Strong strategic delivery in 2020
- Delivering for all stakeholders through our response to COVID-19
- No employees furloughed or use of government liquidity; supported customers, suppliers, employees and communities
- Dividends paid in full; 2020 full year dividend increased to 91.0p (52% of adjusted EPS)
- Living our Purpose: Smart science to improve livesTM
- Prioritising COVID-19 vaccines and drug delivery activities
- Launched sustainability Commitment to be Climate, Land and People Positive by 2030
- Increasing contribution from life science and consumer markets
- Accounting for over 80% of Group profit
- Enhancing growth, reducing cyclicality and expanding market opportunities
- Fast-growing Health Care platform
- Accelerating strategic delivery with almost £1bn of organic and inorganic investments including Avanti and Iberchem acquisitions, part-funded by an equity placing raising gross proceeds of £627m
Resilient financial performance
- Limited adverse financial impact from COVID-19 due to commitment of employees, strength of product portfolio, global footprint, customer intimacy and flexible manufacturing base
- Group underlying sales 2.7% lower; Core Business constant currency (CC) sales growth of 2.3%
- Steady month-on-month sales improvement in the second half in COVID-impacted sectors; underlying Q4 sales in line with prior year in Personal Care and returned to growth in Performance Technologies
- Limited decline in adjusted operating profit of 5.9% (-4.0% CC)
- Robust free cash generation; leverage ratio of 1.8x EBITDA
- IFRS profit before tax reduced to £269.5m (2019: £302.3m), including impact of acquisitions
Record year for Life Sciences; challenges in Personal Care and Performance Technologies
- Outstanding performance in Life Sciences, with record sales and adjusted operating profit
- Sales 14.6% higher (+14.8% CC), driven by growth in Health Care and Seed Enhancement
- Adjusted operating profit up 20.8% (+25.4% CC) and return on sales improved to 32.2% (2019: 30.6%), through growth in high value-add niches
- Acquisition of Avanti Polar Lipids; adds delivery technology to Croda’s patient health care, leverages scale-up synergy and opens up wide range of future mRNA and gene therapy drug and vaccine applications
- Combining Personal Care, Home Care and Fragrances to create market-leading Consumer Care platform
- Adverse impact from COVID lockdowns on consumer demand in ‘going out’ and prestige beauty channels
- Personal Care sales 1.9% lower (-1.8% CC) and adjusted operating profit 15.8% lower (-15.3% CC), reflecting adverse business mix
- Iberchem acquisition unlocks significant growth and synergy in customer cross-sell and emerging markets
- Resilient sales in Performance Technologies but significant adverse profit impact
- Sales 3.2% lower (-3.2% CC) and adjusted operating profit 22.2% lower (-21.3% CC), reflecting impact of higher operating leverage and adverse business mix
While continued COVID-19 restrictions make the near-term outlook for elements of our Consumer Care and Performance Technologies sectors difficult to predict, 2020 sales exit rates were encouraging with consumer and industrial end markets showing signs of recovery. Life Sciences is expected to remain strong. The benefits of recovery, together with the full year impact of Avanti, Iberchem and our Pfizer-BioNTech COVID-19 vaccine contract, are expected to support profitable growth across the business.
Through our Purpose, Smart science to improve livesTM, we will continue to increase the positive impact our products deliver for our customers and their consumers, whilst also reducing the negative impact our activities have on our fragile world. The combination of our differentiated business model, healthy innovation pipeline and recent investments is expected to underpin performance and generate value for all our stakeholders.
Steve Foots, Chief Executive Officer, commented:
“During a year in which we have all faced unprecedented challenges, the response and commitment of our employees to maintain business continuity and serve our customers has been outstanding. The strength and quality of Croda’s business model has been further tested and proven. Whilst customer demand in certain end markets has inevitably been impacted by the pandemic, Croda’s financial performance has been resilient.
“Our strong financial platform has allowed us to make further progress positioning the business to focus on the fast growth markets of the future, capitalising on emerging trends in existing and adjacent markets. We have made significant investments to accelerate delivery of our strategy, notably the acquisitions of Avanti and Iberchem, so that life science and consumer markets now represent over 80% of Croda’s profit generation.
“My proudest moment in more than 30 years at Croda came with our critical involvement with the Pfizer-BioNTech COVID-19 vaccine, a fantastic example of our Purpose, Smart science to improve lives™. I am more confident than ever that our recent acquisitions, relentless innovation and emphasis on sustainability will drive our future profitability.”
An analyst presentation will be available via webcast at 0900 GMT on 2 March 2021 at www.croda.com/investors. To participate, please register in advance. Dial-in details are: +44 20 3936 2999; access code: 516866.