Croda’s Q1 update reaffirms full year profit expectations as continued margin enhancement and mix offsets somewhat sluggish underlying sales trends. Reported sales increased by 7.7% (+9.8% in the three core sectors) and by 0.4% on an underlying basis. Profit growth in Q1 was achieved through a good performance in consumer markets and innovation driving margins (New and Protected Products +8.0%). Operating margins increased by 60 basis points. Despite pockets of good growth (Asia, Europe, NPP), underlying sales trends have been held back by North America, where export customers have been impacted by the stronger dollar, and Latin America, given challenges in that region. Despite this, we continue to expect a year of good progress and remain at BUY. NB shares remain cum-div the 100p special.
