Croda International Plc · LSE:CRDA
Croda International — H1 2021 Earnings Presentation
37 slides from Croda International's earnings presentation, Jul 27, 2021
Slide 1: Half year 2021 results
Croda International Plc: 27 July 2021 Half year 2021 results
Slide 2: Cautionary statement and definitions
Cautionary statement and definitions Cautionary statement Constant currency results This review is intended to focus on matters which are relevant to the interests of shareholders in All data is at reported currency rates unless otherwise stated. Reported currency results reflect the Company. The pu
Slide 3: Agenda
Agenda • Record performance • Excellent first half financial results • Moving to faster growth markets • Q&A 3 Smart science to improve lives™
Slide 4: Record performance
Record performance Steve Foots – Chief Executive Officer 4 Smart science to improve lives™
Slide 5: Record performance driven by accelerated strategic implementation
Record performance driven by accelerated strategic implementation Record performance Accelerated strategic implementation • Reported sales up 39% on H1/20 • Strong underlying growth across all sectors - Benefitting from significant capital investment over last • Underlying sales up 27% on H1/20; up
Slide 6: Excellent first half results…
Excellent first half results… Sales Return on sales Adjusted operating profit Free cash flow +38.8% +1.9ppts +49.8% -46.8% £934.0m 25.9% £242.1m £42.7m Higher volumes, increased prices Growth in higher value niches; Higher sales and improved Increased capex; demand driven and acquisitions more than
Slide 7: ….recovered to above pre-pandemic levels
….recovered to above pre-pandemic levels H1/21 underlying sales well ahead of H1/19 H1/21 underlying volume and price/mix higher than H1/19 Price / mix Volume Total 14.5% 10.2% 10.6% 10.4% Consumer Care Life Sciences Performance Group Consumer Care Life Sciences Performance Group Technologies Techno
Slide 8: All sectors delivering strong growth
All sectors delivering strong growth • Performance driven by strong improvement in Personal Care, particularly Beauty Actives Consumer • Capturing new market share with sustainable ingredients Care • Iberchem and other acquisitions performing to plan; integration programmes progressing well • Excell
Slide 9: Excellent first half financial results
Excellent first half financial results Jez Maiden – Group Finance Director 9 Smart science to improve lives™
Slide 10: Record performance supported by continued investment
Record performance supported by continued investment % change constant Adjusted results, £m H1/21 H1/20 % change currency Sales 934.0 672.9 38.8% 46.9% Operating profit 242.1 161.6 49.8% 58.7% Return on sales 25.9% 24.0% 190bps - Profit before tax 229.5 152.5 50.5% 59.5% Basic earnings per share 124
Slide 11: Strong price and volume growth complemented by acquisitions
Strong price and volume growth complemented by acquisitions Sales, £m 14% Constant currency sales +47% 20% Underlying sales +27% -8% 6% 8% 13% 19% Acquisitions +20% 14% 934.0 Existing business Lipid systems Avanti Iberchem 672.9 Underlying sales +27% HY/20 Price / mix Volume Acquisitions Currency HY
Slide 12: Excellent growth across all sectors
Excellent growth across all sectors Consumer Care Life Sciences Performance Technologies +61% +46% +39% +15% Growth in sales % +98% +50% +23% +18% Growth in operating profit % -480bps +720bps +50bps +190bps 24.6% 39.3% 15.6% 25.9% Return on sales (%) 12 Smart science to improve lives™
Slide 13: Significant improvement in Consumer Care
Significant improvement in Consumer Care Strong sales recovery in all business units Highlights +26% • Rapid Personal Care improvement - Resurgence in Actives +13% - Good demand in Effects and Formulation +11% +8% - Margin improvement from enriched mix +5% • Personal Care underlying sales +8% on pre
Slide 14: Outstanding performance in Life Sciences
Outstanding performance in Life Sciences Strong sales growth in the existing business Highlights +61% • Sales growth through organic expansion and leveraging +30% +23% acquired technologies +17% • Outstanding Health Care performance - Vaccine adjuvant sales increased over two thirds + - Speciality e
Slide 15: Strong recovery in Performance Technologies
Strong recovery in Performance Technologies Good sales growth in both business units Highlights +18% • Continued improvement in sales - Recovery in industrial markets +10% - Next generation applications - Sustainability-driven demand –• Smart Materials – built on improved 2020 sales +• Energy Techno
Slide 16: Lower cash generation reflecting higher investment
Lower cash generation reflecting higher investment Working capital outflow driven by sales increase, £m Cash flow, £m H1/21 H1/20 EBITDA 280.3 193.4 (98.4) (20.3) (5.9) Working capital (98.4) (13.5) (72.2) Capital expenditure (81.6) (50.9) Interest & tax (56.9) (48.2) Other (0.7) (0.6) Pro-rata incr
Slide 17: Guided by a clear capital allocation policy
Guided by a clear capital allocation policy Capital allocation policy Application in H1/21 1 Reinvest for organic growth 1 >£80m invested to drive future organic growth 2 Provide regular returns to shareholders 2 10% increase in ordinary interim dividend 3 Acquire complementary technologies / adjace
Slide 18: Moving to faster growth markets
Moving to faster growth markets Steve Foots – Chief Executive Officer 18 Smart science to improve lives™
Slide 19: Rapid implementation of strategic priorities over last 12 months
Rapid implementation of strategic priorities over last 12 months Smart science to improve livesTM Purpose Sustainability Innovation Growth Group Expand Strengthen Refine Performance Life Sciences Consumer Care Technologies Sector • Scaling patient health technologies • Sustainability-driven sector •
Slide 20: 2021 performance benefiting from prior year investments
2021 performance benefiting from prior year investments August 2020 Avanti acquisition November 2020 Iberchem acquisition COVID-19 drugs and vaccines Strong organic growth in H1 2021 • 180% increase in sales year-on-year • Sales up 13% • Key role in first global applications of mRNA • Integration pr
Slide 21: Focused on fast growth markets of the future
Focused on fast growth markets of the future Life Sciences We reach customers worldwide with our ingredients to deliver health care solutions, protect crops and enhance seeds; from our vaccine technologies to microplastic-free seed coatings, we are using our smart science to improve lives everywhere
Slide 22: Building a world class drug delivery business…
Building a world class drug delivery business… Patient health Preventative health Speciality excipients Lipid systems Vaccine adjuvants Market estimate Market estimate Market estimate • c$0.6bn for injectable excipients • c$1bn • c$0.5bn for vaccine adjuvants pre COVID-19 • High single digit CAGR •
Slide 23: …with bigger, bolder innovation projects…
…with bigger, bolder innovation projects… Patient health Preventative health Speciality excipients Lipid systems Vaccine adjuvants • Supporting 25 COVID-19 projects • Supporting 25 COVID-19 projects • Supporting 50 COVID-19 projects • Biologics = 9 of top 10 selling drugs in 2020 • 200+ lipid produc
Slide 24: …and rapid operational scale-up
…and rapid operational scale-up Avanti, US Denmark • 2x employees Biosector • 2x capacity • 2x lipid capacity $185m €72m • £5m investment • £40m investment (+ up to $75m) acquisition acquisition • On stream now • On stream in Q3 Japan United States United Kingdom • 1.5x speciality excipients • 2x sp
Slide 25: Moving to fast growth consumer markets
Moving to fast growth consumer markets Superior growth rates in Croda’s high value technologies Exposed to accelerating sustainability product launches CAGR 2020 - 2025 8.2% x2 since 7.2% 6.3% Q2 2019 4.2% Q219 Q319 Q419 Q120 Q220 Q320 Q420 Q121 Q221 Global Beauty Peptides Botanicals Biotech Total l
Slide 26: Winning with sustainability
Winning with sustainability Acquisition Increasing demandof fornatural actives bio-based leader ingredients Renaissance in mild surfactants • ECO plant operating well since March • Clean beauty / Sulfate free demand • 10x Personal Care customers • Legislation change • 2x Home Care customers • Renais
Slide 27: Winning with innovation
Winning with innovation Acquisition Acquisition of natural of natural actives leader actives leader Move to sustainable actives • Croda already botanicals market leader • Naturals-focused innovation • €25m Alban Muller acquisition • AmeyezingTM from Sederma • 100% natural actives - Origins in wild g
Slide 28: Winning with Iberchem
Winning with Iberchem Parfex – moving toof Acquisition natural ECO actives leader fragrances Leveraging mutual strengths in China • €45m fine fragrance acquisition • Asia growing as proportion of sales • Accelerates transition to natural • Strong demand in China raw materials • Co-locating Iberchem
Slide 29: Refining to grow Performance Technologies
Refining to grow Performance Technologies Recovering strongly Establishing the right ownership structure • Smart Materials: building on increased sales in 2020 • PTIC strategic review progressing well • Energy Technologies: outpacing broader recovery • Up to 75% of PTIC could form separate entity •
Slide 30: Built on a strong sustainability strategy
Built on a strong sustainability strategy Acquisition Ingredient of natural actives leader transparency Decarbonisation roadmap • 199 suppliers assessed • Roadmaps for 90% of emissions created by EcoVadis • Benefits customers’ scope 3 emissions • New Global Head of • New carbon price to inform inter
Slide 31: Summary
Summary Record first half year Outlook for full year 2021 • Strong underlying growth across all sectors • Continued underlying growth across all sectors • Successful delivery from recent acquisitions • Customer restocking expected to moderate • Continued success in building Life Sciences platform •
Slide 32: Additional information
Additional information 32 Smart science to improve lives™
Slide 33: Proforma full year 2020 performance
Proforma full year 2020 performance Sales Adjusted operating profit 2020 adjusted results, £m As reported New structure Proforma As reported New structure Proforma Consumer Care 475.9 527.8 666.6 136.5 146.5 171.0 Life Sciences 401.6 392.5 410.5 129.4 124.5 127.5 Performance Technologies 416.4 373.6
Slide 34: Significant headroom with long maturities
Significant headroom with long maturities Significant headroom+, £m …. …with long maturities* Net debt £600m 866 Cash 105 £100m Undrawn committed 306 21 22 23 24 25 26 27 28 29 30 Total committed funding: £1,228m +At 30 June 2021. *Excluding leases. 34 Smart science to improve lives™
Slide 35: IAS19 deficit on retirement benefits
IAS19 deficit on retirement benefits £m 31 Dec 2020 30 Jun 2021 Market value of assets 1,536.8 1,470.7 Value of liabilities (1,569.1) (1,468.9) Deficit pre tax (32.3) 1.8 Deferred tax 7.0 (0.5) Deficit post tax (25.3) 1.3 35 Smart science to improve lives™
Slide 36: Additional financial information
Additional financial information Currency translation • Adverse profit impact in H1/21; primarily “local” currencies versus GBP • H1 2021 average rates: - $1.388 (H1 2020: $1.261) - €1.152 (H1 2020: €1.145) • Average annual impact: - £1.3m per $cent pa - £1.0m per €cent pa • US$ and € represent 75%
Slide 37: Smart science to improve lives™
37 Smart science to improve lives™