Shares in the chemical giant Croda International PLC (LSE:CRDA) fell sharply after the FTSE 100-listed group said that de-stocking would be a feature in the first six months of 2023 and that its performance would be ‘second half weighted’.
De-stocking occurs when companies look to run down existing supplies rather than buy new products. It is particularly prevalent in the drugs and chemicals sectors.
Croda's veiled warning, carried alongside better-than-expected annual results, saw 3% or £270mln wiped from the group’s market value in the first hour of trade.
The company reported an adjusted profit for the 12 months ended December 31, 2022, of £496.1mln, up 11% on 2021’s performance and around £11mln ahead of consensus.
The stock, which has marked time so far this year, fell 216p to 6,712p.
Of the 19 banks and brokerages covering Croda, nine are positive on the speciality chemicals group's shares, while eight are ‘neutral’. The consensus price target is 7,997p.
Croda products include surfactants, which are used as ingredients for cosmetic creams and lotions, dietary supplements containing speciality lipids such as omega-3 oils, and fatty acid amides that add "slip" to plastic surfaces. This property allows plastic bags to be peeled apart easily.
The company has factories in several countries around the world, including the UK, France, Spain, Italy, the Netherlands, the United States, Brazil, Singapore, India, Indonesia, Korea, and Japan.