Record financial performance - strategy executed with agility
Record financial performance
All businesses trading ahead of pre-pandemic levels
- Underlying sales up 26% on 2020 – comprising volume up 9% and price/mix up 17%
- Underlying sales 18% ahead of 2019, excluding lipid systems†
- Adjusted operating profit up 47% on 2020 (and 38% higher than 2019)
- FRS profit before tax up 53%
- Return on sales up 180 basis points to 24.8% (2020: 23.0%)
- Adjusted earnings per share up 43% on 2020 (and 35% higher than 2019)
Navigating inflation well – successful cost recovery
Increased innovation – New and Protected Products (NPP) up from 27% to 37% of total sales
Proposed full year ordinary dividend increased 10%
- Significant benefit from recent acquisitions – £58m additional operating profit and stronger growth platform
- Lipid systems platform well established in patient health care delivery – approximately US$200m (£145m) sales, primarily to our principal vaccine customers
- Fast growth across all three patient health care platforms – 130 new customers and 250 new programmes, two thirds for non-COVID applications
- Encouraging F&F performance despite challenging emerging markets; first cross-selling synergies delivered
Strategic transition to pure-play Consumer Care and Life Sciences company with accelerated investment
- Agreement to sell majority of Performance Technologies and Industrial Chemicals (‘PTIC’) for €915m (including €140m for Sipo, subject to Croda acquiring 100%) – completion expected summer 2022
Organic capital investment increased over 30% to nearly £160m, with resultant free cash flow 13% lower – confidence in investment to support strategy to scale consumer, health and crop care businesses to drive consistent sales growth and even stronger profit margins
Delivering a stronger Consumer Care performance – total sales increased by 45%, underlying by 18%
- Strong rebound in Personal Care, reflecting performance of both Beauty Actives and Beauty Care
- Continued innovation – NPP reached 44% of total sector sales (2020: 38%)
- Acquired Alban Muller and Parfex – accelerating transition to more natural raw materials
Outstanding performance in Life Sciences – total sales up 46%, underlying sales ex lipid systems† up 18%
- Record adjusted operating profit, up 68% – return on sales of 36.4% (2020: 31.7%)
- Health Care sales growth of 80% – excellent performance in patient health care, led by lipid systems for COVID-19 mRNA vaccines
- Significant increase in innovation – NPP at 48% (2020: 27%)
- Strong second half performance in Crop Protection, offsetting softness in Seed Enhancement
- Performance Technologies sales up 18%; adjusted operating profit up 32%, benefiting from operating leverage
Steve Foots, Chief Executive Officer, commented: “2021 has been an outstanding year for Croda, with record financial results and excellent strategic progress. All parts of the business have delivered underlying growth, ahead of 2019 pre-pandemic levels, with strong cost recovery in a high inflation environment. Our Health Care business delivered an exceptional performance as a result of the work we have done to support the global roll out of COVID-19 mRNA vaccines and therapeutic drugs, and a rapidly building pipeline of non-COVID applications. This progress has been supported by further organic and inorganic investment to increase innovation and strengthen our platform for future growth.
“I’m grateful to Croda colleagues around the world who have risen to the dual challenges of responding to a rapid recovery in customer demand whilst managing ongoing COVID-19 restrictions. I am also delighted that we have established the Croda Foundation, which is already helping over 50 million people globally by supporting vaccine infrastructure.
“Our excellent strategic progress during the COVID-19 pandemic has included progressing our transition to a pure-play Consumer Care and Life Sciences company, with our agreement to sell the majority of our industrial businesses. As a result, Croda will now be focused on faster growth, higher return markets, positioning us to deliver more consistent sales growth and an even stronger profit margin.”
Growth is expected to continue in 2022 in line with our medium-term expectations. This should be supported by robust consumer demand, inflation cost recovery and the benefit of our recent investments more than offsetting moderation in customer restocking. Lipid systems sales are expected to be at a similar level to 2021. With an increasing proportion of Group sales coming from higher value add solutions, profit margins in Consumer Care and Life Sciences are expected to remain strong.
The combination of our differentiated business model, healthy innovation pipeline and current investment programme are expected to underpin performance and continue to generate value for all our stakeholders.
†Lipid systems comprise lipid excipients and other Avanti lipid technology products. They are excluded from this growth calculation to give a more informative comparator to 2019, given the sales arising from COVID-19 contracts secured since 2019.