Chemicals maker Croda expects profit to fall in 2024 amid subdued demand

By Prerna Bedi

(Reuters) -Chemicals group Croda International said on Tuesday it expects profit and profit margins to fall in 2024 as it grapples with customer destocking and subdued demand at two of its three main businesses.

"The Crop (Protection) unit has still got a little bit of destocking to go. We've had three quarters of negative volumes there but... we expect that to continue certainly for the first half of the year," Chief Executive Steve Foots said in an interview with Reuters.

Shares in the FTSE 100-listed firm were down 2% at 4,805 pence at 0915 GMT, having dropped nearly 30% in the last year.

Sales volumes remain depressed in Crop Protection and Industrial Specialties, two of the three businesses with the highest production volumes, the company said. The other is Beauty Care.

UK-based Croda, which supplies chemicals to makeup giant Estee Lauder, said it expected an adjusted pre-tax profit of between 260 million pounds ($329.8 million) and 300 million pounds in 2024, down from 308.8 million pounds in 2023.

Analysts on average expect Croda to report between 268.0 million pounds and 314.1 million pounds in 2024 profit, according to a company-compiled consensus.

The company also said adjusted operating margin would be two to three percentage points lower than 2023 amid depressed sales volumes for industrial specialities and waning COVID-19 lipid sales.

Foots said the firm was "cautiously optimistic" about a recovery in demand at its Consumer Care Unit - which includes fragrances and cosmetics - since the beginning of this year.

"If you look at our Consumer Care business which is our largest business, you know we're effectively... well towards the end of destocking there. Most of our big customers are now back to normal replenishments there," he added. ($1 = 0.7885 pounds)

(Reporting by Prerna Bedi in Bengaluru; Editing by Rashmi Aich and Susan Fenton)