H1 beat with strong pricing and margins but more subdued volumes Croda reported H1 PBT of GBP289m, 11% ahead of consensus with all divisions ahead of expectations. Organic growth was 17% driven by 20% price, 2% mix whilst volumes declined 5% including some destocking but also de-marketing in Consumer Care (prioritising its capacity for higher value products). Management now sees FY22 earnings ''modestly ahead'' of previous expectations, pointing to c5% upside to consensus or PBT closer to GBP485m. Expecting consumer cool off, but not cliff edge Within the upgraded guidance, management assumes some slowdown in consumer demand in H2 although likely a ''cool down'' rather than a cliff edge. With the divestment of PTIC now complete and with the gradual portfolio upgrades in the core business over time, management is confident its portfolio of Consumer Care and Life Sciences is now more resilient than in the past. Lipids revenues to trough in 2023 and 2024 Croda provided guidance for lipid systems revenue through 2024, targeting USD150m in 2022 (lowered from USD200m), and troughing at USD120m in 2023 and 2024 with growth thereafter. Although a downgrade to 2022, we believe the drop in 2023/24 is not as bad as feared and should help draw a line on discussions on lipids downside risk which has overshadowed conversations on Life Sciences growth prospects. Based on its current pipeline, management expects non-COVID applications to account for 75% of lipids revenue by 2024. We would expect more colour on lipids and its wider pharma pipeline of 330 programmes at the Healthcare investor event on 5th October. We upgrade FY22 estimates by 5%, mainly in Consumer Care We have a Neutral rating; we do expect a more challenging operating environment in H2 plus headwinds from a smaller lipids contribution h/h and y/y, but we would agree with management that the portfolio (and balance sheet) is somewhat more resilient today than in the past. We nudge down our...