Unilever supplier Croda says sterling’s strength will hit this year’s profits

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Natural chemicals firm Croda International warned 
that its annual profits will be lower than last year as the group battles with the strength of the pound.

Croda, whose customers include Unilever, L’Oreal, Estee Lauder and Procter & Gamble, said that currency translation knocked £38.3m off its half year sales for the six months to June 30.

The pound’s strength, mainly against the dollar, has forced the Snaith-based company to issue a number of profit warnings this year.

Chief executive Steve Foots said he expects the adverse currency effect to continue in the third quarter.

However, the firm, which makes chemicals used in cosmetics, pesticides and detergents, said it expects to make progress in its underlying profit.

Croda’s adjusted pre-tax profit fell six per cent to £125.3m in the six months to June 30, down from £133.1m in the first six months of 2013.

The group said that currency translation and transaction costs reduce half year operating profit by £11.4m.

Sales fell 4.5 per cent to £537.4m as revenue fell in all three of its divisions - consumer care, performance technologies and industrial chemicals. The group said that its performance was below initial expectations as weak consumer demand in Europe hit the business.

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