Croda International Plc · LSE:CRDA
Croda International — Investor Day (May 2022)
54 slides from Croda International's investor day presentation, May 12, 2022
Slide 1: Iberchem site visit
Croda International Plc: 12 May 2022 Iberchem site visit
Slide 2: Cautionary statement
Cautionary statement Cautionary statement This review is intended to focus on matters which are relevant to the interests of shareholders in the Company. The purpose of the review is to assist shareholders in assessing the strategies adopted and performance delivered by the Company and the potential
Slide 3: Agenda and meet the team
Agenda Meet the team 1. Iberchem growth plan 2. Sales synergies 3. Parfex growth plan Presentation Unlocking the potential of F&F 1. Iberchem organic growth plan – Why we win – Customer-driven R&D José Balibrea Richard Butler Alexandre Levet 2. Sales synergies Managing Director, Senior Vice Presiden
Slide 4: Unlocking the potential of F&F
Unlocking the potential of F&F Richard Butler – Senior Vice President, Fragrances and Flavours 4 Smart science to improve lives™
Slide 5: Created growth businesses targeting >1.5x GDP growth
Created 8 growth businesses – all targeting >1.5x GDP growth Consumer Care Industrial Specialties Beauty Actives – Beauty Care – Fragrances and Flavours – Home Care – Supported by: ~£150m sales ~£400m sales ~£180m sales ~£50m sales Life Sciences Health Care Crop Care Consumer & Veterinary Health Pat
Slide 6: The leading tier F&F company
The leading tier 2 F&F company Portfolio breadth Iberchem is uniquely positioned: • Unrivalled geographic reach • Customers value breadth of portfolio • Consolidation reducing tier 2 competitors Geographic coverage • Customers want independent supplier Bubble sizes represent total sales. Brand image
Slide 7: Strongly differentiated in the tier 2 landscape
Strongly differentiated in the tier 2 landscape Tailor-made Customer Cost effective products & proactive Global Reach Compliance Total diversity R&D marketing proposal Focused on Tier 1 large accounts High R&D costs ✓ Agility and pace ✓ Tier 1-like services ✓ Scale Lack of global reach Tier 2
Slide 8: Opportunities in new customer segments
Opportunities in new customer segments A typical Iberchem customer A typical customer of a tier one F&F company • Local family-owned • Large international companies corporations • Flexible and agile • Complex internal business model structure • Fast to customer • Working with core-list system • Rely
Slide 9: Compelling offer for all customer types
Compelling offer for all customer types Our unique combination offers Tier 1 strength Winning with MNCs / regional majors Confidence and credibility Local manufacturing Global reach Strong R&D Sustainability Alignment on Sustainability Combined with Tier 2 agility Winning with SMEs • Direct selling
Slide 10: Attractive long term market trends
Attractive long term market trends Global fragrance market Fragrance market CAGR 2020-2024 Expected to reach 12% Driven by 10% $58.8bn in 2024 8% Emerging 6% 4% 2% 5.6% global CAGR Markets 0% Global Western Europe North America Middle East & Africa Latin America Eastern Europe Asia-Pacific Growing m
Slide 11: Three growth drivers plus acquisition opportunities
Three growth drivers plus acquisition opportunities 1. Iberchem organic growth plan 2. Sales synergies Double-digit % CAGR €48m by 2025 Three growth drivers plus acquisition opportunities 4. Acquisition opportunities 3. Parfex Selective technology or geography €40M sales by 2025 11 Smart science to
Slide 12: 1. Iberchem organic growth plan
1. Iberchem organic growth plan Jose Balibrea – Managing Director, Iberchem 12 Smart science to improve lives™
Slide 13: Iberchem: years of successful expansion
Iberchem: 37 years of successful expansion Acquisition of Acquisition of is founded became majority rebranded for takes majority in Murcia, flavour products Corporate milestones shareholder stake in in China and Spain Iberchem In France in Malaysia Acquisition of Acquires Aromas launched takes major
Slide 14: A global fragrance-led company with distinctive positioning
A global fragrance-led company with distinctive positioning Sales by division Sales by region € 206m € 43m LatAm 8% revenue EBITDA Flavours 23% Asia 31% Europe 20% + 15% 21% Home Care Personal Care sales growth Fragrances Fragrances 40% EBITDA margin Africa 21% (CAGR 2010-21) 37% Middle East 20% 15
Slide 15: Excellent financial track record
Excellent financial track record Consistent top line growth across the cycle Strong profit growth and attractive cash profile +15% CV19 +21% CAGR Raw CAGR mat crisis Oil crisis Arab spring 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2
Slide 16: 2022-2025 investments for growth; capital light model retained
2022-2025 investments for growth; capital light model retained ~ €70m capital investment by project ~ €70m capex by region ~€ 70m ~ 5% CAPEX CAPEX over sales LATAM in 2022-2025 2022-2025 China EEMEA Ongoing Asia 50% capital investments on three significant projects: Western Spain Europe • F&F-Beauty
Slide 17: Why we win
Why we win Jose Balibrea – Managing Director, Iberchem 17 Smart science to improve lives™
Slide 18: Unrivalled agility and pace
Unrivalled agility and pace 1. Wide product portfolio 2. Global platform • 40,000 fragrance references • 120 countries • 19,000 flavour references • >75% sales to emerging markets • >20% sales to China 3. Fast to customers 4. Customer-driven R&D • 4,000 customers • +280 new fragrance • +1,400 new cu
Slide 19: 1. Wide product portfolio
1. Wide product portfolio 40,000 fragrance references 16% Personal care and perfumes 52% Functional fragrances 5% 48% 5% Air care Baby care Deodorant Beauty and personal care 77% Facial care Hygiene 3% Dishwashing Bath & shower Hair care 33% Laundry care Haute parfumerie/Natural Mass market fragranc
Slide 20: 2. Global platform
2. Global platform Italy France Turkey India Spain Tunisia China Dubai Mexico Thailand Ethiopia Colombia Ghana Malaysia Singapore Nigeria Kenya Brazil Indonesia South Africa Denotes local presence Denotes indirect presence through sale of products Denotes expanding presence Commercial office Creativ
Slide 21: 3. Fast to customers
3. Fast to customers • Strong customer intimacy Number of active customers (ex. Parfex) – 11-year average relationship among Top 50 customer list 4500 +9.2% – Eight of these with >20-year relationship with Iberchem 4000 CAGR • Focused on customer niches not targeted by larger competitors • Low conce
Slide 22: 4. Customer-driven R&D
4. Customer-driven R&D 1. 2. 3. 4. Identification and Knowledge Study trends Product data capture management and tastes development 22 Smart science to improve lives™
Slide 23: Customer-driven R&D
Customer-driven R&D Maria Angeles Lopez – Fragrance Development Manager, Iberchem 23 Smart science to improve lives™
Slide 24: Our approach to R&D
Our approach to R&D Vision Strategic business partner to our customers offering fragrance development, formulation advisory, marketing and technical support Customer fragrance development Supported by extensive insight Customer-driven Dynamic Extensive insight on latest market Customers fully update
Slide 25: Unparalleled commercial support to regional customers
Unparalleled commercial support to regional customers Extensive customer support with a “local” approach at every stage SALES SUPPORT MARKETING SUPPORT TECHNICAL SUPPORT OPERATIONS SUPPORT • Same language • Macro vision and trend • Application and technical advice • 15 production sites globally • Av
Slide 26: Capturing the most recent trends
Capturing the most recent trends Identification Research & Development Product deployment Proactive data capture 60% • Trade fairs 280 • Conferences new codes per month in Fragrances(1) • Intelligence from local subsidiaries • Suppliers' new launches • Close market monitoring Knowledge Product Study
Slide 27: Formulation-driven approach
Formulation-driven approach State of the art and recent R&D laboratories • Well established culture of innovation 1 4 • 10 R&D centres and 280 R&D technicians • 2019: invested in state-of-the-art applications laboratory • 22 Perfumers, 9 Flavourists • Allows rapid commercialisation of value 2 5 for
Slide 28: Iberchem organic growth plan – key takeaways
Iberchem organic growth plan – key takeaways • Wide product portfolio • Global platform • Fast to customers • Customer-driven R&D - Unparalleled commercial support to regional customers - Capture the most recent trends - Formulation-driven approach 28 Smart science to improve lives™
Slide 29: 2. Sales synergies
2. Sales synergies Richard Butler – Senior Vice President, Fragrances and Flavours 29 Smart science to improve lives™
Slide 30: Three sources of sales synergies totaling €48m by 2025
Three sources of sales synergies totaling €48m by 2025 1 2 3 Geographic expansion Customer cross-selling Full formulation capability 400 Region Croda Iberchem Claims Europe & the 75% 28% Americas 4,000 Sensory Asia, Middle 6,000 25% 72% East & Africa Fragrance Croda to Middle East, Africa, Indies Sh
Slide 31: Encouraging progress in 2021
Encouraging progress in 2021 700 Sales visits 370 Consumer Care 330 50 1,300 New customers Samples requested 22 Consumer Care 500 Consumer Care 28 800 240 Projects created 100 Consumer Care 140 Consumer Care excludes F&F 31 Smart science to improve lives™
Slide 32: 1. Geographic expansion in action
1. Geographic expansion in action Leveraging the Croda network in Brazil Further expanding in China The market opportunity: The market opportunity: • Second largest fragrance market globally worth $5.6bn • Fastest growing Personal Care market globally • No pre-existing Iberchem presence • Increasing
Slide 33: 2. Customer cross-selling in action
2. Customer cross-selling in action Regions where Croda is stronger A region where both companies have a significant presence Regions where Iberchem is stronger Logos from company websites. 33 Smart science to improve lives™
Slide 34: 3. Full formulation capability in action
3. Full formulation capability in action A recent project with a large regional Personal Care brand owner and contract manufacturer in Turkey Customer seeks to Croda researches the key Fragranced base Customer benefits from a develop a new facial trends in the relevant formulations supplied to total
Slide 35: Full formulation capability
Full formulation capability Magali Bonnier – Research & Technology Director, Croda 35 Smart science to improve lives™
Slide 36: Different types of formulation ingredients
Different types of formulation ingredients Actives - Claims - Delivery systems - Sun care - Hair care Functional - Skin care ingredients Surfactants - Thickeners - Fragrances Oils - Conditioners - Aesthetics - Film former - Fillers Others - Preservatives - Antioxidants Formulation Academy to share o
Slide 37: Delivering improved performance through science
Delivering improved performance through science 1. Formulation technology Stability – Viscosity - Rheology Claims Claims Claims 2. Claims 3. Sensory 4. Fragrance Skin • Sensory panel • Formulation stability • Color/Pigmentation • Consumer testing • Evaluation of fragrance • UV protection performance
Slide 38: Full formulation capability in action
Full formulation capability in action Overnight memory mask – Fights the signs of fatigue, ensuring skin is revitalised and ready to face the day ahead Ingredient Functionality % Supplier Iberchem fragrance 35.14942 Deionised water >50% Non-Croda Glycols Reduce moisture loss 12% Non-Croda Glycerine
Slide 39: Capturing the power of sensory and emotions
Capturing the power of sensory and emotions • Emotions can be induced during the use of skin care products • Using neuroscience to understand how emotions are generated by different textures and fragrances 39 Smart science to improve lives™
Slide 40: Adding value to customers through our formulation expertise
Adding value to customers through our formulation expertise Croda’s unique positioning Primary Formulation Sensory >1,500 market-ready Fragrance label claim ingredients benefits full formulations Indies Larger customers Limited formulation capability Regular upgrade to product range Croda offer: Cro
Slide 41: Sales synergies – key takeaways
Sales synergies – key takeaways • Geographic expansion • Cross-selling • Full formulation capability - Delivers improved performance - Captures the power of sensory and emotions - Adds value to customers 41 Smart science to improve lives™
Slide 42: 3. Parfex growth plan
3. Parfex growth plan Alexandre Levet – Sales Director, Parfex 42 Smart science to improve lives™
Slide 43: An increasingly naturals-focused brand in premium markets
An increasingly naturals-focused brand in premium markets 43 Smart science to improve lives™
Slide 44: Excellent reputation for fine fragrances
Excellent reputation for fine fragrances • Established in 1985 in Grasse; historical origin for the Industry 2021 sales by region • Fragrances for premium personal care and fine perfumery markets • Promoting natural raw materials that are available in Grasse Employs Selling fragrances in c.100 peopl
Slide 45: Parfex growth plan – what will it deliver?
Parfex growth plan – what will it deliver? Sales Low investment Higher ambition • Double digit CAGR from 2021-25 • €40m total sales by 2025 • Currently delivering to plan 6% underlying EBITDA CAGR 2015-21 Sales • Expanding EBITDA margin Double digit CAGR • Fastest growth with premium customers 2021-
Slide 46: Parfex growth plan – how will it deliver?
Parfex growth plan – how will it deliver? 1 2 3 4 5 Sales teams Manufacturing Croda brand Co-development Efficiencies Parfex present in network Leverage Croda Increase fine fragrance Routes to market 50 countries Utilise Iberchem to produce reputation and relationships to & premium skin care offerin
Slide 47: Customer sustainability benefits
Customer sustainability benefits Guillaume Audy – Sustainability Director, Iberchem 47 Smart science to improve lives™
Slide 48: Climate Positive – sustainable fragrance solutions
Climate Positive – sustainable fragrance solutions Sustainable fragrance options Fragrance technologies On-site operations 48 Smart science to improve lives™
Slide 49: People Positive – communities and education
People Positive – communities and education Our commitment: to be the most sustainable supplier in Emerging Markets 1 2 3 4 5 Train local teams to Educate customers on Define commercial Create tailor-made KPIs to measure become sustainability benefits of sustainable opportunities solutions to progre
Slide 50: Summary
Summary Richard Butler – Senior Vice President, Fragrances and Flavours 50 Smart science to improve lives™
Slide 51: Three growth drivers creating a >€400m business by 2025
Three growth drivers creating a >€400m business by 2025 Margin Growth drivers >€ 400m Iberchem standalone revenues in 2025 1 organic growth plan Margin broadly in line with peers Mid • Agile model c€48 m sales teens % 2 +c€40m synergies by 2025 • Lean corporate centre 3 Parfex growth plan +c€48m +c€
Slide 52: Key takeaways
Key takeaways • Strong market differentiation • Agile business model with extensive portfolio • Global R&D capability driving innovation • Customer proximity underpins speed to market • Exciting organic growth trajectory • Further upside from sales synergies • Leveraging Croda’s full formulation cap
Slide 53: Questions
Questions 53 Smart science to improve lives™
Slide 54: Smart science to improve lives™
54 Smart science to improve lives™