Croda International Plc · LSE:CRDA
Croda International — H1 2018 Earnings Presentation
32 slides from Croda International's earnings presentation, July 2018
Slide 1: Croda International Plc 2018 Half Year Results
Croda International Plc 2018 Half Year Results July 2018 Innovation you can build on™
Slide 2: Cautionary statement and definitions
Cautionary statement and definitions 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 a
Slide 3: Our Performance
Our Performance Steve Foots – Group Chief Executive Innovation you can build on™
Slide 4: Growth strategy delivering
Growth strategy delivering ▪ Growing the Core ▪ Record profit ▪ Robust top line momentum - all Core Business sectors and geographies ▪ Further improvement in return on sales ▪ Stretching the Growth ▪ Relentless innovation ▪ Technology acquisitions ▪ Robust financial platform and stronger free cash f
Slide 5: Growing the Core
Growing the Core Robust sales growth Improved profitability Excellent EPS growth Core Business Return on sales Adjusted Basic EPS +4.7% 25.4% 100.2p +3.6% +50 bps +12.0% Group Year on year change Growth Record Performance NPP sales driving strong reflects bottombusinesses three strong line performan
Slide 6: Performance Technologies: broad-based sales growth
Broad-based sales growth Supported by relentless All Core Business sectors All regions innovation 9.3% 27.7% 6% 20.5% 5% 5% 4% 2.3% 1.7% Personal Care Life Sciences Technologies Asia LatAm Europe North America Performance FY '12 HY '18 Growth NPP as % of sales Growth NPP is New & Protected Products.
Slide 7: Excellent sales growth in Personal Care
Excellent sales growth in Personal Care Industry-leading Sales growth Innovation-led growth return on sales ▪ Customer barriers to entry +9.3% reducing ▪ Indie revolution increasing pace +6.1% 34.1% ▪ Multinational customer activity increasing -60 bps ▪ Actives, Effects & Formulation businesses all
Slide 8: Resilient performance in Life Sciences
Resilient performance in Life Sciences Robust growth offsetting Strong sales growth in Crop Resilient return on sales specific headwinds +2.3% ▪ Strong growth in Crop Protection ▪ Incotec delivering superior returns Non-API +7.4% - on course for 20% return on +1.8% 29.9% sales ▪ Crop Care expanding
Slide 9: Impressive profit growth in Performance Technologies
Impressive profit growth in Performance Technologies Transition to higher value Strong mix improvement Growing innovation pipeline +15.2% Return on sales ▪ Driving ‘value over volume’ ▪ Better profitability in strategic growth areas - Smart Materials & 19.3% Energy Technologies ▪ Improving knowledge
Slide 10: Financial Performance
Financial Performance Jez Maiden – Group Finance Director Innovation you can build on™
Slide 11: Consistent top and bottom line growth
Consistent top and bottom line growth Reported Constant £m 2018 currency currency reported change change Sales 702.8 (0.6)% 3.6% Operating profit 178.5 1.5% 6.0% Net interest (3.5) 42.6% 41.0% Profit before tax 175.0 3.1% 7.7% IFRS profit before tax 170.8 1.7% Adjusted EPS 100.2p 7.3% 12.0% Interim
Slide 12: Growing the Core Robust top line momentum
Growing the Core Robust top line momentum Core Business sales growth A powerful business model ▪ Top-line momentum seen in 2017 has carried strongly into 2018 6.8% ▪ Exceptional market positions, leading technologies & focused innovation 4.7% 4.4% ▪ Volume growth across consumer businesses ▪ Continu
Slide 13: Core Business sales +4.7%
Core Business sales +4.7% Sales £m Constant currency sales +3.6% +0.8% -4.2% +3.9% -1.1% 707.3 702.8 2017 reported Industrial Chemicals Core Business M&A Currency translation 2018 reported 13 Innovation you can build on™
Slide 14: Robust volume growth in consumer businesses
Robust volume growth in consumer businesses Total +9% +2% +2% +5% growth ▪ Personal Care: high performing sector – growth driven equally by volume and price/mix +5% ▪ Life Sciences: impact from API exit offset by +11% volume growth, particularly in Crop +4% +9% +3% -1% ▪ Performance Technologies: tr
Slide 15: Continued profit progress
Continued profit progress Growth in operating profit +£11m +£6m +£5m +£1m Personal Care Life Sciences Performance Group Technologies Constant currency Group includes Industrial Chemicals 15 Innovation you can build on™
Slide 16: Excellent EPS growth driven by Core Business & tax
Excellent EPS growth driven by Core Business & tax Basic EPS, p Constant currency PBT +7.7% +4.3% +1.7% +7.3% +2.4% +3.6% -4.7% 93.4 100.2 HY '17 Sales growth Operating margin Interest Tax rate FX HY '18 16 Innovation you can build on™
Slide 17: Robust financial platform for future growth & returns
Robust financial platform for future growth & returns Net capital investment Free cash flow £71m £55m Bio £41m £25m £41m £63m £30m Other £30m HY '17 HY '18 HY '17 HY '18 Net debt/leverage No pension deficit funding required FY '17 HY '18 1.0x 1.0x £21m £16m £382m £393m FY '17 HY '18 IAS19 pension de
Slide 18: Connecting to faster growth markets
Connecting to faster growth markets Premium niches R&D Smart partnering Sustainability Tech acquisitions Digitalisation Grow the Core Stretch the Growth 18 Innovation you can build on™
Slide 19: Sustainability Megatrend shaping our markets
Sustainability Megatrend shaping our markets Living in balance with the planet’s Beauty & Ageing Health & Wellbeing resources Unprecedented Technology Energy Revolution Circular Economy Change 19 Innovation you can build on™
Slide 20: …and driving our growth
…and driving our growth Ten years of Sustainability Reporting UN Sustainable Development Goals Growth in Product Sustainability Claims 15,000 ▪ Industry leader 10,000 5,000 ▪ Strong track record 0 ▪ Powerful growth driver 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Consumer trend accelera
Slide 21: Personal Care: Growth through innovation driven by Sustainability Megatrend
Personal Care: Growth through innovation driven by Sustainability Megatrend of sales globally generated by brands whose marketing 65% conveyed commitment to environmental and/or social value Ethical sourcing Sun protection RSPO Solaveil™ 2016 2017 2018 Anti pollution Biosurfactants 2014 2017 NPP 42%
Slide 22: Life Sciences: Sustainability driving performance improvement
Life Sciences: Sustainability driving performance improvement increase in agricultural productivity required 60% in next 30 years to ensure food security for growing population Drift reduction Optimised protection Atplus™ Incotec 2016 2017 2018 High purity Yield enhancement 2014 2017 NPP 28% of sale
Slide 23: Performance Technologies: Sustainability creating new markets
Performance Technologies: Sustainability creating new markets reduction in Greenhouse Gas emissions >80% by 2050 will drive innovation for clean and low-carbon technologies Anti-microbial coatings Reduced emissions MyCroFence™ Perfad™ 2016 2017 2018 Thermal energy storage Water purity 2014 2017 NPP
Slide 24: Our significant projects are driven by Sustainability
Our significant projects are driven by Sustainability 2018 2019 2020 Biosurfactants plant Incotec expansion: US & China Skin actives: Sederma expansion Markets: Personal Care and Market: Life Sciences Market: Personal Care Home Care High purity excipients: doubling Sun care: expanding capacity Smart
Slide 25: …as are our technology-led acquisitions
…as are our technology-led acquisitions IRB Nautilus Enza Biotech Markets: Personal Care, Life Markets: Personal Care, Life Market: Personal Care Sciences, Performance Technologies Sciences, Performance Technologies Incotec Plant Impact IonPhasE Market: Life Sciences Market: Life Sciences Market: Pe
Slide 26: A powerful business model delivering superior returns
A powerful business model delivering superior returns Priorities unchanged Outlook * Deliver consistent top and ▪ Encouraging momentum in consumer bottom line growth businesses Increase the proportion of ▪ Successfully transitioning protected innovation Performance Technologies Accelerate the captur
Slide 27: Additional material
Additional material Innovation you can build on™
Slide 28: Strong financial performance, strong Sustainability performance
Strong financial performance, strong Sustainability performance % of energy from non-fossil fuel Profit before tax Total waste sent to landfill (Te) sources £60.9m in 2007 9,111 in 2007 1,771 in 2017 £320.3m in 2017 Our increasing use of non-fossil energy has avoided burning the equivalent of This r
Slide 29: Sales growth
Sales growth % H1 2017 H2 2017 H1 2018 Personal Care 2.3% 8.2% 9.3% Life Sciences 0.8% 8.2% 2.3% Performance Technologies 9.1% 4.3% 1.7% Core Business 4.4% 6.8% 4.7% Industrial Chemicals (1.1)% (6.8)% (7.0)% Group 3.8% 5.4% 3.6% Sales growth in constant currency 29 Innovation you can build on™
Slide 30: Income statement
Income statement H1 2017 H2 2017 H1 2018 £m Reported Reported Reported Revenue 707.3 665.8 702.8 Adjusted operating profit 175.8 156.4 178.5 Net interest (6.1) (5.8) (3.5) Adjusted profit before tax 169.7 150.6 175.0 Exceptionals, acquisition (1.7) (4.5) (4.2) costs & intangibles IFRS profit before
Slide 31: Retirement benefit deficit (IAS19 basis)
Retirement benefit deficit (IAS19 basis) £m 31 December 2017 30 June 2018 Market value of assets 1,304.8 1,283.1 Value of liabilities (1,335.3) (1,306.1) Deficit pre tax (30.5) (23.0) Deferred tax 9.4 7.4 Deficit post tax (21.1) (15.6) 31 Innovation you can build on™
Slide 32: Capital Policy
Good capital discipline Reinvest to Regular Disciplined Excess capital Capital Policy grow dividend approach to returned acquisitions 1.5x 40-50% EPS 1-1.5x leverage depreciation pay-out over typically cycle Leverage at 30 June 2018 - 1.0x Leverage excludes retirement benefit deficit 32 Innovation y