Croda International PLC (LSE:CRDA) shares slipped around 3.4% on Wednesday after US giant Estee Lauder Companies Inc (NYSE:EL) slashed its profit forecast.
In US pre-market trading, Estee stock tumbled 14% after the cosmetics manufacturer released first-quarter earnings in which slashed its profit outlook for the coming quarter, blaming slow growth in mainland China, wider Asia travel retail and disruption from the Israel-Hamas war.
The New York-headquartered group cut expectations for 2024 adjusted profit per share to $2.17-2.42, compared with its prior forecast of $3.50-3.75, as annual sales growth was now seen between -2% and +1%, compared with the previous forecast of between +5% and +7%.
Estee reported sales in the three months to September down 10.5% to $3.5 billion, in line with expectations, while underlying earnings per share surprised on the upside at 11 cents, better than the consensus forecast for a loss of 21 cents.
Croda, which is a major supplier of chemical ingredients to Estee Lauder and other cosmetics brands, last month cut its profit guidance due to declining demand, especially in its North American beauty care business.
Estee said challenges in Asia were partially offset by organic sales growth in the US returning, along with growth in other markets in Asia such as Hong Kong and Japan, while the UK and Germany led growth in Europe.
But chief executive Fabrizio Freda said good momentum continued in many developed and emerging markets around the world, contributing to a better-than-expected first quarter.
But the full-year 2024 outlook was lowered due to "incremental external headwinds, namely from the slower growth in overall prestige beauty in Asia travel retail and in mainland China, which is currently confirmed in the pre-sale phase of the 11.11 shopping festival [Singles Day], and the risks of business disruption in Israel and other parts of the Middle East".
He added: "We are accelerating and expanding our profit recovery plan, to benefit fiscal years 2025 and 2026, to realize our ambitions to rebuild profitability despite the external headwinds’ increased pressure on the business in fiscal 2024".