Croda International Plc · LSE:CRDA
Croda International — H1 2024 Earnings Presentation
34 slides from Croda International's earnings presentation, Jul 30, 2024
Slide 1: 2024 half year results Analyst presentation
Croda International Plc 2024 half year results Analyst presentation 30 July 2024 Smart science to improve lives 1
Slide 2: Disclaimer
Disclaimer Cautionary statement Alternative Performance Measures (APMs) This review is intended to focus on matters which are relevant to the We use a number of APMs to assist in presenting information in this interests of shareholders in the Company. The purpose of the review statement in an easily
Slide 3: Agenda
Agenda 01. Executive summary 02. Financial performance 03. Future performance drivers Smart science to improve lives 3
Slide 4: 01 Executive summary
Click icon to add picture Croda Croda International International Plc Plc 01 Executive summary Steve Foots Group Chief Executive Officer Smart science to improve lives 4
Slide 5: Group performance in line with expectations
Executive summary Group performance in line with expectations Sales 7% lower Sequential sales growth v H223* • Consumer Care up 3% • Consumer Care up 9% • Life Sciences down 19% • Life Sciences* down 2%; Pharma* up 3% • Industrial Specialties down 17% • Industrial Specialties up 21% Sales of innovat
Slide 6: Significant portfolio change
Executive summary Significant portfolio change 1 2 3 Pre-Covid Pandemic and aftermath Reset for growth Macro More stable environment Pandemic-stimulated boom / restocking Demand reset Portfolio Acquired Avanti and Iberchem Industrials divestment Portfolio transitioned Growth Sales CAGR (2014-2019) o
Slide 7: Delivering on self-help measures
Executive summary Delivering on self-help measures Learnings from a challenging period Issues to address Croda response Encouraging leading indicators • Extended lead-times leading to • New model moving decision-making • Higher customer Net Promoter 1. transactional relationships closer to customers
Slide 8: Differentiated model with attractive financial characteristics
Executive summary Differentiated model with attractive financial characteristics A high and stable gross margin1 Underpinned by IP and continued innovation 100% NPP relative to total sales (%) H1 2024 36% >1,650 H1 2023 34% active patents 0% H1 2022 H2 2022 H1 2023 H2 2023 H1 2024 Balanced investmen
Slide 9: Assessment of current macro-economic market
Executive summary Assessment of current macro-economic market Consumer Care Agriculture Pharma Consumer Care sales growth in Stock days constant currency (H1 2024 vs. H1 2023) Q2 24 MNCs (1)% Q1 24 L&R +9% Customer A Customer B Customer C Pre-CV19 2022 2023/24 Pharma sales • Customer inventories are
Slide 10: Portfolio well positioned for earnings growth
Executive summary Portfolio well positioned for earnings growth Beauty Actives Beauty Care F&F Home Care Leader in peptides and Differentiated ‘effect’ ingredients Business model optimised Principal technology biotech ingredients for hair care and sun protection, for local and regional platforms are
Slide 11: Near-term priorities
Executive summary Near-term priorities 1 2 3 4 Beauty Care Crop Protection Pharma Operational improvements Driving Beauty Care performance Focusing on innovation in Accelerating conversion of Strong operational improvements and capturing growth of local & Crop Protection Pharma pipeline and cost con
Slide 12: 02 Financial performance
Click icon to add picture Croda Croda International International Plc Plc 02 Financial performance Anthony Fitzpatrick Interim Chief Financial Officer Smart science to improve lives 12
Slide 13: Group performance summary
Financial performance Group performance summary Adjusted results, £m H1 2024 H1 2023 % change Sales 815.9 880.9 (7.4)% Operating profit 135.6 175.8 (22.9)% Operating margin 16.6% 20.0% (3.4)ppts Profit before tax 127.3 174.3 (27.0)% Basic earnings per share 68.8p 92.9p (25.9)% Ordinary dividend per
Slide 14: Sales lower than prior year but higher than H2 2023
Financial performance Sales lower than prior year but higher than H2 2023 Sales, £m Reported sales (7)% • Constant currency sales 0% (5)% down 4% driven by price/mix • Raw material prices down ~4% from 1 January 2024 +1% (3)% Sector breakdown (H1 2024 vs. H1 2023) Volume Price/mix Acquisitions FX Re
Slide 15: Consumer Care – growing in key markets
Financial performance Consumer Care – growing in key markets Sales Innovation vs H1 2023 vs H2 2023 New and • 2 ppts above H123 +13% +15% Protected Products • NPP sales grew 11% +11% +9% +9% +9% at constant currency +8% +3% +3% 42% of total sales (6)% Beauty Beauty F&F Home Consumer Actives Care Car
Slide 16: Life Sciences – impacted by Crop and consumer health destocking
Financial performance Life Sciences – impacted by Crop and consumer health destocking Sales Innovation +3% vs H1 2023 vs H2 2023 New and • 2 ppts above H123 Protected Products • Increased in Pharma as (2)% (2)% key strategic platforms (11)% (10)% (17)% (19)% 33% grow of total sales (33)% Pharma* Cro
Slide 17: Industrial Specialties – enhancing efficiency of Group manufacturing model
Financial performance Industrial Specialties – enhancing efficiency of Group manufacturing model Sales Innovation vs H1 2023 vs H2 2023 New and • In line with H123 +23% +21% Protected Products +16% 16% of total sales (14)% (17)% (24)% Core Supply Industrial Croda agreement Specialties Operating marg
Slide 18: Adjusted operating margin improving sequentially
Financial performance Adjusted operating margin improving sequentially * Adjusted operating margin % versus H1 2023 Adjusted operating margin % versus H2 2023* +5% (2)% (0)% (2)% (1)% (2.7)% (1)% Crop Protection impact 20.0% 17.7% 16.6% 16.6% 15.0% H1 2023 Volume Price/mix Variable H1 2024 H2 2023 C
Slide 19: Improved free cash flow and disciplined capital management
Financial performance Improved free cash flow and disciplined capital management Cash flow, £m H1 2024 H1 2023 EBITDA 184.5 219.2 Working capital 43.5 (9.7) • Operating cash flow up Interest & tax (33.4) (52.3) by £50m Other cash movements (0.1) (13.0) • Driven by £44m working Net cash from operatin
Slide 20: 03 Future performance drivers
Click icon to add picture Croda Croda International International Plc Plc 03 Future performance drivers Steve Foots Group Chief Executive Officer Smart science to improve lives 20
Slide 21: Well positioned for earnings growth
Future performance drivers Well positioned for earnings growth Technology Capital invested to drive future growth Near-term priorities trends intact Driving fast growth in Asia • Driving • Solus Biotech acquisition Beauty Care Consumer performance • Shanghai claims lab Care • Capturing growth • Guan
Slide 22: Driving Beauty Care performance – improving leading indicators
Future performance drivers Driving Beauty Care performance – improving leading indicators Increasing innovation Sustainable ingredients growing Higher sales volumes Localising our approach Impact valued by customers Regaining share in North America Cradle-to-gate carbon footprint data for +1.5 ppts*
Slide 23: Beauty Care – tailored offer to customers of all sizes
Future performance drivers Beauty Care – tailored offer to customers of all sizes Growing global market – L&R Beauty Care – R&D investment China case study – L&Rs driving customers increasingly important enhancing customer proximity Croda growth L&R share of beauty product launches Investment focuse
Slide 24: Winning with local and regional customers in F&F
Future performance drivers Winning with local and regional customers in F&F Distinctive positioning with Investing to support L&R customers Growing ahead of the market continued growth Reported Croda F&F growth rate (yoy) compared Investing in innovation – Grasse and Dubai with tier 1 peers* >95% 25
Slide 25: Innovating to develop sustainable Agriculture solutions
Future performance drivers Innovating to develop sustainable Agriculture solutions L&Rs growing in Agriculture Asian demand for drone delivery MPF* coating sales in all regions Proportion of Crop Protection sales to multinational vs. L&R customers 2019 2022 H1 2024 MNCs 57% 55% 44% L&Rs 43% 45% 56%
Slide 26: Pharma pipelines expanding; innovation coming to market as planned
Future performance drivers Pharma pipelines expanding; innovation coming to market as planned Industry pipelines expanding Strong competitive position New technology coming to market mRNA Vaccines & Therapeutics Novel lipid-based adjuvants Unique portfolio of specialty 1130 excipients for Protein an
Slide 27: Operational improvements and cost control
Future performance drivers Operational improvements and cost control Creating value from M&A Operational efficiencies Cost and capital discipline Growth synergies New organisational structure Robust cost control • Utilising global sales network • More responsive to customers • Expected to benefit FY
Slide 28: Conclusion
Future performance drivers Conclusion FY 2024 outlook Summary • Encouraging H1 for Consumer Care, key strategic • Sequential sales growth versus H2 2023 Pharma platforms and Industrial Specialties • Record levels of innovation • Improving operating margins driven by higher sales 1 • Improving operat
Slide 29: Additional financial information
Croda Croda International International Plc Plc Additional financial information Smart science to improve lives 29
Slide 30: Currency translation
Currency translation Sensitivity analysis H124 currency impact The US Dollar and the Euro together represent The average rates in H124 were: approximately 65% of the Group’s currency translation • US$1.266 (H1 2023: US$1.234) exposure. We estimate that the average annual currency translation impact
Slide 31: Quarterly sales breakdown
Additional financial information Quarterly sales breakdown Quarterly sales by sector (£m) Sector Q123 Q223 Q323 Q423 Q124 Q224 Consumer Care 236.8 218.8 218.2 212.3 236.8 231.6 Life Sciences 170.8 132.4 125.0 174.1 121.8 124.4 Industrial Specialties 69.1 53.0 43.7 40.3 49.9 51.4 Group 476.7 404.2 38
Slide 32: Five-year sales performance by business unit
Additional financial information Five-year sales performance by business unit Reported sales 2019-2023 (£m) Consumer Care Life Sciences Consumer Care Life Sciences 7% CAGR 13% CAGR ex CV19 lipids F&F Seed 13% CAGR Enhancement Home Care 9% CAGR 12% CAGR Crop Protection 9% CAGR Beauty Care 4% CAGR Pha
Slide 33: 2024 technical factors
Additional financial information 2024 technical factors Net finance costs Effective tax rate ~£20m ~26% Expected to be at the top end of dependent on geographic previous £15-20m range mix of profit Working capital Capital expenditure Unwind of CV19 receivables and disciplined management could ~£150m
Slide 34: Smart science to improve lives
Smart science to improve lives