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Investing.com -- Croda (LON:CRDA) International delivered a second-half performance that slightly exceeded expectations, reporting an adjusted pre-tax profit of £133 million—3% ahead of consensus, on Tuesday.
However, Q4 revenues of £405 million fell short of forecasts by 2%. While Life Sciences and Industrial Specialties performed well, Consumer Care lagged behind expectations.
For 2025, Croda has set an adjusted PBT guidance range of £265-295 million, approximately 3% below consensus estimates of £289 million.
Despite the lower midpoint, the company expects high single-digit EBIT growth, supported by a £40 million cost-saving initiative.
The program aims to deliver £25 million in savings in 2025, with an additional £15 million anticipated in 2026.
Analysts view this initiative as a key factor in offsetting margin pressures and sustaining profitability. Given that the guidance remains within expectations, the share price reaction is expected to be neutral to slightly positive.
Croda’s segment performance was mixed. Life Sciences emerged as the strongest contributor, with adjusted EBIT of £59 million, exceeding estimates by over 12%.
However, EBIT margins contracted by 320 basis points year-over-year, largely due to the absence of £50 million in revenue from Avanti, which had boosted prior-year figures.
Despite this, the company expects renewed growth and margin expansion in Life Sciences heading into 2025. Industrial Specialties also performed well, reporting adjusted EBIT of £7 million, slightly ahead of forecasts, with margins improving by 590 basis points.
Meanwhile, Consumer Care underperformed, with adjusted EBIT of £78 million, falling 5% below consensus. Despite this, margins improved by 210 basis points, and Croda remains optimistic about growth prospects for the segment in the coming year.
On the financial front, Croda’s H2 operating cash flow stood at £124 million, a significant decline from £193 million in the previous year.
Free cash flow came in at £58 million, missing consensus expectations of £78 million, while net debt increased to £532 million, equivalent to 1.4 times EBITDA.
The company declared a final dividend of £0.63 per share, slightly above Jefferies’ forecast of £0.61, bringing the full-year dividend to 110p per share, in line with market expectations.
Despite the slightly softer outlook for 2025, Croda’s focus on efficiency measures and expected margin expansion across key segments provide a level of reassurance to investors.