Croda International Plc · LSE:CRDA
Croda International — Investor Day (April 2018)
112 slides from Croda International's investor day presentation, April 2018
Slide 1: Connecting to Faster Growth Markets
Connecting to Faster Growth Markets Capital Markets Event, Netherlands, April 2018 1 Innovation you can build on™
Slide 2: Cautionary statement
Cautionary statement This presentation contains forward looking statements that are subject to risk factors associated with, amongst other things, the economic and business circumstances in countries and sectors in which Croda operates. It is believed that the expectations reflected in these stateme
Slide 3: Objectives for our Capital Markets Event
Objectives for our Capital Markets Event Consumer Markets Executing Strategy Our Team • Growing the Core: • Investing in faster • Meet the senior team Deep dive into Life growth markets Sciences & Personal Care • Stretching the Growth: • Investing in faster • Informative discussions Technology oppor
Slide 4: Programme
Programme Wednesday 11 April (Incotec) 13:30 Welcome Steve Foots Growing the Core - Incotec Erik-Jan Bartels Incotec insight tour 19:30 Drinks and dinner discussions (Hotel Krasnapolsky) Croda management team Thursday 12 April (Hotel Krasnapolsky) 08:30 Delivering our Strategy Steve Foots Growing th
Slide 5: Meet members of our Senior Team
Meet members of our Senior Team Board Executive Steve Foots Jez Maiden Maarten Heybroek Sandra Breene Dr Nick Challoner Graham Myers Anthony Fitzpatrick Group Chief Executive Group Finance Director President President President Group Financial President PTIC Personal Care Life Sciences Controller Co
Slide 6: Incotec - Primed for growth
Connecting to Faster Growth Markets Incotec - Primed for growth Erik-Jan Bartels – Managing Director, Incotec 6 Innovation you can build on™
Slide 7: Incotec
Connecting to Faster Growth Markets Incotec Seed Enhancement Driving the Core • Why Seed Enhancement is • Incotec & Croda attractive • Superior growth • Accelerating growth opportunities • Vegetables & Field • Key opportunities Crops 7 Innovation you can build on™
Slide 8: Welcome to Incotec
Welcome to Incotec Celebrating 50 years 8 Innovation you can build on™
Slide 9: Enkhuizen: City of Seeds
Welcome to Incotec Enkhuizen: City of Seeds • Enkhuizen founded in 1000 AD • Flourished from 1500s due to shipping, fishing (herring) & trade • Mid 19th century seed breeding and trade developed o Sluis & Groot Syngenta o Royal Sluis Monsanto and Incotec o Pop Vriend o ENZA • Today tourism is th
Slide 10: The Drom
Welcome to Incotec The Drom • The “Dromedaris” (Dromedary) was built in 1540 as the city gate to Enkhuizen • Used as defence tower, prison, storage room and post office • City wall was broken down when city was enlarged • Since 1959 used as a cultural centre with music, theatre, film 10 Innovation y
Slide 11: Seed Valley
Welcome to Incotec Seed Valley • Established in 2008 to connect West-Frisian seed companies o 38 companies o Incotec HQ located in the heart of the vegetable seed business • Named “Seed Valley” because “green software” is developed • Focus on education, skilled labour, image, infrastructure and join
Slide 12: Macro trends: Growing world population
Macro trends Growing world population 0.22 0.21 0.20 • At present around 7.4 billion people 0.18 0.17 • Estimation for 2050: 9.5 billion 9.0 9.5 • Less arable land per capita 8.5 7.7 6.9 • Over the next 30 years, agricultural productivity must increase by 60% 2010A 2020F 2030F 2040F 2050F Population
Slide 13: Macro trends: Threats to food production
Macro trends Threats to food production • Human-induced disasters o War o Political intervention o Pollution • Natural disasters/climate change o Flooding o Drought o Salination o Desertification o Pests and diseases 13 Innovation you can build on™
Slide 14: Industry trends: We have to do More with Less
Industry trends We have to do More with Less • More product per hectare • More regulatory pressure o Less chemical protection against pests and diseases • Less water 14 Innovation you can build on™
Slide 15: Implications for the Seed Industry
Industry trends Implications for the Seed Industry • Need for improved genetic material • Need for better (biological) actives • Need for improved seed enhancement o Seed health and plantability o Effective use of seed space and innovative delivery systems o Full and uniform germination 15 Innovatio
Slide 16: Driving growth in Seed Enhancement
Industry trend Driving growth in Seed Enhancement Seed Enhancement: treatments applied to seeds between harvest and sowing Seed Industry revenue Superior growth rate in 2016: US$70bn Seed Enhancement US$2.5bn Seeds Seed Actives Seed Enhancement 2017 2022 Sources: International Seed Federation, Busin
Slide 17: Two key markets for Incotec
Two key markets for Incotec High value seeds Low value seeds Low volume High volume Multiple treatments No treatments Vegetables Flowers Field Crops Cereals Forage / Grass Up to €80,000/kg €5 - 15/kg < €1/kg 17 Innovation you can build on™
Slide 18: Business model in Vegetable seeds
Business model in Vegetable seeds Seed company service Nursery Grower Retailer Logos sourced from company websites 18 Innovation you can build on™
Slide 19: Business model in Field Crops seeds
Business model in Field Crops seeds Seed/Crop Cooperative Farmer Processor Retailer company product Logos sourced from company websites 19 Innovation you can build on™
Slide 20: Market leader in Seed Enhancement
Market leader in Seed Enhancement • Dedicated to seed enhancement • Unique / differentiated products and services • Widest range of technologies • High quality, expertise and trust • Local presence in all global regions • Strong in all core technologies 20 Innovation you can build on™
Slide 21: Dedicated to Seed Enhancement
Dedicated to Seed Enhancement DNA Active Seed Enhancement 21 Innovation you can build on™
Slide 22: Strong in all core technologies
Strong in all core technologies Analytical Priming services (pre-germination) Disinfection Encrusting & Pelleting Film coating Application of actives, biologicals & nutrients Upgrading (X-ray) 22 Innovation you can build on™
Slide 23: Incotec and Croda
Incotec and Croda 2015 2018 Aspiration Innovation and Acquisition Restructuring growth Revenue £50m £50m £100m Return on sales 10% 20% >20% Return on sales target of 20% by end 2018 23 Innovation you can build on™
Slide 24: Incotec and Croda 2 stage development
Incotec and Croda 2 stage development Restructuring Headcount • Purification of the business 600 o Geographic market focus 400 o Site consolidation 200 o Headcount and cost reduction 0 Pre-acquisition Today Innovation and Growth • New investments o Innovation centres – customer centric o Capacity in
Slide 25: Focus on 5 key markets
Incotec and Croda Focus on 5 key markets • Capacity increase & efficiency • New innovation centres • Capacity increase • New innovation centre • Increase efficiency • New innovation centre Continued operations Discontinued operations 25 Innovation you can build on™
Slide 26: Accelerating growth
Incotec and Croda Accelerating growth Growth through innovation Application of Data to demonstrate in film coatings biologicals product value Maximise benefits of Encrustment in field Capitalise on/diversify Croda infrastructure crops vegetables know-how 26 Innovation you can build on™
Slide 27: Key opportunities
Accelerating growth Key opportunities Active TIG pipeline Next gen Matrixyl Nautilus Adjuvants - UK univ. IonPhasE Self healing coatings Technology acquisitions Expanding R&D Premium niches STRETCHING THE GROWTH Active TIG pipeline Next gen Matrixyl Enza Biotech Nautilus Adjuvants - UK univ. Seed en
Slide 28: Key opportunities: Premium niches
Premium niches Key opportunities Premium niches Encrustment in Field Crops Biologicals • Increase size/weight of small seeds • Sustainability trend • Create more seed space for actives / nutrients • Need for innovative delivery systems • Improve plantability • Combination with encrustment (seed spac
Slide 29: Key opportunities: Leveraging Croda synergies
Synergies Key opportunities Leveraging Croda synergies Film Coatings • Using Croda know-how to improve quality • Opportunity: < 10% share in film coatings • New film coatings developed with ‘Croda inside’ • Next generation based on Croda chassis Marketing the CrodaWay • Step changes in branding and
Slide 30: Key opportunities: Delivering regional opportunities
Regional opps. Key opportunities Delivering regional opportunities Vegetables in China • World’s biggest producer and consumer of vegetables • Starting mechanisation and specialization (nurseries) • Almost no local expertise in quality seed treatment • Increasing market share for supermarkets Rice i
Slide 31: Incotec - Primed for growth Summary
Incotec - Primed for growth Summary 2017 2022 Increase market share Accelerating innovation Application of in growing market and acquisition Biologicals 31 Innovation you can build on™
Slide 32: Questions?
Questions ? Contributing to feeding the world, by getting the utmost out of seed 32 Innovation you can build on™
Slide 33: Site tour with 8 Stops
Site tour with 8 Stops 8. Film Coating 1. Quality Inspection 7. Encrusting 2. Germination Lab 6. Biologicals 3. Pelleting 5. Priming 4. Upgrading (X-ray) Innovation you can build on™
Slide 34: Our Strategy
Connecting to Faster Growth Markets Our Strategy Steve Foots, Group Chief Executive 34 Innovation you can build on™
Slide 35: Delivering Our Strategy
Delivering Our Strategy Where have we How are we doing? Where are we come from? going? • Strong Executive • 2016 CME revisited • Growing the Core & team Stretching the Growth • Strong track record • Business model • Priorities • Shareholder value • Core strengths • Investment case creation 35 Innova
Slide 36: We have a strong and experienced Executive team
We have a strong and experienced Executive team… Steve Foots Jez Maiden Sandra Breene Nick Challoner Group Chief Executive Group Finance Director President President Personal Care Life Sciences Maarten Heybroek Stuart Arnott Anthony Fitzpatrick Tom Brophy Graham Myers President President President G
Slide 37: With a strong track record of consistently delivering
With a strong track record of consistently delivering… Sales Profit before tax EPS £320m 179p £1,373m £886m £66m 33p 2007 2017 2007 2017 2007 2017 Reported currency Profit and EPS are on an adjusted basis, as defined in the 2017 Results 37 Innovation you can build on™
Slide 38: Reflected in our share price evolution
…reflected in our share price evolution Croda market Share price capitalisation £/share 45 £5.8bn 30 15 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 £0.8bn Croda FTSE 350 Chemicals FTSE 350 2007 2017 Outperformed Sector Index by 2.1x and Market Index by 20x 38 Innovation you can build on
Slide 39: We are delivering year-on-year progress
We are delivering year-on-year progress… 2014 2015 2016 2017 Deliver consistent Sales +3.4% Sales +15.0% Sales +10.4% top and bottom line PBT +8.2% PBT +13.2% PBT +11.1% EPS +7.8% EPS +15.4% EPS +14.9% growth Increase proportion NPP NPP NPP NPP of protected 23.4% 26.1% 27.3% 27.6% innovation Acceler
Slide 40: Significant achievements since the last CME
With significant achievements since the last CME Market Increased capability Performance 2015 – 17 2015 - 17 • Asia • Margin improved • New technologies • NPP >40% • R&D • Profit +25% Personal Care • Asia, USA, Europe • Margin restored post • Incotec Incotec • R&D • NPP >30% • Profit +29% Life Scien
Slide 41: Driven by a powerful Business Model
Driven by a powerful Business Model Sustainable Balanced Dynamic Local direct selling sourcing footprint innovation engine model >60% 29 34 >17,000 Raw materials Production Innovation Customers from natural sites centres served sources Unrivalled capabilities 41 Innovation you can build on™
Slide 42: Supported by core strengths
Supported by core strengths Customer intimacy People and culture Innovation Unrivalled understanding of Entrepreneurial & agile spirit Broad, proprietary unmet needs technology base Croda is a relentless innovation machine 42 Innovation you can build on™
Slide 43: Croda at a glance
Croda at a glance Highlights A global, balanced footprint • £1.37bn sales • 4,300 employees • Operating in 37 countries • 68 operations • 28% sales in new, patented & protected products Well positioned for future growth 2017 numbers 43 Innovation you can build on™
Slide 44: Vision and strategic aims unchanged
2018–20: Connecting to faster growth markets Vision and strategic aims unchanged ▪ To be the leading speciality ingredient company delivering sustainable innovation, superior performance & value to our customers & consumers ▪ To be different Personal Life PTIC Care Sciences Accelerate our Deliver In
Slide 45: Growing the core and stretching the growth
2018-20: Connecting to faster growth markets Growing the core and stretching the growth Premium niches R&D Smart partnering Sustainability Tech acquisitions Digitalisation Grow the Core Stretch the Growth Strong foundation to accelerate growth in our Core markets 45 Innovation you can build on™
Slide 46: Growing the core and stretching the growth
2018-20: Connecting to faster growth markets Growing the core and stretching the growth Grow the Core Delivering profit growth ahead of sales • Robust top line growth > market growth ahead of volume growth • Industry leading margin + improvement • Capital light Superior ROIC Stretch the Growth Inves
Slide 47: Summary: A robust investment case
Summary A robust investment case High quality business Earnings growth Strong cash returns ▪ World class margins ▪ Relentless innovation ▪ High ROIC ▪ Low product churn ▪ Customer intimacy ▪ Cash generation ▪ Capital light ▪ Targeted acquisitions ▪ Progressive dividends 47 Innovation you can build o
Slide 48: Crop Protection
Connecting to Faster Growth Markets Crop Protection Dr Dave Cherry, Managing Director - Crop Care 48 Innovation you can build on™
Slide 49: Crop Protection
Connecting to Faster Growth Markets Crop Protection Crop Protection Growing the Core • Market opportunities • Premium niches • Emerging trends • Investing in R&D • Recent performance • Technology acquisitions 49 Innovation you can build on™
Slide 50: Our Life Sciences business
Our Life Sciences business Personal Care Life Sciences Performance Technologies Industrial Chemicals Seed Enhancement Crop Protection Health Care 50 Innovation you can build on™
Slide 51: A market with Faster Growth opportunities
Crop Protection A market with Faster Growth opportunities Global market size and growth Our addressable market Crop Protection Formulation aids 50% 4% $50bn increase since $5bn CAGR 2020 2006 • Global mega trends are driving new opportunities • High performance solutions are the key to unlocking the
Slide 52: Industry trends: Aligned with our position
Industry trends Aligned with our position Formulation aids Active ingredient Agrochemical and adjuvants formulations Croda produce these • Herbicides to: • Insecticides • Increase stability • Fungicides • Enhance • Micronutrients performance & delivery Croda leading the market • Innovation driven •
Slide 53: Understanding Formulation Aids & Adjuvants
Industry trends Understanding Formulation Aids & Adjuvants Formulation Aids improve the long term stability of agrochemical products Formulation breakdown can lead to: Formulation Separation Reduced storage life Breakdown Compromised efficacy Adjuvants improve the delivery and bio-efficacy of active
Slide 54: Macro trends - More from Less
Macro trends - More from Less Reducing 9 billion By 2050, the global population will grow to 60% Agricultural productivity must increase by environmental over nine billion people, an increase of two 60% in the next 30 years to ensure food billion security for the growing population impact • Increase
Slide 55: Croda has been winning in Crop
Croda has been winning in Crop …By getting closer to customers Consistently beating the market Faster growth in NPP Revenue growth NPP product sales 2013 2017 2013 2017 Broadening our customer base Strong future pipeline of innovation 2017 share of sales Multinationals 49% Tier 2/Tier 3 Pipeline val
Slide 56: Stretching the growth
Stretching the growth Premium Niches R&D Digitalisation Sustainability Technology acquisitions Smart Partnering 56 Innovation you can build on™
Slide 57: Premium niches: Targeting stronger growth
Premium niches Premium Niches Targeting stronger growth Our value adding technologies help our customers achieve more complex, efficient & safer formulations that minimise the impact on the environment Off target spray drift Wettability/adhesion Controlled delivery Uptake enhancement ‘Green’ surfact
Slide 58: Supported by stronger investment
R&D Supported by stronger investment Expanded global R&D capabilities Increased new product development 30+ Brazil USA UK India New products launched in last 5 years High value applications Investment in collaborative projects Regional support driving growth in Asia Asian sales growth 2013 2017 2013
Slide 59: Outstanding approach and service
R&D Outstanding approach and service Knowledge Sharing Bespoke/Tailored Innovation & & Education Solutions Inspiration • Hands-on training • Face to face support • Open innovation programmes • Collaborative agreements & • Formulation design • Crop Care website tools projects • Application testing &
Slide 60: With Faster Investments in Technology
Tech acquisitions With Faster Investments in Technology What? Researches & develops crop enhancement chemistry to improve crop yield & quality How? Discovers & creates chemical compounds to develop foliar sprays & seed treatments that work with natural plant responses Where? Main research facility i
Slide 61: Crop Protection Summary
Crop Protection Summary • Croda’s formulation aids & adjuvants are critical to the Crop Protection market • Our technologies allow customers to create complex, efficient and safer formulations • Croda outperforms the market, growing with the majors & tier 2/3 customers • We will drive faster growth
Slide 62: Personal Care
Connecting to Faster Growth Markets Personal Care Sandra Breene, President Personal Care 62 Innovation you Innovation you can can build build on™ on™
Slide 63: Personal Care
Connecting to Faster Growth Markets Personal Care Personal Care Growing the Core • Driving recent performance • Stronger, Faster & Smarter investments • Emerging trends • Right structure • Aligned to growth • 3 businesses driving future growth 63 Innovation you can build on™
Slide 64: Our Personal Care Business
Our Personal Care Business Personal Care Life Sciences Performance Technologies Industrial Chemicals Beauty Actives Beauty Effects Beauty Formulation Arnaud Fournial Jenn Hart Richard Butler 64 Innovation you Innovation you can can build build on™ on™
Slide 65: Faster growth in Personal Care
Faster growth in Personal Care… Strong sales growth Relentless innovation +8.2% +2.3% H1/17 H2/17 2012 2017 NPP Sales Robust regional sales growth Targeted investments +8% • R&D +6% +5% • Emerging markets +1% • People • Digital Europe North Am Asia Latin Am Sales growth is shown for 2017 in constant
Slide 66: Driven by sharper management focus
…driven by sharper management focus Restructured for growth • Different drivers & needs • Increased innovation & differentiation Beauty Beauty Beauty • Targeted focus driving growth Actives Effects Formulation Regional presence strengthened • North America initiatives delivering • Latin America rest
Slide 67: Aligned with Faster Growth categories
Industry trends Aligned with Faster Growth categories Source: Euromonitor International Market is global beauty & personal care market, finished products at retail value 67 Innovation you Innovation you can can build build on™ on™
Slide 68: Industry trends: Aligned with our positioning
Industry trends Aligned with our positioning Fragmentation Flight to Premium • Lower barriers to entry • Growing ahead of mass at 7% • Brand proliferation • China, USA, Eastern Europe • Loss of share at majors • More sophisticated claims Asia and Africa Sustainability • Population growth • Purity •
Slide 69: Targeting Stronger, Faster & Smarter Investments
Stretching the growth Targeting Stronger, Faster & Smarter Investments Premium Niches R&D Smart Partnering Technology acquisitions Sustainability Digitalisation PERSONAL CARE FOCUS ACROSS ALL GROWTH AREAS 69 Innovation you can build on™
Slide 70: With Stronger R&D Investment
R&D R&D With Stronger R&D Investment... Recent investments in South Africa & Korea Skin Hair etc Niche Hair Care South Africa Salon Global centres of excellence South Africa Korea etc K Beauty Korea Lab Regional centres of excellence Mexico Indonesia etc Local technical/customer centres 70 Innovatio
Slide 71: Faster Investment in partnering
Tech acquisitions Smart partnering Faster Investment in partnering… Colour Cosmetics Premium Skin Care • New exclusive Acquired Nautilus: partnership • Open innovation • Fast paced niche relationship sector • Many new products • Innovative special • Access to unique effect pigments marine microbial
Slide 72: Investment in Green & Clean Beauty
Sustainability Investment in Green & Clean Beauty… Green Beauty Barometer survey of American women found: • More than 6 in 10 women now read beauty product labels prior to purchase • Women aged 35-54 are increasingly going green - 69% say purchasing natural products is important to them, +10 percent
Slide 73: And Smarter Digital Investment
Digitalisation …And Smarter Digital Investment New digital ecosystems Rapid formulation screening Cutitronics Materials Innovation Factory • 25% investment • State of the art facility • High-tech digital technology • Robotics • Optimum delivery of skin care • Fast screening • Agile R&D Digitally ena
Slide 74: With a Smarter Structure & Sharper Focus
With a Smarter Structure & Sharper Focus Three powerful businesses: • Beauty Actives • Beauty Effects • Beauty Formulation LONG TERM INNOVATION Supported by: • Strengthened long term Beauty innovation capability Formulation • Different and focussed attention 74 Innovation you Innovation you can can
Slide 75: Beauty Actives
Beauty Actives Beauty Actives Beauty Actives supply IDEAS and CONCEPTS to the majority of cosmetic manufacturers globally Excellence in Emotive Essential in Actives Ingredients • Actives with high added value for the • Plant extracts with identified Premium and Masstige markets phytomolecules • Base
Slide 76: Flight to Premium
Flight to Premium Beauty Actives Premium Beauty Market • Premium is about emotional connection DayWear Eye • Increasingly wealthy consumers spend Phytodensia – Phyto Estée Lauder on items that resonate emotionally (Alès Group) Cooling Anti-Oxidant • Consumers spend more on products that Hair care ra
Slide 77: Investment in R&D will support growth
Investment in R&D will support growth Beauty Actives • €10m investment to expand Sederma by >50% in R&D and Production • Reinforces global #1 position in peptide skin actives • Expands resourcing for plant, plant cell culture and microbial transformation • Creates opportunities to leverage new disru
Slide 78: Beauty Effects
Beauty Effects Beauty Effects • Creating an “Actives type” business in Beauty Effects o Above market growth o Innovation rich • Trusted to deliver the latest & next effects • Expanding existing portfolio of value-adding products that deliver immediate or short-term consumer performance benefits o Ha
Slide 79: Flight to Premium
Flight to Premium Beauty Effects UV and pollution protection Strength encapsulated Embrace style diversity Elegant UVB protection Instant skin smoothing Intelligent hydration 79 Innovation you can build on™
Slide 80: Faster Investment in Smart Partnering
Faster Investment in Smart Partnering Beauty Effects • Sustained fast growth in colour cosmetics, especially in premium niches • Smart partnership with Glassflake • Innovative special effect pigments originally developed for speciality coatings applications • Completed successful market test late 20
Slide 81: Beauty Formulation
Beauty Formulation Beauty Formulation • Sensory and Texture o the touch, the feel, the experience • Beauty Formulation Texture o 1,500 heritage ingredients across 25 technology groups from 16 sites worldwide o Providing customer with technology breadth, problem solving options & creative inspiration
Slide 82: Getting closer to customers: Croda in Korea
Getting closer to customers R&D Beauty Croda in Korea Formulation Customer needs from cosmetic ingredients are changing fast: 1990s 2000s 2010s Today Future Scientific claims Differentiated Functional Safe Emotion formulation delivery cosmetics Effective Organic, sustainable Local customers are driv
Slide 83: Smarter Digital Investment
Smarter Digital Investment Beauty Formulation • Croda has created its Centre of Innovation for Formulation Science in the Materials Innovation Factory (M.I.F.) at the University of Liverpool • State-of-the-art facility will house the highest concentration of laboratory robotics for materials science
Slide 84: Personal Care Summary
Personal Care Summary • Positioned to capitalise on emerging trends • Investing in fast growth disruptive technologies, R&D and premium niches • As well as in Smart Partnerships and Technology Acquisitions • Digital and Sustainability becoming powerful differentiators • Strategy continuing to delive
Slide 85: Beauty in Business…Questions?
Beauty in Business…Questions? ▪ Personal Care ▪ Beauty… In Business 85 Innovation you Innovation you can can build build on™ on™
Slide 86: Stretching the Growth: Technology Opportunities
Stretching the Growth Technology Opportunities Anthony Fitzpatrick, Damian Kelly, Maarten Heybroek & Chris Sayner 86 Innovation you can build on™
Slide 87: Stretching the Growth: Technology Opportunities
Stretching the Growth Technology Opportunities Innovation in Croda In-flight disruptive opportunities • Clever R&D • Biotechnology • Biostimulation • Leveraging Open Innovation • Smart materials • Technology acquisitions • Biosurfactants 87 Innovation you can build on™
Slide 88: Stretching the Growth
Stretching the Growth Premium Niches R&D Digital Sustainability Technology Acquisitions Smart Partnering Innovation and technology deliver superior growth 88 Innovation you can build on™
Slide 89: Our Innovation Framework
Tech acquisitions R&D Our Innovation Framework R&D Innovation Open Technology Innovation Investment Return on Investment: 11x for every £1 invested in R&D 89 Innovation you can build on™
Slide 90: Proven Innovation Framework
Tech acquisitions R&D Proven Innovation Framework Accelerating open innovation Strong sales growth in new technologies 500 Partners 15 Cum. funding (£m) Partners/Projects Projects 400 10 300 200 5 100 0 0 2013 2017 2010-2013 2014 2015 2016 2017 Five successive years of NPP growth Delivery of Technol
Slide 91: Growing our core sectors faster
Tech acquisitions Growing our core sectors faster Beauty & Ageing Health & Wellbeing Sustainability Personal Care Life Sciences Performance Technologies KEY CRITERIA FOR TECHNOLOGY ACQUISITION Long term ROIC at or Ability to globalise IP-rich above 20% Innovation you can build on™ 91
Slide 92: In-flight disruptive opportunities: Technology examples
In-flight disruptive opportunities Technology examples Revenue Sector Technology Time to full Investments Potential PC LS PT commercials Organic, IRB, Nautilus, Biotechnology ✓✓✓ 0-5 years ✓ ✓ Enza Biostimulants ✓✓ 0-3 years Plant Impact ✓ Smart Polymers ✓✓ 0-3 years IonPhasE ✓ Biosurfactants ✓✓✓ 0-
Slide 93: Open Innovation: Leveraging global potential
R&D Open Innovation Leveraging global potential Innovation through collaboration Our partners • 178 projects, 400 partners, >£12m in funding • Global partners o UK, France, Netherlands, Singapore, Japan, USA • Valuable outputs o New products, application data, test methods & processes • Leads to Sma
Slide 94: Biotechnology – sustainable technology
In-flight disruptive opportunities Biotechnology – sustainable technology White: • Ditton • Enza Green: • IRB Blue: • Nautilus 94 Innovation you can build on™
Slide 95: Why “Green” Biotechnology?
In-flight disruptive opportunities Why “Green” Biotechnology? Sourcing Sustainable development • No crops • Smart land usage • No seasonality • Reduced solvents • No supplier • No biosphere destruction • Unlimited availability Ethics Safety and quality • Land can be used for • High, standardised act
Slide 96: Why “White” Biotechnology?
In-flight disruptive opportunities Why “White” Biotechnology? Organic – Fermentation investment Sugar Based Chemistry • Long standing investment • Meets trend for sustainable surfactants • Access to unique chemistry, molecules • Sugar based surfactants have unique and effects bespoke performance pro
Slide 97: Enza Biotech
In-flight disruptive opportunities Enza Biotech • Acquired July 2017 • World class scientists focused on novel drug delivery technology • Unparalleled expertise and IP on enzymatic route to novel sugar based chemistry Hair Care • Proven access to unique molecules with meaningful commercial potential
Slide 98: Why Marine “Blue” Biotechnology?
In-flight disruptive opportunities Why Marine “Blue” Biotechnology? Oceans are vast & underexplored with unparalleled biodiversity Diversity Geographic Habitat Biological Applications Adjuvancy Solar Protection 98 Innovation you can build on™
Slide 99: Nautilus Biosciences
In-flight disruptive opportunities Nautilus Biosciences • Acquired January 2018 o Six year Open Innovation partnership • World class scientists focused on marine microbial biodiversity • Expertise in microbe isolation, fermentation, molecular biology, genetic engineering, genomics Skin Care • Expans
Slide 100: Operate in 3 key markets in Crop Care
In-flight disruptive opportunities Biostimulants • Biostimulants market at advanced stage of commercial development Operate in 3 key markets in Crop Care • Proven yield enhancement, differentiated science with experienced, world-class talent Biostimulants • Commercially proven, technology rich, stro
Slide 101: Smart Materials
Inflight disruptive opportunities Smart Materials The Internet of Things • Devices, cars, sports equipment, etc are increasingly connected to the Internet through embedded micro electronic components • Rapid discharge of static electricity can damage micro electronics • This drives the rapidly growi
Slide 102: Controlled Electro Static Discharge (ESD)
Inflight disruptive opportunities Controlled Electro Static Discharge (ESD) 0 Ohm conductivity Insulator 1e8 Ohm 1e11 Ohm Conductor Controlled ESD in Polymers • IonPhasE additives give polymers the right conductivity for safe discharge of static electricity • IonPhasE additives are compatible with a
Slide 103: IonPhasE
Inflight disruptive opportunities IonPhasE • Acquired December 2017 • Technology leader in fast growing market (>2x GDP) • Emerging position in target markets like Automotive and Electronics • Robust protection from IP and know how • Excellent strategic fit with Smart Materials business • Sales €9m
Slide 104: Croda’s role in Sustainability
Sustainability Inflight disruptive opportunities Croda’s role in Sustainability • Surfactants produced at Atlas Point since 1940s • Iconic emulsifiers invented here o Arlacel™, Brij™, Myrj™, Tween™. o Synonymous with the chemistry o Globally the strongest brands • 7,000 customer/product combinations
Slide 105: Industry trends in Sustainability
Sustainability In-flight disruptive opportunities Industry trends in Sustainability 20th Century Feedstock Growth in Product Sustainability Claims 12,000 10,000 8,000 6,000 21st Century 4,000 Feedstock 2,000 0 Source: GNPD Mintel capturing Environmentally Friendly, Carbon Neutral 16-1-18 105 Innovat
Slide 106: New ECO surfactants
Sustainability In-flight disruptive opportunities New ECO surfactants • 100% renewable • 100% bio-based* • Outperform other Non-EO Bio-based substitutes (eg APGs) • Lower carbon footprint than petrochemically derived ingredients • USDA BioPreferred Program 3rd party certification • RSPO Supply Chain
Slide 107: ECO - immediate opportunities
Sustainability In-flight disruptive opportunities ECO - immediate opportunities 2 years of customer engagement Gaining new is presenting rich opportunities: sales switching customers from competitors to • “Deep Green” accounts are ECO ready to fill pipelines Gaining new Upgrading sales converting •
Slide 108: Biopreferred is now mainstream
Sustainability In-flight disruptive opportunities Biopreferred is now mainstream Tide Purclean™ is a registered trademark of The Procter & Gamble Company 108 Innovation you can build on™
Slide 109: Technology Opportunities Summary
Technology Opportunities Summary • Relentless innovation Technology Investment Thesis Year through organic investments and thoughtful M&A Biotech IRB ‘Green’ adjacency for Sederma 2012 • High potential, disruptive Seed Incotec Crop Care adjacency 2015 technologies addressing enhancement identified m
Slide 110: Summary
Connecting to Faster Growth Markets Summary Steve Foots, Group Chief Executive 110 Innovation you can build on™
Slide 111: A strong business getting stronger
A strong business getting stronger ▪ Continuing to deliver significant progress ▪ Performance driven by a powerful business model and focused strategy to: - Deliver consistent top and bottom line growth - Increase the proportion of protected innovation - Accelerate our customers’ transition to susta
Slide 112: Three strong legs of growth
Three strong legs of growth Connecting to faster growth markets Investing in… Technology Smart Personal Care acquisitions partnering Sustainability Digital Life Sciences R&D Premium Niches Performance Technologies 112 Innovation you can build on™