Sales slipped slightly for chemicals giant Croda in 2019, in the most subdued market conditions felt since the recession a decade earlier.
Revenues of £1.377 billion were reported in the annual results for the East Yorkshire FTSE-listed firm, down from £1.386 billion in 2018 - a fall of 0.6 per cent.
Pre-tax profits of £302.3 million for the year ending December 31 were down 2.3 per cent from £317.8 million.
It closed ahead of the emergence of the coronavirus pandemic, with accounts signed off in late February - a month before lockdown.
Ironically it was the personal care market that took a hit - with some blame attached to US/China trade wars. Since then, the Snaith team - with manufacturing in Hull and Rawcliffe Bridge regionally, has supplied key ingredients for key weapons in the Covid-19 fight such as sanitisers, medicines, medical equipment and face masks. Much of the former - glycerine - enough for five million sanitiser bottles - was gifted to customers.
Reflecting on 2019, chair Anita Frew described it as a “resilient performance” by the employer of 4,500 globally.
She said: “This was a year that proved the robustness of our strategy and business model, the talent of our people and the importance of our purpose - smart science to improve lives.”
The company holds the ambition to become the most sustainable supplier of innovative ingredients, committing by 2030 to be climate, land and people positive.
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“I am pleased with our performance in four key areas,” she said. “We saw no reduction in our industry-leading profit margin, we delivered stronger cash generation, we maintained a healthy innovation pipeline and we invested in new capacity to drive future growth.
“We also returned £266.9 million to our shareholders, combining growth in ordinary dividend with a special return of excess capital. Although we experienced lower sales, we responded well, continuing to invest in future opportunities whilst keeping our cost base lean and fit for the future.”
A £100m spend in capital includes a huge new global distribution base off the M62 at Goole.
A dividend of 90p per share, up 3.4 p from 2018’s 87p, has been proposed.
Continuing her overview, she said: “Sales and profit were slightly lower than 2018, reflecting difficult market conditions in Personal Care and Performance Technologies. Core business sales declined by 0.2 per cent.
“Personal Care, our largest business, experienced slower demand as trade headwinds impacted two of its biggest markets, in North America and North Asia, but nevertheless maintained its profit and innovation pipeline. Encouragingly it experienced a return to sales growth in the fourth quarter.
Optimism was expressed about beauty activity, which may have been tempered by Covid-19, while excitement was triggered in Life Sciences.
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“The rate of development of new, more complex drugs and sustainable agriculture products is creating exciting opportunities for Croda,” she said. “2019 saw record sales accompanied by an improved margin. Growth in speciality excipient (bulking agents) delivery systems for health care and in differentiated adjuvants (boosters) in crop protection provide an excellent platform on which to build further and match the scale and profitability of our Personal Care business in due course.”
Industrial markets globally saw a marked slowdown and Performance Technologies experienced a “disappointing” fall in sales and profitability.
“This was a reflection of poor automotive demand and general economic uncertainty across broader industrial markets in Europe and North America, but despite this short-term weakness, the fundamentals for this sector remain attractive,” Mrs Frew said, adding: “The resilience of our strategy and business model has stood the test if time, tough markets and a changing world. As we look forward, this foundation, a wealth of innovative ideas which can improve lives for us all, and our focus on purpose, give us confidence.”
Signing off in late February, Steve Foots, chief executive said Covid-19 posed “potential for some disruption to customer and consumer demand.”
Sales offices in China and production units had re-opened with limited operations, with the country accounting for 6 per cent of sales and 2 per cent of production.
Looking ahead, he said: “In the year ahead, subject to trading conditions remaining similar, we expect to make further progress in our consumer markets, whilst demand in industrial markets is expected to remain weak but stable. Growth will be second half weighted.”
Covid-19 update from Croda:
Updating on the pandemic situation since, Mr Foots said: “We are proud to continue to play our part as a critical supplier to a number of industries during the COVID-19 crisis. We are focused on prioritising the safety of our people whilst delivering for our customers and supporting our local communities. In these difficult times, we are seeing the benefits of using our creativity and our technology to keep innovating together.
“Most of our people are working either on-site with strict social distancing measures in place, or from home, often balancing childcare responsibilities alongside their work. I am full of admiration for them and grateful for everyone’s commitment and energy. We have confirmed our intention at this time that no one will lose their job or have their regular salary or benefits reduced as a result of the crisis.
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“We are also adjusting payment terms to support smaller suppliers and customers, and have made £200,000 available to support those in need closest to our largest manufacturing sites globally. This is the best of Croda in action – thoughtfully and determinedly helping our local communities.
“All of our principal manufacturing locations are operating as close to normal as possible, allowing us to keep supplying ingredients to our customers for use in PPE, trial vaccinations, medications, hand sanitisers and disinfectants amongst other products. Raw material supply chains also remain broadly secure. We are continuously monitoring the situation and, as colleagues in some of our regions prepare to return to their workplaces, we are working to ensure that they and their families stay safe and that Croda is well prepared for any further changes that lie ahead.”