Margins improve at Croda

Strong demand for its speciality chemicals in America offset weaker trading conditions in Europe for Croda International in the first half of 2012.

Profit before tax in the six months to the end of June rose 6.3% to £132.6m from £124.8m the year before, while in the second quarter alone profit before tax rose 5.3% to £67.5m from £64.1m.

First half sales rose 2.4% to £572.9m from £559.6m in the first half of 2011, while second quarter sales edged up 0.1% to £281.9m from £281.7m a year earlier. Average prices increased by 4.2%, primarily driven by price increases in Europe but also a change in the mix of products being sold.

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In the second quarter, the Consumer Care division's sales rose 2.4% to £150.8m from £147.3m the year before, the Performance Technologies division grew sales 0.9% to £105.6m from the preceding year's £104.7m while the group's smallest division, Industrial Chemicals, saw sales tumble 14.1% to £25.5m from £29.7m in the second quarter of 2011. The group noted that the second quarter of 2012 saw fewer trading days in Europe than in the corresponding period of 2011.

Half-year earnings per share rose 8.1% to 66.9p from 61.9p last year, and the interim dividend has been increased in line with earnings growth, to 26.75p from 24.75p.

Net debt at the end of June had been reduced to £208.0m from £253.3m a year earlier as a result of strong free cash flow generation.

"These are a robust set of results which have been achieved despite challenging trading conditions in Europe. Against strong 2011 comparatives and adverse currency translation, both core business segments have made further progress. It is particularly pleasing to see Performance Technologies delivering improved margins and continuing to demonstrate the benefits of increased innovation," said Martin Flower, the Chairman of Croda.

"Assuming no significant change in market conditions in the near term, we remain confident that this strategy will enable us to make further progress in the second half of 2012," Flower added.

JH