Croda International Plc 2017 Full Year Results February 2018 Innovation you can build on™
Cautionary statement This review is intended to focus on matters which are relevant to the interests of shareholders in the Company. The purpose of the review is to assist shareholders in assessing the strategies adopted and performance delivered by the Company and the potential for those strategies to succeed. It should not be relied upon by any other party or for any other purpose. Forward looking statements are made in good faith, based on a number of assumptions concerning future events and information available to the Directors at the time of their approval of this report. These forward looking statements should be treated with caution due to the inherent uncertainties underlying such forward looking information. The user of this review should not rely unduly on these forward looking statements, which are not a guarantee of performance and which are subject to a number of uncertainties and other facts, many of which are outside the Company’s control and could cause actual events to differ materially from those in these statements. No guarantee can be given of future results, levels of activity, performance or achievements. Unless otherwise stated, all profit, margin and EPS data refer to ‘adjusted’ results, which can be found on the face of the G roup Income Statement in the first column. The definition of adjusted profit is as follows: IFRS result excluding exceptional items, acquisition costs and amortisation of intangible assets arising on acquisition, and tax thereon where applicable. The Board believes that the adjusted result gives a Innovation you can build on™ 2 clearer presentation of the underlying performance of the Group. All figures at reported currency rates unless otherwise stated.
Our Performance Steve Foots – Group Chief Executive Innovation you can build on™
Record profit and strong sales growth Record profit: continued progress across all core sectors. PBT +11.1% at ▪ £320.3m Strong sales growth: +10.4% - strongest underlying growth since 2012 ▪ Relentless innovation: 5 th successive year of NPP growth ▪ Robust margin & return: ROS 24.2%, ROIC 19.2% ▪ Investment in disruptive technologies: Cutitronics, Enza, IonPhasE, ▪ Nautilus Strong returns to shareholders: 9.5% increase in full year ordinary ▪ dividend Underlying sales reflect current year results for existing business translated at the prior year’s average exchange rates, excluding the impact of acquisitions. NPP is New & Protected Products. ROS is return (operating profit) on sales. ROIC is defined in the 2017 Results Press Release. Innovation you can build on™ 4
Consistent top and bottom line growth Strong sales growth Robust return on sales Excellent EPS growth Reported currency Group +10.4% 24.2% 179.0p +5.6% +20 bps +14.9% Constant currency Year on year change Basic EPS growth Core Business Record NPP sales driving strong bottom line performance A strong business getting stronger Core Business comprises the core sectors of Personal Care, Life Sciences and Performance Technologies Innovation you can build on™ 5
Broad- based sales growth across…. All core sectors All customer classes All major regions 6.6% Top 10 11-20 Rest 8.0% 5.3% 6.2% 4.6% +4.7% 5.3% +4.3% Personal Care Life Sciences Technologies Europe North America Asia Performance +4.6% 2016 2017 Constant currency Innovation you can build on™ 6
Personal Care: strong sales improvement with stable margin Return to sales growth Stable margin Innovation-led growth +5.3% ▪ NPP +6% to >40% sales ▪ Strong growth in Beauty Actives ▪ Return to healthy growth in 33.3% Beauty Formulations +3.3% ▪ Growing opportunity in Beauty Effects - 70 bps ▪ MNC recovery ▪ ‘Flight to premium’ Modest mix impact Sales Profit Sales and operating profit growth in constant currency Innovation you can build on™ 7
Life Sciences: innovation and Incotec integration delivering faster profit growth Incotec driving improvement Focus on fast growth Faster profit growth in return on sales technologies +14.0% ▪ NPP +10%; 32% of sales ▪ Outperformance in Crop Protection 30.1% ▪ R&D investment delivering in Incotec ▪ Investment in Health Care high +200 bps +4.6% purity delivery systems ▪ North America API contract successfully exited YOY change Sales Profit Sales and operating profit growth in constant currency Innovation you can build on™ 8
Performance Technologies: transitioning to more focused innovation Second year of Focus on Broad based growth ‘value over volume’ double digit % profit growth +10.7% Full year return on sales ▪ Re-focusing on faster growth technologies ▪ Premium Smart Materials & +6.6% 16.5% Energy Technology markets ▪ Structural sales growth in H1 +120 bps ▪ Margin expansion in H2 H2 change Sales Profit Sales and operating profit growth in constant currency Innovation you can build on™ 9
Financial Performance Jez Maiden – Group Finance Director Innovation you can build on™
Consistent top and bottom line growth Reported Constant £m 2017 currency currency reported change change Sales 1,373.1 10.4% 4.6% Operating profit 332.2 11.4% 6.9% Net interest (11.9) (20.2)% (19.2)% Profit before tax 320.3 11.1% 6.5% IFRS profit before tax 314.1 13.9% Adjusted EPS 179.0p 14.9% 10.5% Proposed ordinary dividend 81.0p 9.5% Positive percentage indicates favourable variance Innovation you can build on™ 11
Sales momentum in Core Business Constant currency sales growth Three strong legs of growth (Core Business) 7.9% ▪ Return to steady organic growth in H1 Growth accelerated in H2 ▪ 5.7% 5.3% ▪ Progressive improvement in consumer business at strong margins 3.4% Rebalanced Performance Technologies growth – ▪ focus on value over volume Q1 '17 Q2 '17 Q3 '17 Q4 '17 Innovation you can build on™ 12
Constant currency sales in Core Business +5.6% Sales £m +5.8% +10.4% Constant currency sales +4.6% +5.6% +0% -1.0% 1,373 1,244 2016 reported Industrial Chemicals Core Business M&A Currency translation 2017 reported Innovation you can build on™ 13
Robust volume growth in consumer businesses Volume Price/mix ▪ Personal Care: return to volume growth +6.6% +4.6% Life Sciences: volume growth, particularly Crop ▪ +5.3% +4.6% ▪ Performance Technologies: sharper focus on premium/technology benefiting mix; raw material price increases recovered Personal Care Life Sciences Performance Group Technologies Constant currency Innovation you can build on™ 14
Continued profit progress across Core Business Growth in operating profit +£34m +£15m +£12m +£9m +3.3% +14.0% +10.7% +6.9% Personal Care Life Sciences Performance Group Technologies Percentage growth in constant currency, absolute growth in reported currency Group includes Industrial Chemicals sector Innovation you can build on™ 15
Excellent EPS growth driven by underlying performance, currency & tax Basic EPS, p +14.9% +3.8% +4.6% Constant currency PBT +6.5% +2.3% -0.4% +4.6% 179.0 155.8 2016 EPS Sales growth Operating margin Interest FX Tax rate 2017 reported Continued impact in 2018 Innovation you can build on™ 16
Robust financial platform for future growth & returns Net capital investment Free cash flow £157m £105m Bio £92m £40m £156m £99m Other £65m £65m 2016 2017 2016 2017 Net debt/leverage Pension deficit 1.0x 1.1x 2016 2017 £21m £364m £382m £113m 2016 2017 Leverage: Net debt / EBITDA. Net debt, EBITDA and free cash flow are defined in Results Press Release – Finance Review Pension deficit on IAS19 basis Innovation you can build on™ 17
Strategy continuing to deliver Innovation you can build on™
With strong ronger er, faster ster & smarter ter investments Premium Niches Smart Partnering R&D Technology acquisitions Sustainability Digitalisation Stretching our growth plans across our 3 core sectors Innovation you can build on™ 19
Targeting stron ronger ger growth in Premium Niches ‘Flight to Performance’ in Life Sciences & ‘Flight to Premium’ in Personal Care Performance Technologies Drift reduction Yield increase Anti-wrinkle Sun protection Matrixyl ™ Solaveil ™ Atplus ™ Disco™ Injectables Sterile coatings Curl retention Hair straightening Volarest ™ Kereffect ™ Tween™ MyCroFence ™ A relentless focus on innovation Innovation you can build on™ 20
Supported by stronger ronger investment in R&D Five successive years of NPP growth Getting closer to our customers in Asia 27.6% 20.5% £379m £216m 2013 2017 Recent R&D laboratories 2012 2017 Expanded new R&D capabilities Understanding local needs in South Africa Brazil Incotec Sederma Korea 2016 2017 NPP values as % of Group sales. Sales growth in constant currency. Innovation you can build on™ 21
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