Croda: Sales Weakness Was Broadly Expected and Should Improve Sequentially; Shares Attractive

Narrow-moat Croda reported a 10% decline in first-quarter 2024 constant-currency sales. This was primarily driven by the crop protection business, which faced a strong comparison base from the first quarter of last year, ahead of widespread customer destocking that drove volumes materially lower for 2023. Still, since much of this weakness and its phasing was already baked into the guidance shared at the beginning of the year; management confirmed the 2024 outlook for adjusted operating profit between GBP 260 million and GBP 300 million. We don’t expect to make any material change to our forecast and confirm our GBX 5,500 fair value estimate. We view shares as undervalued at current levels.