Croda: FTSE chemicals giant’s share price drops after outlook slashed
British speciality chemicals group Croda International cut its 2023 profit outlook on Monday, due to destocking and weak demand, particularly in its beauty care business in North America.
The FTSE 100 company said it now expects 2023 group adjusted profit before tax of £300m to £320m pounds. It had forecast 370 million-400 million pounds previously.
Following its profit outlook being slashed, it was the leading faller on FTSE after the open, down around 3.5 per cent.
Retailers selling beauty products globally have been battling weak demand for much of this year, amid a slow recovery at duty-free and travel destinations and especially in the key China market.
At the same time, consumers have been spending less on non-essential items due to high inflation, while companies struggle to protect profit margins as costs surge.
“Customers have continued to reduce their ingredient inventories in consumer care, crop and industrial end markets, due to a combination of destocking and a weaker demand environment,” Croda said in its third-quarter trading statement.
The company, which counts Estee Lauder, Unilever and Procter and Gamble among its customers, said third-quarter sales volume in its beauty care business came lower than expected in July and August, with the North American market not recovering from weakness in the previous three-month period.
Croda, headquartered in Yorkshire, said it had implemented several cost-cutting measures since June, including optimising production through plant shutdowns and reduced shift patterns.
Aby Jose Koilparambil – Reuters