin for both the Consumer Care and Life Sciences division improved over the full year, helped by cost savings of £28 million, better than the £25 million target. 

A final dividend of 63p per share, payable to eligible shareholders on 27 May, makes a total payment for 2025 of 111p per share, up 0.9%.

Broker UBS reiterated its ‘buy’ stance on Croda shares post the news. The group’s AGM is scheduled for 22 April.   

ii view:

Started in 1925, Croda today employs around 6,000 people. Its chemicals are used in many things from ingredients for home care products to helping make medical drugs and assisting with seed growth and enhancement. Management is focused on optimising its customer and product portfolios, improving the supply chain, as well as simplifying the company. 

Geographically, the combined Europe, Middle East, and Africa (EMEA) region accounted for most sales in 2025 at 40%. That was followed by Asia at 25%, North America 24%, and Latin America the balance of 11%.  

For investors, US trade tariffs and Croda’s previously proposed customer surcharge to export to the country are headwinds. The relatively high energy costs and carbon charges battled by UK players combined to overseas operators should not be ignored. The positive impact of the pandemic and ingredient sales for Pfizer’s Covid vaccine has made for tough comparatives, while inflation and the costs of group investments were previously flagged as headwinds.

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On the upside, Croda’s focus on product innovation and reducing costs is being underlined via new financial targets out to 2028. Signs of improving customer demand persist. Diversity in both business type and geographical region exists, while an estimated net asset value comfortably below the three-year average may suggest improved value. 

On balance, and despite continuing risks, Croda shares have had a strong month, potentially establishing foundations of a longer-term recovery. A forecast dividend yield of around 3.7% could also be of interest to income investors. 

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