Croda Shares (CRDA) Down 9% On Trading Update – What Happened?

Croda shares (LON:CRDA) are trading down 9% today, with markets reacting to the H1 trading update that showed sales slowing quarter on quarter.

Since the turn of the year, Croda's share price has pulled back 21%, with bearish sentiment seemingly holding control. The 1 year decline of 35.8% has pulled the shares close to levels not seen in a decade.

CEO Steve Foots emphasized the company's proactive approach to navigating challenges, highlighting successful strategies to simplify operations, modernize the business, and enhance profit margins.

This includes an ambitious cost-saving program, now targeting £100 million in annualized savings by the end of 2027, a significant increase from the initial £40 million goal.

• Adjusted operating profit: +12% at constant currency
• Adjusted operating margin: 17.2% (up from 16.6% in H1 2024)
• Dividend increased to 48.0p (from 47.0p)
• Cost savings target increased to £100m by end of 2027
• Full Year 2025 outlook: Adjusted profit before tax between £265m-£295m

The company's financial results were in line with estimates, with group sales increasing by 7% at constant currency, driven primarily by higher sales volumes across all three business segments.

A standout performer within Consumer Care was the Fragrances & Flavours (F&F) division, which experienced a remarkable 17% growth.

Croda's Life Sciences segment demonstrated robust growth of 9%, fueled by strong demand for Seed Enhancement (up 17%) and Crop Protection (up 12%) products from multinational customers.

The Pharma sector also saw a 5% increase, benefiting from continued expansion in biopharmaceuticals and a gradual recovery in the consumer health market.

While the second quarter sales remained 6% ahead of the prior year at constant currency, they were sequentially lower than the first quarter, signalling potential headwinds from the broader economic environment.

However, Croda's adjusted operating profit rose impressively by 12% at constant currency, resulting in an improved adjusted operating margin of 17.2% compared to 16.6% in the first half of 2024.

This margin expansion was driven by higher sales volumes and successful cost-saving initiatives, which offset the negative impacts of foreign exchange fluctuations and price/mix dynamics.

Looking ahead, Croda remains cautiously optimistic about its prospects, despite the ongoing uncertainty in the global political and economic environment.

The company reaffirmed its full-year 2025 guidance, expecting to deliver an adjusted profit before tax between £265 million and £295 million at constant currency.