Highlights

  • Adjusted profit before tax rose to GBP 276.2 million, up 8.4% year-on-year.
  • The Group introduced a financial framework targeting adjusted operating margin above 20% by 2028.
  • Free cash flow reached GBP 161.6 million, with leverage reduced to 1.3x.

Shares in Croda International Plc (LSE:CRDA) rose 2.41% to GBX 3,057 on 24 February after the group reported higher sales and adjusted earnings for the year ended 31 December 2025. The speciality ingredients manufacturer also introduced a new financial framework to 2028, outlining margin, cash flow and return targets.

Sales Growth Led by Consumer Care and Life Sciences

Croda reported group sales growth of 6.6% at constant currency, with gains across its core Consumer Care and Life Sciences divisions.

Profit Performance Impacted by Impairments

Adjusted operating profit rose 7.9% at constant currency, with group adjusted operating margin improving to 17.4% from 17.2% in 2024.

Adjusted profit before tax increased 8.4% to GBP 276.2 million, compared with GBP 260.0 million in 2024. On a constant currency basis, this equated to GBP 282.0 million.

However, IFRS operating profit fell to GBP 110.1 million from GBP 227.5 million the prior year. The decline followed GBP 107.3 million in impairment charges, including GBP 44.6 million linked to optimising lipids capacity, alongside a GBP 15.9 million onerous contract provision.

Cash Flow, Dividend and Balance Sheet

Free cash flow totalled GBP 161.6 million, compared with GBP 169.6 million in 2024 (restated). The second half generated GBP 133.6 million, reflecting lower working capital and capital expenditure.

Net leverage declined to 1.3x from 1.5x at 30 June 2025.

Croda increased its full-year dividend by 1p to 111p per share.

Financial Metrics Snapshot

  • Share Price: GBX 3,057 (+2.41%)
  • Full-Year Sales Growth: +6.6% (constant currency)
  • Q4 Sales Growth: +5%
  • Consumer Care Sales: +8%
  • Life Sciences Sales: +8%
  • Industrial Specialties Sales: -2%
  • Adjusted Operating Profit: +7.9%
  • Adjusted Operating Margin: 17.4% (2024: 17.2%)
  • Adjusted Profit Before Tax: GBP 276.2m (2024: GBP 260.0m)
  • IFRS Operating Profit: GBP 110.1m (2024: GBP 227.5m)
  • Impairment Charges: GBP 107.3m
  • Free Cash Flow: GBP 161.6m
  • Leverage Ratio: 1.3x
  • Full-Year Dividend: 111p (2024: 110p)

Transformation Programme and 2028 Framework

Croda reported GBP 28 million in gross benefits from its transformation programme in 2025, ahead of its GBP 25 million target. The company is targeting approximately GBP 100 million in annualised benefits by FY28.

A working capital programme aims to deliver around GBP 50 million in reductions by 2028.

Under its new framework to 2028 (at constant currency), Croda is targeting:

  • Organic sales growth of 3–6% CAGR (2026–2028)
  • Adjusted operating margin above 20% by FY28
  • Free cash flow-to-sales ratio above 12% (2025: 9.5%)
  • Return on Invested Capital above 10% (2025: 8.2%)

2026 Outlook

For 2026, Croda expects organic sales growth within the 3–6% range and a further increase in adjusted operating margin. Adjusted operating profit is anticipated to be in line with current market expectations at constant currency.

If exchange rates from February to December 2026 remain at January 2026 closing levels, the company estimates a negative currency translation impact of approximately GBP 8 million on reported operating profit.

Croda delivered higher sales and adjusted earnings in 2025 while absorbing impairment charges that weighed on statutory profit. With margin expansion and cash generation targets set for 2028, attention will shift to execution of the transformation programme and delivery against 2026 guidance.

Frequently Asked Questions (F&Q)

Why did IFRS operating profit fall despite higher sales?
The decline was due to GBP 107.3 million in impairment charges and a GBP 15.9 million onerous contract provision.

What dividend has Croda declared for 2025?
Croda increased its full-year dividend to 111p per share.

What is Croda’s margin target by 2028?
The company is targeting adjusted operating margin above 20% by the full year 2028.