Croda profits to suffer from FX in 2014, limited forward visibility

25th Feb 2014 10:09

Croda International posted an in-line set of full-year results on Tuesday, although the company warned global trends were 'unpredictable' and said its forward visibility remained limited. It also admitted currency translation is expected to have an adverse impact on profit growth in 2014.The group said it had been "another year of demanding market conditions", but achieved both pre-tax profit and earnings per share growth.Pre-tax profit for the year rose 5% from £238.3m to £250.1m, on revenue of £1.07bn, up 2.4% on the £1.051bn generated the previous year. Sales rose strongly in the Industrial Chemicals division, climbing 16.9%, but adjusted operating profit was flat at £10.3m. Performance Technologies sales rose 1.1%, helping profit climb 5.9% to £63m. Basic earnings per share jumped 17% to 131.2p, although on an adjusted basis they climbed 8.3% to 132.2p. Chairman Martin Flower said: "In another year of demanding market conditions, Croda continued its track record of pre-tax profit and earnings per share growth. From a strategic perspective, we have made real progress, maintaining our focus on innovation and developing our business in both existing and emerging markets. "With record sales of new and protected products across the business, acquisitions in North America and China, three more R&D laboratories, two more customer training centres and further investment in our global sales force, our platform for sustainable, organic growth is much stronger."He added: "We still expect to achieve constant currency sales and profit growth in 2014 [... and] the board is confident that Croda has the right strategy in place to deliver its medium-term growth targets."The dividend was increased from 59.5p to 64.5p year-on-year. Canaccord Genuity maintained its 'sell' rating and 2,030p target price, saying: "Profit growth remains our key concern here; fourth quarter earnings before interest and tax (EBIT) growth was just 2.3%. "The company is focused on accelerating growth organically and has made a few small acquisitions. We applaud these actions, but have yet to see a meaningful pick-up in profit growth." The share price fell 0.32% to 2,492p by 10:35 Tuesday.NR