Croda International Plc · LSE:CRDA
Croda International — H1 2022 Earnings Presentation
38 slides from Croda International's earnings presentation, Jul 28, 2022
Slide 1: Half year 2022 results
Croda International Plc Half year 2022 results 29 July 2022
Slide 2: Disclaimer
Disclaimer Cautionary statement Alternative Performance Measures (APMs) This review is intended to focus on matters which are relevant to We use a number of APMs to assist in presenting information in this the interests of shareholders in the Company. The purpose of the statement in an easily analys
Slide 3: Agenda
Agenda 01. Overview 02. Excellent first half performance 03. An even more resilient growth platform 04. Questions Smart science to improve lives™ 3
Slide 4: Overview
01 Overview Steve Foots Chief Executive Officer Smart science to improve lives™ 4
Slide 5: Strong operating model underpinning strategic progress
Overview Strong operating model underpinning strategic progress Highlights Strong strategy delivery • Record sales, margin and profit •Divested majority of PTIC • Growth across all sectors and regions •Transitioning to pure-play business • Successful inflation recovery •Capital redeployment underway
Slide 6: Record sales, margin and profit
Overview Record sales, margin and profit Sales Operating profit Return on sales Earnings per share +20.7% +24.1% +70bps +25.2% £1,127m £300.4m 26.6% 155.2p Strong sales growth in Profit growth across Continued positive Strong returns to every region & sector Croda businesses mix shareholders Reporte
Slide 7: A pure-play Consumer Care and Life Sciences company
Overview A pure-play Consumer Care and Life Sciences company Knowledge IP rich intensive Capital light Carbon light Higher value NPP IP protection Capex Scope 1 & 2 emissions Test tube & vial quantity 37% >1,500 6% -26% £/kg £/g as a % of total sales patents of sales post PTIC divestment product pri
Slide 8: Excellent first half performance
02 Excellent first half performance Jez Maiden Group Finance Director Smart science to improve lives™ 8
Slide 9: Excellent first half performance
Financial results Excellent first half performance % change constant Adjusted results, £m H1/22 reported H1/21 reported % change currency Sales 1,127.3 934.0 20.7% 18.3% Operating profit 300.4 242.1 24.1% 21.8% Return on sales 26.6% 25.9% 70bps - Profit before tax 288.8 229.5 25.8% 23.6% Basic earni
Slide 10: Sales growth driven by pricing and mix
Financial results Sales growth driven by pricing and mix Sales, £m Reported growth +21% 22% (5)% 1% 3% (191.0) Underlying growth +17% 1,127.3 934.0 936.3 H1/21 reported Price / mix Volume Acquisitions Currency translation H1/22 reported Divestment impact Excluding divested currency currency business
Slide 11: Continued recovery of unprecedented inflation
Financial results Continued recovery of unprecedented inflation H1/22 sales analysis Inflation in key input costs 35% Raw materials Raw materials • Broad basket of raw materials • Average increase of 25% from Q4/21 to Q2/22 19% +25% Labour* • Successfully managing impact through pricing Freight 3% E
Slide 12: Sales growth across all regions
Financial results Sales growth across all regions Reported sales growth • Strong regional recovery over last 18 months • Limited impact from lockdowns in China +35% +31% • Continued strong growth in North America +21% +13% • Latin America led by excellent crop demand • Double digit growth in Europe
Slide 13: Sales and profit growth across all sectors
Financial results Sales and profit growth across all sectors Consumer Care Life Sciences PTIC Group +24% +24% +21% +14% Growth in sales (%) +61% +34% +24% Growth in operating profit (%) +4% 26.6% 36.0% 17.7% 26.6% Return on sales (%) +200bps -330bps +410bps +70bps Reported currency. Operating profit
Slide 14: Strong Consumer Care performance
Financial results Strong Consumer Care performance Sales, £m • Standout performer Reported growth +24% • Successful inflation recovery 22% (4)% 3% 3% • Slightly lower volume: de-marketing & 2021 customer stocking • Sales growth in all four business units • Growth led by Beauty Care • F&F synergies u
Slide 15: Life Sciences building on exceptional prior period
Financial results Life Sciences building on exceptional prior period Sales, £m • Further progress after outstanding 2021 Reported growth +14% • Continued strong growth in Crop 1% 11% 0% 2% • Health Care platforms growing (excluding lipids) • Mix effect on return on sales (36.0%) • Lipid systems movi
Slide 16: Divestment of majority of PTIC
Financial results Divestment of majority of PTIC Sales, £m • Successful divestment on 30 June Reported growth +24% • Principal divestment completed: €775m gross (10)% 0% 2% proceeds 32% • Sipo sale discussion continues (€140m) • Retained Industrial Specialities business 342.7 Estimated impact of div
Slide 17: Lower free cash flow reflecting working capital investment
Financial results Lower free cash flow reflecting working capital investment • Strong EBITDA growth • Working capital primarily reflecting inflation Cash flow, £m H1/22 H1/21 • Stable inventory volume Adjusted operating profit 300.4 242.1 • H2 improvement expected Depreciation and amortisation 43.5
Slide 18: Reinvesting proceeds of divestment
Financial results Reinvesting proceeds of divestment Organic capital investment programme • Divestment enables capital allocation to faster growth, higher return markets ~£160m programme • Rich seam of growth opportunities • Reinvest in capex for organic growth • Complement with selective M&A: techn
Slide 19: An even more resilient growth platform
03 An even more resilient growth platform Steve Foots Chief Executive Officer Smart science to improve lives™ 19
Slide 20: Attractive portfolio for more resilient growth
Attractive portfolio for more resilient growth Consumer Care: >5% sales growth + synergies, >25% ROS Supported by: Industrial Specialties Consumer Beauty & Veterinary Health Actives Beauty Care Fragrances and Flavours Home Care • Innovation leader • Broad portfolio • Highly responsive • Targeted IP
Slide 21: Consumer Care
Consumer Care Smart science to improve lives™ 21
Slide 22: Growth through sustainable ingredients
Consumer Care Growth through sustainable ingredients Bio-based Croda commitment: 75% bio-based raw materials ingredients • Global ambition to move away from fossil-derived ethylene oxide feedstock Enables customers to meet their commitments to fossil-free formulations Leaders driving change Positive
Slide 23: Growth through a strong sales pipeline
Consumer Care Growth through a strong sales pipeline Beauty Actives Beauty Care F&F Encapsulated retinol Mineral sunscreens Encapsulated fragrances Enhanced anti-aging effect through encapsulation Accelerating demand in North America and Asia Enhanced sustainability through encapsulation >75% ECO sa
Slide 24: Growth through future innovation pipeline
Consumer Care Growth through future innovation pipeline Sustainable actives Sustainable surfactants Sustainable fragrance molecules • Actives derived from ‘blue’ biotech • Biotech-derived glycolipid surfactants • New bio-based fragrance ingredients • Anti-dandruff, anti-aging and anti-inflammatory •
Slide 25: Growth through focused investment
Consumer Care Growth through focused investment Biotech Sulfate-free surfactants Expansion in China Fabric care biopolymers New biotech applications laboratory Carbon-neutral surfactant expansion New facility, Guangzhou, China Consumer Care expansion, Singapore ‘Big bet’ projects 3x capacity On-stre
Slide 26: An even more resilient growth platform
Consumer Care An even more resilient growth platform Beauty Actives Beauty Care F&F Home Care Trend Science and sustainabiilty Green; clean; conscious Fast and responsive Carbon benefits-in-use Portfolio 16,300 combinations 23,250 combinations 36,500 fragrances 2,500 combinations Footprint 100 count
Slide 27: Life Sciences
Life Sciences Smart science to improve lives™ 27
Slide 28: Growth through biologics
Life Sciences Growth through biologics Market Opportunity Croda product class Proteins and $300bn biologic drug market; 12% CAGR monoclonal >5,000 clinical trials of monoclonal antibodies (mAbs) underway Speciality excipients antibodies • Enable targeted therapies for diseases previously only treate
Slide 29: Growth through strong biopharma sales pipeline
Life Sciences Growth through strong biopharma sales pipeline Speciality Excipients Vaccine adjuvants Lipid systems mAbs to treat cancer World’s only aseptic adjuvant facility Preventing respiratory diseases Speciality excipients for oncology applications Prophylactic vaccines for multiple diseases P
Slide 30: Growth through biopharma innovation pipeline
Life Sciences Growth through biopharma innovation pipeline Novel delivery systems Immunotherapy Gene therapy Current example: oral insulin delivery system Current example: cancer immunotherapy Current example: heart disease gene therapy Uses speciality excipient with superior solubility Uses vaccine
Slide 31: Growth through focused investment
Life Sciences Growth through focused investment Speciality excipients Vaccine adjuvants Lipid systems Doubled capacity at our speciality excipients plant Rapidly expanding our aseptic facility for adjuvant systems Establishing a second lipid systems scale up site Completed: In progress: In progress:
Slide 32: An exciting biopharma pipeline
Life Sciences An exciting biopharma pipeline Customers Programmes Non-Covid +30 New in first +80 Speciality +10% excipients half 2022 Vaccine adjuvants Total Lipid 160 330 systems >75% New applications Speciality excipients Vaccine adjuvants Lipid systems • Monoclonal antibodies • Next-generation ad
Slide 33: Summary
Summary Outlook Resilient growth platform • H1 profit ahead • Powerful operating model • Full year profit modestly ahead of previous expectations • Increased focus • More resilient Consumer Care platform • Greater innovation • Growing in Crop • Strong pipeline of opportunities • Exciting platforms i
Slide 34: Questions
04 Questions Smart science to improve lives™ 34
Slide 35: Additional financial information
05 Additional financial information Smart science to improve lives™ 35
Slide 36: IAS 19 retirement benefits
Additional financial information IAS 19 retirement benefits £m 30 Jun 2022 31 Dec 2021 Market value of assets 1,107.6 1,340.1 Value of liabilities (999.5) (1,332.2) Surplus pre tax 108.1 7.9 Deferred tax (27.2) (2.1) Surplus post tax 80.9 5.8 Smart science to improve lives™ 36
Slide 37: Currency exposure
Additional financial information Currency exposure Currency translation • Favourable profit impact in H1/22 as Sterling weakened • H1/22 average rates: - US$1.301 (HY/21: US$1.388) - €1.189 (HY/21: €1.152) • Average annual impact: - £1.4m per $cent pa - £1.1m per €cent pa • US$ and € represent appro
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