Croda International: A Dividend Aristocrat with a Crashing Share Price
Croda International: Croda International, a UK-based chemicals manufacturer, has increased its dividend for 32 consecutive years. However, its share price has plummeted 30% in the last year. Let’s explore the reasons behind this decline and whether it’s a good time to invest.
The Dividend Record:
Croda International has a stellar track record of dividend hikes, making it a true Dividend Aristocrat. Despite the recent challenges, the company maintained its dividend progression, albeit with a marginal 1p increase.
Croda International: Company Fundamentals:
| Attributes | Value |
| Industry | Specialty chemicals |
| Market Cap | £5.68bn |
| Revenue (2023) | £1.65bn |
| Net Income (2023) | £236.3m |
| Dividend Yield (2023) | 2.68% |
| P/E Ratio (2023) | 33.49 |
| Net Debt (2023) | £537.6m |
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Croda International: The Share Price Crash:
The share price has fallen significantly due to various factors, including:
- Plummeting lipid sales
- Customers reducing inventory levels
- Challenging market conditions in Life Sciences
Croda International: Financial Performance:
The company’s full-year 2023 sales fell 11%, and adjusted profit before tax crashed 33%. However, the dividend remained intact, and free cash flow rose 5%.
Outlook:
The forecast for 2024 and 2025 indicates a slow growth in dividend yield, from 2.68% to 2.8%. The company’s net debt has increased, but it’s expected to fall in the coming years.
Valuation:
The price-to-earnings ratio has jumped to 33.49 times, making the shares appear expensive. The chart shows a significant decline in the share price over the last year and three years.
Additional Points:
- Industry Challenges: The chemicals industry is highly competitive and faces various challenges, including regulatory changes and shifting market demands.
- Sustainability Efforts: Croda International has made efforts to improve its sustainability, which could be a positive factor for long-term investors.
- Global Presence: The company has a strong global presence, with operations in various countries, which could provide a hedge against regional economic downturns.
- Research and Development: Croda International invests in research and development, which could lead to new products and growth opportunities.
Croda International: Growth Prospects:
Here’s an overview of Croda International’s company growth prospects:
- Long-term Growth: Croda International aims to deliver sustainable growth through innovation, customer focus, and operational excellence.
- Innovation: The company invests in research and development to create new products and technologies.
- Sustainability: Croda International focuses on sustainable practices, reducing environmental impact, and improving social responsibility.
- Global Expansion: The company has a strong global presence, with opportunities for growth in emerging markets.
- Segment Growth: Croda International’s Consumer Care and Life Sciences segments offer growth potential, driven by trends in healthcare, wellness, and sustainability.
Challenges:
- Industry Competition: The specialty chemicals industry is highly competitive, with intense price competition and changing market demands.
- Regulatory Risks: Croda International faces regulatory challenges, including changes in chemical regulations and trade policies.
- Economic Uncertainty: Global economic uncertainty, including Brexit and trade tensions, may impact demand and supply chains.
Growth Drivers:
- Innovation and R&D: Croda International’s investment in research and development drives new product growth and customer solutions.
- Sustainability and ESG: The company’s focus on sustainability and environmental, social, and governance (ESG) factors attracts customers and investors seeking responsible businesses.
- Global Trends: Croda International benefits from global trends in healthcare, wellness, and sustainability, driving demand for its products.
Please note that this is a summary, and it’s essential to consult the company’s official reports and conduct your own research before making any investment decisions.
Conclusion:
While Croda International has a strong dividend record, its share price crash and high valuation make it less attractive. However, the company could be a good long-term buy-and-hold option if the economy picks up and demand for its products accelerates.
Disclaimer:
- This post is for informational purposes only and should not be considered as investment advice.
- The information provided is based on publicly available data and may not be up-to-date or accurate.
- I am not a financial advisor, and my opinions or analysis should not be relied upon for investment decisions.
- Investing in the stock market involves risks, and you could lose some or all of your investment.
- Please conduct your own research and consult with a financial advisor before making any investment decisions.
- I am not responsible for any losses or damages that may result from reliance on the information provided in this post.
FAQ:
Why is Croda share price falling?
The share price of Croda International Plc has fallen due to:
1: Declining sales and profits
2: Plummeting lipid sales
3: Reduced customer inventory levels
4: Challenging market conditions in Life Sciences
5: Increased net debt
6: Intense industry competition
7: Regulatory risks