Croda to cut costs as profits fall

CRODA INTERNATIONAL yesterday became the latest chemical company to unveil a slump in profits due to dire markets and the strength of the pound.

The fall in profits came as Croda announced it would close several non- core operations, with job losses likely, in a bid to reduce costs. The company declined to name the plants earmarked for closure but said the measures would cost pounds 8m and yield annual savings of pounds 4m from 2001.

The speciality chemicals group reported a 12 per cent fall in 1998 pre- tax profits before exceptionals to pounds 33m, on sales marginally higher at pounds 354.9m. The figures were depressed by an pounds 18m exceptional loss on the disposal of three businesses, leading to an overall profit figure of just pounds 14m, down 64 per cent on 1997. The disappointing figures forced Croda to leave the dividend unchanged at 10.35p.

The chairman Keith Hopkins said the results had been severely affected by the difficult trading conditions in many key markets. A collapse in demand in the financially-stricken Far East caused a profit shortfall in Croda's industrial chemicals division, which produces paints, inks and fire-fighting products.

The company's core speciality chemicals division, which supplies high- technology products to pharmaceuticals and cosmetics companies, was also hit by lower Asian demand, with sales in the region down 15 per cent. The unit's problems were compounded by a sharp rise in the price of vegetable and palm oil imposed by Indonesia.

Croda's plight was deepened by the strong pound, which last year wiped nearly 10 per cent off the group's profits and some 4 per cent off sales.

The finance director, Barbara Richmond, said many of Croda's markets were set to remain subdued throughout 1999.

David Phillips at Sutherlands said Croda's margins, at around 15 per cent, were among the best in the sector, but warned that the difficult trading conditions would persist in the near term.

However, Croda shares have fared better than many of its peers. After yesterday's 3.5p fall to 225p, they are on 13 times 1999 earnings of around pounds 33m. This is an unjustified discount to rivals such as Laporte and BTP, which are better positioned to take advantage of a upturn in the chemical markets. At these levels, Croda is no more than a hold.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

A timely reminder of the bloody anniversary we all forgot

A timely reminder of the bloody anniversary we all forgot

Who remembers that this week we enter the 150th anniversary year of the end of the American Civil War, asks Robert Fisk
Homeless Veterans appeal: Former soldiers pay their respects to a friend who also served

Homeless Veterans appeal

Former soldiers pay their respects to a friend who also served
Downfall of Dustin 'Screech' Diamond, the 'Saved By The Bell' star charged with bar stabbing

Scarred by the bell

The downfall of the TV star charged with bar stabbing
Why 2014 was a year of technological let-downs

Why 2014 was a year of technological let-downs

Security breaches and overhyped start-ups dominated a year in which very little changed (save the size of your phone)
Cuba's golf revolution: But will the revolutionary nation take 'bourgeois' game to its heart?

Will revolutionary Cuba take 'bourgeois' golf to its heart?

Fidel Castro ridiculed the game – but now investment in leisure resort projects is welcome
The Locked Room Mysteries: As a new collection of the genre’s best is published, its editor Otto Penzler explains the rules of engagement

The Locked Room Mysteries

As a new collection of the genre’s best is published, its editor explains the rules of engagement
Amy Adams on playing painter Margaret Keane in Tim Burton's Big Eyes

How I made myself Keane

Amy Adams hadn’t wanted to take the role of artist Margaret Keane, because she’d had enough of playing victims. But then she had a daughter, and saw the painter in a new light
Ed Richards: Parting view of Ofcom chief. . . we hate jokes on the disabled

Parting view of Ofcom chief... we hate jokes on the disabled

Bad language once got TV viewers irate, inciting calls to broadcasting switchboards. But now there is a worse offender, says retiring head of the media watchdog, Ed Richards
A look back at fashion in 2014: Wear in review

Wear in review

A look back at fashion in 2014
Ian Herbert: My 10 hopes for sport in 2015. Might just one of them happen?

Ian Herbert: My 10 hopes for sport in 2015

Might just one of them happen?
War with Isis: The West needs more than a White Knight

The West needs more than a White Knight

Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

'The day I was shot by the Taliban'

Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
Revealed: the best and worst airlines for delays

Revealed: the best and worst airlines for delays

Many flyers are failing to claim compensation to which they are entitled, a new survey has found
The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

The stories that defined 2014

From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

Disaster looming? Now you know where to head...

Which British city has become the first to be awarded special 'resilience' status by the UN?