Croda International Plc · LSE:CRDA
Croda International — FY2021 Earnings Presentation
38 slides from Croda International's earnings presentation, Feb 28, 2022
Slide 1: Full year 2021 results
Full year 2021 results Croda International Plc 1 March 2022
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: 2021: a record year
2021: a record year Steve Foots – Chief Executive Officer 3 Smart science to improve lives™
Slide 4: Record results – strategy executed with agility
Record results – strategy executed with agility • Record sales, profit and margin, well ahead of pre-pandemic levels • Strong cost recovery in a high inflation environment • Continued innovation – New and Protected Products (NPP) growing significantly • Recent acquisitions delivering – accelerated i
Slide 5: Outstanding performance
Outstanding performance Sales Adjusted operating profit Adjusted earnings per share Capital expenditure +35.9% +46.6% +42.5% +31.0% £1,889.6m £468.6m 250.0p £158.5m Broad-based sales growth Growth in higher value niches Strong returns to shareholders Investing in fast growth Reported currency, versu
Slide 6: Growth well ahead of pre-pandemic 2019
Growth well ahead of pre-pandemic 2019 Strong underlying* sales growth across all sectors With adjusted operating profit significantly higher 23.6% 99.0% 17.3% 17.7% 37.9% 15.9% 12.0% -1.5% Consumer Care Life Sciences Performance Group Consumer Care Life Sciences Performance Group Technologies Techn
Slide 7: Broad-based underlying growth across all sectors and regions
Broad-based underlying growth across all sectors and regions Consumer Care Life Sciences Performance +40% Technologies +24% +26% +18% Full year sales growth by sector % Europe North Asia Latin America America +30% +27% +26% +24% +16% Full year sales growth by region % Underlying sales, versus 2020 7
Slide 8: Successfully navigating a high inflation environment
Successfully navigating a high inflation environment Input cost growth • Sales growth • Return on sales ~% cost 24.8% FY 2021 increase Raw materials +17% +9% +17% 23.0% Energy +8% Volume Price/Mix Freight +25% 2020 2021 High inflation environment Growing across all businesses Record margin Input cos
Slide 9: Progress on key non-financial performance indicators
Progress on key non-financial performance indicators Climate ambition Decarbonisation Diversity & Inclusion Supporting communities • % of women in leadership • 1.50C verified targets • Executing on roadmaps • Over 50m people helped roles increased to 36% 9 Smart science to improve lives™
Slide 10: Transitioning to a Consumer Care and Life Sciences company
Transitioning to a Consumer Care and Life Sciences company More carbon light More IP GHG emissions intensity 2021 NPP as % sales 2021 416 48% 44% 193 15% Croda PTIC PTIC CC LS Faster sales growth* Even stronger profit margins High single digit % 30%+ Mid single 25%+ digit % <20% ~GDP PTIC CC LS PTIC
Slide 11: Record financial performance
Record financial performance Jez Maiden – Chief Financial Officer 11 Smart science to improve lives™
Slide 12: Record performance supported by continued investment
Record performance supported by continued investment % change constant Adjusted results, £m FY/21 reported FY/20 reported % change currency Sales 1,889.6 1,390.3 35.9% 43.2% Operating profit 468.6 319.6 46.6% 54.4% Return on sales 24.8% 23.0% 180bps - Profit before tax 445.2 300.6 48.1% 56.2% Basic
Slide 13: Strong price and volume growth complemented by acquisitions
Strong price and volume growth complemented by acquisitions Sales, £m Constant currency sales +43% Constant currency sales +43% 13% 17% -7% 9% 10% 17% 20% Underlying sales +26% 1,889.6 1,390.3 Existing business Avanti / lipid systems Consumer Care acquisitions FY/20 Price / mix Volume Acquisitions C
Slide 14: Underlying growth driving increased profit
Underlying growth driving increased profit Adjusted operating profit, £m Reported +47% 57.8 -24.8 116.0 Constant currency +54% 468.6 319.6 FY/20 reported currency Underlying growth Acquisitions Currency translation FY/21 reported currency Reported currency except where stated 14 Smart science to imp
Slide 15: Excellent performance across all sectors
Excellent performance across all sectors Consumer Care Life Sciences Performance Technologies +45% +46% +36% +18% Growth in sales % +67% +47% +29% +32% Growth in operating profit % -310bps +470bps +160bps +180bps 24.7% 36.4% 14.7% 24.8% Return on sales (%) F&F dilution impact Reported currency 15 Sm
Slide 16: A stronger Consumer Care business
A stronger Consumer Care business Excellent sales growth Highlights +29% • Excellent sales performance – +18% underlying growth +13% +8% • Strong rebound in Personal Care – Personal Care underlying sales +15% on pre-pandemic level – 30% return on sales Beauty Actives Beauty Care Home Care • Continue
Slide 17: Rapid expansion in Life Sciences
Rapid expansion in Life Sciences Building further scale in Health & Crop Combining existing and new platform growth +80% +37% -8% +17% +13% +2% Health Care Crop Protection Seed Enhancement Existing business Avanti / lipid systems Currency Improved mix and volume driving growth Highlights +46% • Grow
Slide 18: A new future for Performance Technologies
A new future for Performance Technologies Recovery in end markets Highlights +20% • Strengthening recovery through 2021 • Agreement reached in December to divest most of PTIC +16% • Retained business to form Industrial Specialties Smart Materials Energy Technologies Significant volume growth Estimat
Slide 19: Lower cash generation reflecting higher investment & demand growth
Lower cash generation reflecting higher investment & demand growth Working capital outflow (£m) Cash flow, £m FY/21 FY/20 EBITDA 547.6 387.8 (45.0) (102.5) Working capital (102.5) (2.3) 11.1 (68.6) Capital expenditure (158.5) (121.0) Interest & tax (129.8) (87.7) Other (3.2) 0.1 Pro-rata increase in
Slide 20: Guided by a clear capital allocation policy
Guided by a clear capital allocation policy Capital allocation policy Application in FY21 1 Reinvest for organic growth 1 c£160m 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 21: Sustainability + Innovation = Growth
Sustainability + Innovation = Growth Steve Foots – Chief Executive Officer 21 Smart science to improve lives™
Slide 22: Our strategic priorities
Our strategic priorities Fast grow China Sustainability Supporting customers’ sustainability strategies through: Expand Scale Biotech Life Sciences • Ethical sourcing • Ingredient transparency • R&D – sustainable ingredients • Sustainable manufacture Innovation Proactive M&A Providing customers with
Slide 23: Supported by big technology market trends
Supported by big technology market trends Consumer Crop science Pharma 1. Move to sustainable ingredients 2. Move to biologics Ingredients that are: Biologics in crop care: Biopharma: • Bio-based • Biopesticides • Monoclonal antibodies • Safe and “clean” • Biostimulants • Vaccines • Ethically source
Slide 24: Industrial Specialties
Created 8 growth businesses – all targeting >1.5x GDP growth Consumer Care Industrial Specialties Supported by: Beauty Actives Beauty Care Fragrances and Flavours Home Care Life Sciences Health Care Crop Care Consumer & Veterinary Health Patient Health Crop Protection Seed Enhancement 24 Smart scien
Slide 25: Winning with sustainable ingredients in Beauty Actives
Winning with sustainable ingredients in Beauty Actives #1 in peptides #1 in naturals #1 in biotechnology 7% CAGR 6% CAGR 8% CAGR Market Highest growth rates in technology-driven niches 33% products are biotech-derived In 80% anti-ageing products 80% R&D pipeline = “green” Multiple biotechnology plat
Slide 26: Winning with sustainable ingredients in Beauty Care & Home Care
Winning with sustainable ingredients in Beauty Care & Home Care #1 in metal oxides for sun care #1 in sustainable surfactants #1 in proteins for fabric care Sun care 4% CAGR Hygiene 5% CAGR Fabric care 6% CAGR Market Strong demand for sustainable alternatives Leader in sustainable UV filters Leader
Slide 27: Synergy capture on track in Fragrances & Flavours
Synergy capture on track in Fragrances & Flavours First synergies delivered Enhancing sustainability Expanding premium fragrances Emerging markets 8% CAGR Natural fragrances 10% CAGR Premium fragrances 6% CAGR Market Responsiveness – fast-to-market, on-trend, increasingly sustainable €48m synergy pl
Slide 28: Continued innovation in Crop Care with biologics
Continued innovation in Crop Care with biologics Traditional Crop Care Biopesticides Market $60bn market – 3% CAGR $5bn market – 8% CAGR Market need: sustainable delivery Market need: biopesticide delivery Croda • Spray drift reduction • Biodegradability • Microbial delivery • Low carbon, bio-based
Slide 29: Moving to biopharma: Croda's Patient Health platforms
Moving to biopharma: Croda’s Patient Health platforms Patient Health Market Speciality excipients Vaccine adjuvants Lipid systems Biologics & small molecule delivery Vaccines Nucleic acid therapeutics • 9/10 new drug launches are injectables • Prophylactic vaccine market x2 2019-21 • $35bn mRNA mark
Slide 30: Moving to biopharma: pipeline building rapidly
Moving to biopharma: pipeline building rapidly 130 250 66% New customers New programmes Non COVID-19 New Newapplications applications Speciality excipients Vaccine adjuvants Lipid systems • COVID-19 therapeutics • Next-generation adjuvant systems • Influenza vaccines • Oncology and immunosuppressant
Slide 31: Moving to biopharma: executing our 'buy and build' model
Moving to biopharma: executing our ‘buy and build’ model Speciality excipients Vaccine adjuvants Lipid systems €72m $185m Buy Organically Biosector (+ up to $75m) developed acquisition Avanti acquisition Pennsylvania, USA Frederikssund, Denmark Alabama, USA • 2x capacity • 2x capacity • 2x employees
Slide 32: Outlook & summary
Outlook & summary 2022 outlook Summary • Continued growth • 2021 an outstanding year – excellent financial & strategic progress • Robust consumer demand, inflation-recovery and benefit of recent investments • Performance well ahead of 2019 – strong cost recovery • Lipid systems sales – similar to 20
Slide 33: Additional information
Additional information 33 Smart science to improve lives™
Slide 34: Funding: significant headroom with long maturities
Funding: significant headroom with long maturities Significant headroom+, £m …. …with long maturities* £730m Net debt 823 Cash 113 Undrawn committed 334 £100m Total committed funding: £1,226m 22 23 24 25 26 27 28 29 30 +At 31 December 2021. *Excluding leases. 34 Smart science to improve lives™
Slide 35: IAS19 retirement benefits
IAS19 retirement benefits £m 31 Dec 2020 31 Dec 2021 Market value of assets 1,536.8 1,340.1 Value of liabilities (1,569.1) (1,332.2) (Deficit) / Surplus pre tax (32.3) 7.9 Deferred tax 7.0 (2.1) (Deficit) / Surplus post tax (25.3) 5.8 35 Smart science to improve lives™
Slide 36: Additional financial information
Additional financial information Currency translation • Adverse profit impact in FY/21; Sterling strengthened against Group’s key currencies • FY/21 average rates: - $1.375 (FY/20: $1.285) - €1.164 (FY/20: €1.125) • Average annual impact: - £1.5m per $cent pa - £1.2m per €cent pa • US$ and € represe
Slide 37: 2022 Investor relations calendar
2022 Investor relations calendar Consumer Care Life Sciences • 29 March: Consumer Care seminar – London, UK • October: Health Care seminar – London, UK • 11-12 May: Iberchem visit – Murcia, Spain 37 Smart science to improve lives™
Slide 38: Smart science to improve lives™
38 Smart science to improve lives™