CRODA International, provider of chemicals for cosmetics, detergents and pesticides, saw its shares tank nine per cent yesterday after it forecast a drop in pre-tax profits for the full year compared to 2013, blaming a strong pound for the profit warning.
The FTSE 250 listed speciality chemical company, which is the second largest distributor of cosmetic ingredients in the world, announced in a trading update that it now expected second quarter pre-tax profits to be eight per cent lower compared to the first quarter of this year, having previously expected a similar performance for the period.
The company said if the pound remained at current levels, the currency translation and transaction effects would have reduced 2013 pre-tax profit of £251.4m by about £19m.
The amount reflected £13m in currency translation plus an estimated £6m in currency transaction, arising mainly on Croda’s US dollar denominated exports from Europe.
The company also noted a subdued market especially in Europe and weaker sales in industrial chemicals as a reason for the decline in pre tax profits. But it still expects underlying profit progress for 2014.
Croda, which also manufactures Lorenzo's oil, stated it is still confident in its long term strategy.