Croda International Plc · LSE:CRDA
Croda International — FY2020 Earnings Presentation
40 slides from Croda International's earnings presentation, Mar 2, 2021
Slide 1: Croda International Plc: 2020 Annual Results
Croda International Plc: 2 March 2021 2020 Annual Results
Slide 2: Cautionary statement and definitions
Cautionary statement and definitions Cautionary statement Constant currency results This review is intended to focus on matters which are relevant to the interests of shareholders in All data is at reported currency rates unless otherwise stated. Reported currency results reflect the Company. The pu
Slide 3: Agenda
Agenda • 2020 highlights • Financial performance • Strategic update • Q&A 3 Smart science to improve lives™
Slide 4: 2020 highlights
2020 highlights Steve Foots – Chief Executive Officer 4 Smart science to improve lives™
Slide 5: Strong strategic delivery built on resilient financial performance
Strong strategic delivery built on resilient financial performance Resilient financial performance Strong strategic delivery • Limited adverse financial impact from COVID-19 • Purpose-led: Smart science to improve livesTM • Back to growth in H2; growth acceleration in Q4 • Ambitious 2030 sustainabil
Slide 6: Our response to COVID-19
Our response to COVID-19 Delivering for all our stakeholders Investing in our future Purpose / Sustainability Decarbonisation investment Expanding Life Sciences Transforming drug delivery: capex; Avanti Employees Local Customers Shareholders Strengthening Personal Care Iberchem No job losses, Commun
Slide 7: 2020 – a resilient financial performance
2020 – a resilient financial performance Sales Margin Profit Cash H2 recovery and acquisitions Resilient margin Adverse product mix Cashflow supporting increased investment +2.3% -1.7ppts -4.0% -12.3% £1,293.9m 23.0% £319.6m £176.9m Core Business revenue Return on sales Operating profit Free cash fl
Slide 8: Sales recovery in Q4; another record year for Life Sciences
Sales recovery in Q4; another record year for Life Sciences • Record sales and profit driven by Health Care and Seed Enhancement Life • Crop Protection ahead (before planned product withdrawals) Sciences • Delivering components for Pfizer-BioNTech COVID-19 vaccine • Sales recovered month-on-month fr
Slide 9: Financial performance
Financial performance Jez Maiden – Chief Financial Officer 9 Smart science to improve lives™
Slide 10: Resilient performance despite impact of pandemic
Resilient performance despite impact of pandemic % change constant Adjusted results, £m 2020 reported 2019 reported % change currency Sales 1,390.3 1,377.7 0.9% 1.1% Operating profit 319.6 339.7 (5.9)% (4.0)% Profit before tax 300.6 322.1 (6.7)% (4.8)% Return on sales 23.0% 24.7% (1.7)%pts Basic EPS
Slide 11: IFRS result includes impact of acquisitions
IFRS result includes impact of acquisitions £m 2020 reported 2019 reported Adjusted PBT 300.6 322.1 Exceptional items (5.8) (10.7) Acquisition costs (11.7) (0.3) Amortisation of intangible assets (13.6) (8.8) Reported PBT 269.5 302.3 Basic EPS 155.1p 172.8p 11 Smart science to improve lives™
Slide 12: Volume and acquisitions more than offset reduction in price / mix
Volume and acquisitions more than offset reduction in price / mix Sales, £m Core Business sales +2.3% 4.1% -1.2% -0.2% +X% -3.0% 1.2% 669.4 1,390.3 1,377.7 FY 2019 reported Price / mix Volume Acquisitions Industrial Currency FY 2020 reported currency Chemicals translation currency Core Business Chan
Slide 13: Improved H2 underlying sales trend in all regions except Asia
Improved H2 underlying sales trend in all regions except Asia Europe North Asia Latin Core America America Business (7)% (1)% 0% (24)% (6)% H1 sales growth % 7% 8% 0% 3% 0% H2 sales growth % 3% (4)% 0% (9)% (2)% Full year sales growth % Destination underlying sales for the Core Business. Smart scien
Slide 14: Second half sales recovery enhanced by acquisitions
Second half sales recovery enhanced by acquisitions H1 2020 H2 2020 H2 2020 H2 2020 FY 2020 Underlying Acquisitions Total Personal Care (9)% (3)% 9% 6% (2)% Life Sciences (2)% 16% 17% 33% 15% Performance Technologies (6)% (1)% 0% (1)% (3)% Core Business (6)% 3% 8% 11% 2% Industrial chemicals (18)% (
Slide 15: Sector performance led by record year in Life Sciences
Sector performance led by record year in Life Sciences Personal Life Performance Group Care Sciences Technologies 14.8% (1.8)% (3.2)% 1.1% Growth in sales % 25.4% (15.3)% (21.3)% (4.0)% Growth in operating profit % -470bps +160bps -310bps -170bps Return on sales 28.7% 32.2% 13.0% 23.0% Change in sal
Slide 16: Personal Care significantly impacted by COVID lockdowns
Personal Care significantly impacted by COVID lockdowns Q4 underlying sales recovery L’Oréal worldwide beauty market estimates for 2020 Q1 Q2 Q3 Q4 Luxury Mass market 0% -2% -6% -5% -17% -14% Full year sales reduction due to price / mix Highlights +4% • Reduced demand for ‘going out’ products and pr
Slide 17: Record performance in Life Sciences driven by patient health care
Record performance in Life Sciences driven by patient health care Strong year-on-year sales growth in all businesses 30 >50% • COVID-19 creating new Health Care opportunities 20 • Continued growth in high-value niches, including +10% +11% speciality excipients and vaccine adjuvants 10 +3% + • Succes
Slide 18: Resilient sales in Performance Technologies in challenging markets
Resilient sales in Performance Technologies in challenging markets Steady recovery in sales from Q2 low +5% • Q2 weakened, alongside auto / industrial plant closures -2% -9% -6% 85 67 75 69 • Steady second half recovery – encouraging Q4 exit rate 57 • Marked variation in business performance – + – W
Slide 19: From Personal Care to Consumer Care
From Personal Care to Consumer Care Sales Adjusted operating profit 2020 adjusted results, £m As reported New structure Proforma As reported New structure Proforma Consumer Care 475.9 527.8 666.6 136.5 146.5 171.0 Life Sciences 401.6 392.5 410.5 129.4 124.5 127.5 Performance Technologies 416.4 373.6
Slide 20: Robust cash generation supporting investment and dividend
Robust cash generation supporting investment and dividend Clear capital allocation Key sources and uses in 2020 Sources £m Uses £m 1. Reinvest for organic growth EBITDA 388 M&A (870) New equity 615 Capex (121) 2. Regular dividends New debt 237 Dividend (116) Interest / tax (88) 3. Acquire technologi
Slide 21: Strategic update with Purpose
Strategic update with Purpose Steve Foots – Chief Executive Officer 21 Smart science to improve lives™
Slide 22: A strategy for growth driven by sustainability and innovation
A strategy for growth driven by sustainability and innovation Smart science to improve livesTM Strategy Sustainability Innovation Growth Sector megatrends Health and wellbeing Natural, ‘clean’ ingredients Renewable technologies Performance Life Sciences Consumer Care Technologies Sector strategies E
Slide 23: Moving to faster growth life science and consumer markets
And moving to faster growth life science and consumer markets Accessing higher organic growth Increasing share of profit generation Mid-high single % Mid single % 2018 2020 75% 86% cGDP Industrial Consumer Life Sciences Proportion of adjusted operating profit from life science and consumer markets (
Slide 24: Expanding Life Sciences by accelerating move to patient health
Expanding Life Sciences by accelerating move to patient health Moving from consumer health to patient health Consumer Standard Speciality Vaccine Lipid health excipients excipients adjuvants delivery Enhancing active performance Key trends Growing, aging population Drug safety and integrity Biologic
Slide 25: Expanding Life Sciences by accelerating innovation
Expanding Life Sciences by accelerating innovation Speciality excipients Vaccine adjuvants New vaccine adjuvants - c£2bn market opportunity - c£0.5bn market opportunity - 9% sales growth - Over 30% sales growth - First multi-site excipient supplier to - New adjuvant technologies achieve global accre
Slide 26: Expanding Life Sciences by accelerating organic investment
Expanding Life Sciences by accelerating organic investment Drug discovery Phase I to IV Regulatory review Commercialisation and research clinical trials and approval and scale up Speciality excipients £30m investment doubling US capacity, Croda capability expanding in UK and Japan Vaccine adjuvants
Slide 27: Expanding Life Sciences to satisfy many near-term opportunities
Expanding Life Sciences to satisfy many near-term opportunities Pfizer-BioNTech vaccine COVID-19 treatments - Critical delivery system - Working on >60 COVID-19 projects components - Vaccine and therapeutic treatments - Lipid technology; protects and - Projects across all three patient transports mR
Slide 28: Strengthening Consumer Care
Strengthening Consumer Care Beauty Beauty Beauty Key consumer trends Actives Effects Formulation Fragrances Home Care Environmental and ethical standards ✔︎ ✔︎ ✔︎ ✔︎ ✔︎ ‘Purpose brands’ – environmental / social impact ✔︎ ✔︎ ✔︎ ✔︎ ✔︎ ‘Clean beauty’ – only necessary ingredients ✔︎ ✔︎ ✔︎ ✔︎ Vegan-frien
Slide 29: Strengthening Consumer Care through Iberchem
Strengthening Consumer Care through Iberchem Strategic priorities Leveraging combined strength • Leverage combined strength Region Croda Iberchem • Create a ‘one-stop-shop’ Europe & the 74% 25% Americas • Capture cross-sell synergies Asia, Middle 26% 75% East & Africa Creating a ‘one-stop-shop’ Capt
Slide 30: Strengthening Consumer Care through Home Care
Strengthening Consumer Care through Home Care Key trends Sensory Sustainable Fabric care Biotechnology technologies cleaning Near-term opportunities Unilever ‘Brilliance’ Award • Hygiene; increased focus to continue post COVID-19 • Protein-based fabric technology to extend garment life • Fabric care
Slide 31: Strengthening Consumer Care through Personal Care innovation
Strengthening Consumer Care through Personal Care innovation… Silverfree™ by Sederma Actives expansion - Novel lipopeptide - €25m Alban Muller acquisition - Fights hair greying and restores - Actives / botanicals specialist original hair pigmentation - 100% natural - Proven in-vitro and by four - Ad
Slide 32: …to meet our customers' sustainability requirements
…to meet our customers’ sustainability requirements Biobased Raw Materials Sustainable Ethical Sourcing Innovation Ingredient Integrity Ingredient Sustainable Transparency Manufacturing 32 Smart science to improve lives™
Slide 33: …to meet our customers' sustainability requirements
…to meet our customers’ sustainability requirements Biobased Raw Materials Sustainable Ethical Sourcing Innovation Ingredient Integrity 80% increase in product data questionnaires from L’Oréal Ingredient Sustainable Transparency Manufacturing 2019 2020 33 Smart science to improve lives™
Slide 34: Built on a strong sustainability strategy
Built on a strong sustainability strategy Most sustainable Climate Land People ingredient supplier Positive Positive Positive by 2030 Innovation, technology and customer-driven 2020 highlights 2020 results • Intermediate 2021-2025 milestones published Climate Land • KPIs embedded in remuneration Imp
Slide 35: Summary
Summary Delivery Outlook • Delivering for all stakeholders in response to COVID-19 • Elements of Consumer Care and Performance Technologies more difficult to predict near term • Increasing exposure to life science and consumer markets • Encouraging 2020 exit rates • Accelerating strategic delivery –
Slide 36: Additional information
Additional information 36 Smart science to improve lives™
Slide 37: Significant headroom and long maturities
Significant headroom and long maturities Significant headroom+, £m …. …with long maturites* Net debt 801 £600m Cash 107 £100m Undrawn committed 378 21 22 23 24 25 26 27 28 29 30 Total committed funding: £1,244m +At 31 December 2020. *Excluding leases. 37 Smart science to improve lives™
Slide 38: Reduced IAS19 deficit on retirement benefits
Reduced IAS19 deficit on retirement benefits £m 31 Dec 2020 31 Dec 2019 Market value of assets 1,536.8 1,390.8 Value of liabilities (1,569.1) (1,465.8) Deficit pre tax (32.3) (75.0) Deferred tax 7.0 14.9 Deficit post tax (25.3) (60.1) 38 Smart science to improve lives™
Slide 39: Additional financial information
Additional financial information Currency translation • Limited adverse profit impact in 2020; primarily “local” currencies versus GBP • 2020 average rates: – $1.285 (2019: $1.278) – €1.125 (2019: €1.141) • Average annual impact: – £0.8m per $cent pa – £0.6m per €cent pa • US$ and € represent 65% of
Slide 40: Smart science to improve lives™
40 Smart science to improve lives™