The FTSE 100 group posted an adjusted profit before tax of £170.6mln for the first six months of the year, down 2.5% and below an average analyst forecast of £174mln.
Adjusted group sales of £657.8mln were up 2.4% on a reported basis, but down 0.4% if currency swings are ignored, with supplies of speciality ingredients to the beauty and personal care industry contributing 3.6% lower revenues.
Personal Care was weaker in the US and North Asia, which it said was primarily due to President Trump’s trade dispute, with continued growth across rest of sector, while another cloud was the slowing of the Performance Technologies arm in line with the wider industry due to softer end markets in automotive and polymers.
Croda said sales from its core business were in line with prior year despite the subdued market conditions and strong prior year comparators.
Cash generation also improved as free cash flow rose 52% to £94.5mln as capital investment was reduced, helping ease a 4% increase in the interim dividend to 39.5p.
'Slight improvement' means downgrades likely
Chief executive Steve Foots said the Personal Care business was “significantly impacted” by the US/China trade dispute and new sales legislation in China clamping down on ‘Daigou’ cross-border selling, balanced by a strong performance in life sciences.
For the second half, he said if current challenging economic conditions continue, overall he expects a “slight improvement in performance” versus the prior year, when a £171mln PBT was recorded.
Life Sciences is expected to continue progressing, Personal Care to remain subdued in the US while Asia recovers, but Performance Technologies is expected to remain softer until end markets improve.
Broker Liberum said the guidance suggests a full-year PBT in the low £330mlns, versus a consensus forecast in the low £340mlns.
“Today's results will raise concerns that this is more than a cyclical blip.”
Shares in Croda were down 5% to 4,594p on Wednesday morning, falling below 4,600p for the first time since last October.