Croda International (LON: CRDA), the UK specialty chemicals group that supplies ingredients to beauty, pharma and crop-protection customers, climbed sharply in early trade today as it reported interim profit growth that comfortably outpaced sales, driven by a resurgent beauty ingredients business.
Shares traded at 3,017p in early dealing, up 3.15% from Monday’s close of 2,925p, having earlier touched 3,059p. That places the stock in the upper half of its 52-week range of 2,330.89p to 3,242.45p, though still below its 12-month high.
Croda’s results for the six months to 30 June showed group sales up 2.9% to £880.5m, while adjusted operating profit rose a faster 6.7% organically to £155.8m, lifting the adjusted operating margin to 17.7% from 17.2% a year earlier. Chief executive Steve Foots said the company had delivered a good first-half performance in line with expectations, with strong growth in Consumer Care, adding that group profits continued to grow ahead of sales, reflecting both customer demand for innovation and the benefits of its transformation programme.
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The improvement was driven almost entirely by Consumer Care, where sales grew 8.3% organically to £523.7m and adjusted operating profit jumped 14.3% to £98.1m, powered by a 19% surge in the Beauty Actives unit. Life Sciences sales were flat, and Industrial Specialties sales fell 1.9%, underlining how narrowly the profit growth was concentrated in beauty ingredients. Free cash flow rose 36.8% to £38.3m, helped by lower capital spending, while net debt held broadly steady at £577.9m, keeping leverage at 1.4 times cash profit, within the group’s 1-2 times target.
Despite the stronger profit performance, management kept full-year guidance unchanged, still targeting 3-6% organic sales growth and a further rise in margin, and held the interim dividend flat at 48.0p as it works to restore dividend cover and reduce the proportion of profit paid out. Foots said the outlook for the full year was unchanged despite ongoing macro uncertainty, and that the group remained on track to deliver its 2028 financial framework.
The share reaction suggests traders are focusing on the profit growth and margin progress rather than the flat dividend or steady guidance, reading the results as early evidence that Croda’s turnaround plan is showing through in the numbers, even as management signals it is prioritising balance-sheet repair over faster shareholder returns for now.