Croda profits boosted by cost initiatives and strong sales

Croda profits rocket by over 60 per cent as the company successfully curbs cost inflations and sees healthy growth in its sales for the first half of the year.

The company reported that sales during the period grew by 21.3 per cent to reach £488.7m (€618.95m), which it said reflected strong underlying global demand in its chosen markets.

Croda chairman Martin Flower, pointed out that both sales and margins for the company's consumer care division had continued to increase, providing a driving force for the results.

Rising costs counteracted by price increases

Although the company did acknowledge the fact that its consumer care division was hit by significant increases in the cost of both raw materials and utilities during the period, this was passed on thanks to average selling prices increasing by 17.3 per cent.

Likewise sales in the division marginally outstripped that for the rest of the company, rising by 22.2 per cent to reach £215.9, which was matched by a similar increase in operating profit.

Sales growth in the personal care division has been driven by the fact that the company's Uniqema range is now distributed and sold worldwide.

Uniqema range boosts care results

Uniqema was acquired in mid-2006, leading to a cut in the number of production facilities and staff thanks to increased synergies between the two businesses which has helped boost profits.

"Favourable currency movements, a one off spike in glycerine prices and even more benefit coming through from the Uniqema transaction provided a further boost to the result," Flower said.

"This was an excellent first half and, whilst recognizing inflation and global economic trends, we are confident of making further progress," he added.

Profits boom

Perhaps most spectacular was the rise in the company's profits, despite the fact that steep rises in costs and general inflation seem to have eaten hard into the profits of many of its major competitors.

Profits before tax and exceptionals but including discontinued activities rose from £35.1m to £57.6m, which, as well as the increase in sales, the company said was down to increased efficiency improvements and increased synergies concerning the Uniqema range.

The company also said that the improved results helped to curb its debts, which were reduced to £341.6m as a result of the increased cash flow.