Croda International showcased a strong financial year in 2025, marked by significant increases in both sales and profits, alongside tangible advancements in its ongoing transformation initiatives. The specialty chemicals company also presented a comprehensive three-year financial roadmap, aiming to substantially boost its profit margins and cash flow by 2028, signaling a confident stride forward amidst fluctuating global economic conditions.
For the fiscal year 2025, Croda International, identified by LON:CRDA, reported an impressive 7% increase in sales at constant currency rates, reaching £1.7 billion. This growth was notably driven by a 9% surge in patented ingredient sales, reflecting a peak in demand for innovation not seen since before the global pandemic. The company also achieved an 11-point improvement in its Net Promoter Scores, underscoring enhanced customer satisfaction through superior service, collaboration, and building trust. Adjusted operating profit climbed 8% to £295 million, with adjusted profit before tax similarly rising 8% to £276 million, aligning with previously issued guidance. The company's free cash flow stood at £162 million, bolstered by reduced capital expenditure and more efficient working capital management in the latter half of the year. Net debt concluded at £524 million, with a leverage ratio of 1.3 times EBITDA. Shareholders saw a proposed final dividend of 63 pence, culminating in a full-year dividend of 111 pence, a modest increase from the prior year.
The fourth quarter alone saw a 5% sales increase in constant currency, surpassing initial expectations. This was primarily fueled by a 9% rise in Consumer Care, particularly in Flavors and Fragrances and Beauty Actives, and an 8% growth in Life Sciences, with Pharma achieving its best quarter due to higher excipient sales. Crop protection sales also rose by 12% in the quarter, though this growth is anticipated to moderate in 2026, while Industrial Specialties experienced a 19% decline. Geographically, all regions reported growth, with EMEA leading at a 9% sales increase, though Asia's performance was affected by U.S. tariffs impacting pharma and industrial exports. North America saw a recovery in its beauty sector during the second half of the year.
Croda's operating margin improved from 17.2% to 17.4% over the year, with the second half seeing a 17.6% margin. This improvement was attributed to a 0.7 percentage point contribution from sales growth and a substantial 1.6 percentage point benefit from transformation cost savings, which effectively counteracted inflationary pressures and costs associated with new investments. However, a foreign exchange headwind of nearly 1% somewhat obscured the full extent of this recovery. The company reported a profit before tax of £91 million, which included £150 million in exceptional charges and amortization of acquired intangible assets. These non-cash items encompassed a £45 million impairment of the Lamar, U.S. lipid site, an additional £16 million for standby costs, a £29 million write-off for assets under construction, a £22 million impairment related to the closure of a U.K. distribution center, and an £11 million impairment of acquired technology intangible assets.
Looking ahead, Croda's management articulated a strategic plan that integrates growth initiatives with ongoing transformation efforts. This strategy emphasizes refocusing innovation, enhancing customer experience, and maximizing returns from investments. The company introduced a more stringent innovation framework and highlighted successes such as KeraBio, novel applications for existing ingredients, and increased customer co-creation, which saw a 12% rise in average pipeline value per project in 2025. Additionally, Croda is expanding its Beauty Actives capabilities beyond Paris, establishing claims testing and formulation support in key Asian markets. The Pharma business has been reorganized into two distinct areas: Pharma Ingredients and Pharma Solutions, focusing on lipid technologies and vaccine adjuvants. Breakout growth projects are currently excluded from the three-year plan due to timing uncertainties, although the company remains optimistic about their long-term potential.
The transformation agenda aims for £100 million in total annualized savings and a £50 million reduction in working capital by the end of 2028. In 2025, Croda achieved £28 million in savings, ahead of schedule, and reduced its headcount by approximately 5%. Efforts to streamline the portfolio of over 100,000 SKUs, implement minimum order values for smaller customers, and accelerate digital portal adoption are underway to lower the cost-to-serve. For its 2028 framework, Croda projects an average group organic sales growth of 3% to 6%, with Consumer Care matching this range and Life Sciences growing 4% to 7%. Industrial Specialties is expected to remain largely flat. The company targets an adjusted operating margin exceeding 20% by 2028, up from 17.4% in 2025, and a free cash flow conversion of over 12% of sales by the same year. The remaining transformation benefits are estimated at £75 million through 2028, with growth anticipated to contribute slightly more than transformation to margin recovery.
For 2026, Croda anticipates adjusted operating profit to align with market expectations, with organic sales growth projected between 3% and 6%, and a further increase in operating margin. First-quarter sales are expected to be comparable to the strong prior-year quarter, and sales are projected to be evenly split between the first and second halves of the year. Founded in 1925, Croda International specializes in converting bio-based raw materials into innovative ingredients for consumer care and life sciences. The company, employing over 6,000 people globally, is committed to sustainability, aiming to be Climate, Land, and People positive by 2030, reflecting its core strategy of creating and selling innovative ingredients that offer substantial benefits to its diverse customer base.