Croda's profit rises but higher prices hit sales
cost inflation forced the company to increase prices leading to a
drop in sales volume.
The maker of ingredients for leading cosmetics manufacturers reported a 32 per cent increase in operating profit to £88.7m (€117.6m) for the full year ending 31 December. Synergies Contributing to this result were savings of £17m that the company made when integrating Uniqema, which was acquired midway through 2006. Combining the resources of the two companies, Croda reduced its workforce to 3,670 from 4,060, cut the number of its sites from 25 to 22 and closed 6 offices. Total synergies are now expected to exceed £30m and will positively affect profit figures in the coming quarters. Although Croda enjoyed higher profits over 2007, it top line suffered from the higher cost of raw materials. Price increases Sales volume fell 9.2 per cent over the course of the year after the average price of the company's products increased 12.3 per cent. Turnover ended the year 0.6 per cent down at £886.1m as exchange rates also hit Croda's sales figures. Although the price increases began to have a positive impact on turnover at the end of the year with sales in the fourth quarter rising 8 per cent, another round of increases took place in January. Looking ahead to 2008 Croda expects the US and UK markets to be 'uninspiring' but will be looking to compensate with further margin improvements on the back of the buy-out of Uniqema. "The integration of Uniqema is well ahead of schedule," said Croda chairman Martin Flower. "The ongoing benefits of this acquisition, combining with our strong underlying business and robust demand for Croda products across the globe, mean that we are confident of delivering further progress in line with our expectations for 2008."
