Good morning and thank you for joining this Q1 Update call, covering our sales performance in the three months to the 31 of March 2024. I'm joined this morning by Steve Foot, CEO and Louisa Burdett, CFO.

Hopefully you've already seen the statement, so we will have a short introduction from Steve before taking questions. Can we ask the analysts to limit their questions to one to parti -- per participant?

Easy to say, please, plus one supplementary only if necessary for clarification.

Thanks, David. And David hasn't been drinking last night as well.

But morning to you, everybody, let me take you through the handful of key points that summarize what we've seen during Q1. I'll use the final quarter of '23 as the comparator.

As Q1, '23 was a very strong quarter, as in all of our businesses, actually; before these stocking commenced in crop protection and industrial demand started to fall, but you have both the comparators and the R&S anyway. So anyway, we'll start with the early signs of recovery in some of our end-markets, is the punch-line.

Firstly, consumer care has made an encouraging start, driven by a double-digit percentage increase in sales volumes, in comparison to quarter four. Beauty Actives led the way with the strongest growth, particularly in North America and Europe.

And Beauty Care also delivered a double-digit increase in sales with growth across all regions led by the Americas. And momentum has continued in F&F and Home Care too.

So in common with our peers, we think Q1 benefited from some new year restocking, but we remain cautiously optimistic about the recovery in Actives and Beauty Care, plus continued momentum in F&F and Home Care. Secondly, the market continues to be more challenging for life sciences, in comparison to quarter four, sales were flat in crop protection, and they were lower in seed enhancement, although sales are seasonally second half-weighted here.

And we also saw a small decline in pharma, excluding COVID lipids. So just on pharma, as we indicated in February, we've seen the continued impact of de-stocking, primarily in consumer health, but a COVID-19 final normalization and some phasing.

These challenges are temporary, rather than structural and will fall away at some point. What's key is sales of delivery systems for nucleic acid and protein-based drugs continue to grow, and we're also bringing new delivery technologies to market that will contribute more as the year progresses.

And finally, industrial specialty saw higher volumes and a positive mix versus quarter four. So remember, it plays an important role in the overall efficiency of our manufacturing model, so we're pleased with the progress there.

So in summary then, group sales are up 8% sequentially, excluding the COVID lipids we delivered in the previous quarter. And overall, group results for the first quarter were in-line with our expectations.

Currency translation had an adverse impact of just under GBP20 million on quarter one sales and approximately GBP4 million on quarter one profit. So looking ahead, we're on track to meet our previously stated guidance for group performance in the full year '24 and as a team, we remain focused on executing our strategy and we have a clear set of priorities, which are to capitalise on the steadily improving demand environment in beauty care, accelerate the conversion of our exciting pharma pipeline, and continue to enhance and improve the way we operate while carefully monitoring costs.

Alongside continued investment and innovation, these will drive our performance in the near term. So look, let me stop there and Louisa and I are now happy to take your questions.

Hey, good morning everyone. I noticed a consistent theme across the press release seemed to be better product mix in consumer health and industrial.

Does that mix help the margins or is it still much more important that we just get volume across the sites to see that margin recovery? Thanks.

Yes, what we're seeing is I think the main thing for margins is the big volume recovery. I mean we've talked about that.

The two areas, the two big theme areas last year were unusually a big volume decline on our assets and then quite an unusual mix effect in both businesses, both skewing to the negative. So the way back is really about volume recovery.

I think in CC, what you're seeing is whether you look sequentially at quarter four exit rates or you look at relative to quarter one last year, consumer care is double digit volume growth and low to mid-single digit price decline. But actually underneath all of that is you're obviously starting to see with industrial coming through utilization rates now at the factory and coming up from what 55% to 65%.

And so we're starting to see some recovery coming through in the utilization rates as well, combination of consumer and IS there.

Yes, I mean I would reiterate that volume being one of our most positive indicators for the quarter. And the other thing that is helping a more positive trend on margin compared to what we were expecting is the fact that our internal de-stocking, so satisfying customer orders from stock is coming to an end.

So we're getting that benefit as well.

Hi, good morning. Thanks for the question.

First, just to follow up on the sort of answer there to Matt's question, you talk about low to mid-single or did it price sequentially declining sequentially versus Q4? Can you just sort of help us?

I know this is a sales update, but just in terms of the direction of your raw materials, I just sort of think about things like Walgreens into Lanolin. Seems to be down sequentially and you over here quite a bit.

So just sort of the context of how that pricing sits versus your raw materials. And then the second, the clarification, on the pharma business, obviously sequentially sort of slight decline versus Q4.

But in terms of the healthcare ambitions for the year, I assume you're still expecting sort of strong, healthy growth for that platform in 2024. Thank you.

Charles, its David here. Just quickly on the raw materials, they're broadly trapped the way that we said they were when we updated you in February.

So down 2% to 3% in the first quarter, which as continues the trend that we saw in 2023 when raw materials were down by 12% through the year. We're pretty good when we look ahead into the next quarter and then it becomes more difficult to forecast what raw materials are looking like for the remainder of the year.

And again, as we said in February, we think that we're probably reaching the bottom in Q2. So we may even see a little bit of inflation as we get towards the end of the second quarter in-line with what we said in February with the first quarter seeing continued deflation.

And then the second question, was that all right, Charles? We'll come on to your second question…

I think it's a good reminder, though, that we do have some small bits of tactical pricing regain business, which we've talked about consistently, which is there's a discipline of time-bounding that. But that will be a minor contributor to our, the price dynamic in the sequential single-digit declines that we've talked about.

And in the whole pharma area, what you're saying is just more of a slow start in consumer health driven by some stock corrections more than anything else. But actually the platforms of the big platforms that we're obviously targeting, nuclear gas, and protein delivery and the like, continue to strengthen.

They should continue to strengthen through the year as new business starts to come on. We've coded in one or two interesting projects with revenue coming through the year.

So there's some phasing for the rest of the year on that. So I think a lot will depend on how we see consumer health, which is a relatively small part about how do we see that coming back.

But the rest of the pharma looks fine.

Yes, hi. with first quarter now under your belt, can you just help us understand how do you think about the phasing of the BBT, let's say 280, between first half and second half?

I mean, do you have a more updated view on how should we think in terms of phasing? Thank you.

Yes, I mean, it normally, it should be normal, shouldn't it, but we're coming out of this sort of second order effect of the pandemic. But I would say, I mean, it's difficult to call because I mean, a lot of this is around the volume loading of the plants, reconciling that with the margin recovery.

And also, a lot depends on how we see the life science business, particularly crop, whether it comes back, or not in any material volume. So I think it's still too early, Chetan.

I think the encouraging signs as we exit quarter one are obviously on the consumer side, more than anything else. And, you've got consumer care slightly ahead of where we expected life sciences slightly behind.

And the consumer care slightly ahead is on more of the volume starting to come back. So, we've seen some moderation in order intake, but still at a good level.

So we remain cautiously optimistic about consumer. So a lot of the sort of first half versus second half will depend on two or three different things, the volume loading in consumer care going forward and this rebound in parts of life science, whether it comes or not, will determine what, the sort of split, I think.

And that's the whole point this year of trying to update you quarterly. Just to give you, try and take you through the trends of each of the sub-businesses to better guide you, really.

And can I just quickly follow up on your comment on slight moderation in order intake in consumer? Do you think this is just a reflection of maybe some restocking in Q1, which is now maybe edging lower, or is this also something like a seasonality that you have seen in the past?

I'm just trying to...

No, I mean, I think, you've probably heard this from others as well. There's been some rebound.

the order intake in January, like December-January, was very strong, but actually the order intake for Croda consistently through the quarter has come up a little bit, but still at a very high level. So our order intake volumes and therefore value are still giving us, the optimism for -- although it will be cautious, given we're coming out of the pandemic, the cautious optimism that we're in a good place.

So exit rates in Q1 are fine. I think some people -- easter phasing is an excuse in our organisation.

There is an Easter phasing issue this year, which is sort of three days less in March than last year, but actually we see through that, and we see the continued momentum. I think what we're all trying to work out, I think whether you're in fragrance and flavours, whether you're in Croda, or whether you're in other parts of consumer is, where does the demand sit after that bit of restocking?

But it still seems pretty okay to us.

Hello, everybody. Thank you.

Good morning and thanks for taking my questions. Can I just ask a technical one on the consumer care segment, please?

Does the 5% constant currency growth include the contribution from Solis Biopec, i.e. is this...

Is it actually an underlying organic growth number on a scope-adjusted basis? And sorry, just to follow up on the earlier question, did I hear right to get to the midpoint of PBT guidance?

We need a second half-weighted recovery in life sciences. Thank you.

I will ask Louisa do the first one.

Sebastian, the answer to the first is yes. It includes a contribution from Solis Biotech, but it's fairly minimal.

As the business plan for that is sort of quite accelerated in the latter years, but it does include that.

Yes, and on balance, just to be clear, we didn't say that, but on balance is where we are at the end of quarter one, if you decode the statement, we're slightly ahead of where we expected in consumer, slightly behind in life science, I'll repeat that. If that trend continues, then, we will be -- we'll be in, obviously, in the end, comfortably in guidance.

So a lot depends on where consumer care goes from here and where life science goes from here. So one balance is the other, is the point we'll try to make.

Hi, two quick ones from my side. Can you provide sort of a quick update on the CFO change and if anyone has been found or where the process is at the moment?

And then two, can you sort of share a bit around your utilization rates and how they have progressed from the full year '23 and what you expect for the year to be some qualitative comments around that? Thank you.

Yes, I mean, we're in the final... I think we mentioned that on the call.

We're in the final stages of the CFO search. very pleased with that.

So an announcement will come when it comes. So we don't want to push that.

It's more about diary management and finalizing with the board, the PLC board. So that, we won't give a date on that, but it's not far away.

So, as I said, it's a good comprehensive process. I think utilization rates, I mentioned earlier on the call, if you just joined, is utilization rates are improving.

we're starting to feel that now, our multi-purpose sites are all in slightly different places. But when we look at our utilization loadings, they've gone up from -- typically last year, there were 50, 55%.

I'm looking at David to make sure that number's right. Yes, we're exiting quarter one at about 65%.

So clearly that's a benefit. And, that's going to help us because the margins are pretty stable, the gross margins in our world.

And the volume loading is the most important thing for us to make sure we can keep that going. So, as I said before, in the early stages of recovery of some of our markets, particularly consumer care and IS.

So, we're in a, we're in a high loading position now than we were at the start of the quarter.

Hi, just one question for me. I wonder if you could talk a bit about normal seasonality versus, I guess, the current sequential momentum you're seeing on sales.

Because obviously, I guess if you take Q1 at the moment, it implies you can step up in sales through the year. But I imagine there's also some seasonality anyway, so if you could give some guidance on volume momentum versus seasonality between quarters, that would be really helpful.

Hi, Amy. This is David again.

So the seasonality is the most distinct in life sciences where actually there's a strong Q4 weighting, particularly in season enhancements, but also a little bit of a second half weighting in crop protection. As Steve's alluded to, we would normally expect the first quarter to be quite good in consumer care because of the new year restocking effect that I think has certainly been apparent this year for understandable reasons.

But overall, we're seeing encouraging signs in consumer care that give us confidence for the remainder of the year, notably the fact that the growth is coming from all of our business units. The order book is 15% to 20% higher than it was this time last year, and North America is leading the way, which is obviously the area that's been weakest for us over the last 12 to 18 months.

So net-net, I think seasonality works in slightly different ways than the different business units, but we're confident given the encouraging start in consumer care that we can build from here.

Morning. Thanks for taking my question.

I have one on crop protection, please. Would you be able to provide any colour on volume price dynamics in the quarter, maybe some regional trends and your overall assessment of where we are in the stocking cycle for the division?

Thank you.

Yes, I'll provide some general colour. I'm in the team to give you some more data.

I mean, don't forget last year, quarter one was very strong for all of our businesses. So the comparatives are the most difficult quarter one.

Then obviously fell off the end of the cliff as we went into quarter two crop and industrial. That is, I think generally what our customers are saying is, there's still, it's not getting any worse.

You can see sequentially, it's broadly flat from quarter four. So, it's stable at a weak level.

And, the likelihood is it's going to, it's, it's clearly volumes are going to come back to some degree. And we would hope and but we can't be sure through the second half and beyond.

But the rate at which that volume comes back is still the big question. And a lot of the, a lot of our crop customers are still unsure as to how that comes back and it's different for each one.

But by and large, broadly, it's, it now feels like it's going to be North America coming back first, then Europe, then Latin America. I think Latin America have a bit more of a weather issue with drought and things like that.

But, we're in a good place there. We are with the number one delivery system supplier in the industry.

We're coded into thousands of formulation. So when it comes back, it will come back.

But, so I don't think it's anything structural. We just have to wait for it to come back.

But I'll pass to Louise there on the specifics of your first part of the question.

Yes, the only data point that I would give to support Steve's statement is we look sequentially. We've already indicated that at a total SBU level, we are flat quarter on quarter.

But North America is definitely in pole position with single digit growth with Amir and Latin behind. I mean, aid is looking good, but it's obviously a smaller business.

Hi. Morning, all.

Just two, please. Firstly, just in consumer care, given the very strong January, would you mind giving the monthly year-on-year growth?

Or if not that, at least the delta in growth between January and March? So we can understand the exit rate a little better.

And then secondly, just on these new delivery systems we're bringing to the market. Can you kind of give an idea of what the contributions from those might be, sales-wise, over the year?

Thank you.

Yes, just say the first question again.

Yes, could you give the monthly growth in consumer care? Please, to one, given the very strong January, just to understand the sort of the phasing of it.

It's a good question. It's a good try, as you say.

We are trying to give you quarterly, and now we're asking for monthly. Look, it's fact; we're not seeing a massive change month to month.

I think I would say that. It's not falling off the end of the clip, far from it.

So that's why we're still saying we remain cautiously optimistic. So we look at the order intake.

I think the other point, the broad point at making consumerism; we're getting back to a normalized order visibility, which is important. So we've got a better tracking, and I think our customers now are largely through this old de-stocking period.

So for us, getting better visibility in the near term is, we're getting more accurate assessments of that. But we're still coming through the final stages of a pandemic effect.

And I think quite rightly, our customers are quite cautious as well, and everybody's a bit cautious until we see the really firm trends coming through. But overall, we're pleased and encouraged with the progress.

On the pharma pipeline, we gave a number of examples in the four-year pack where each of those new delivery system technologies that we're bringing to market have peak annual sales values of around about GBP20 million. Now, those peak annual sales values are not in 2024, but a number of them will start to generate some revenue as 2024 progresses.

So individually, they're not material, but we hope there will be a decent contribution from those new delivery technologies in 2024.

Hi. Could you please quantify the growth in your drug delivery systems within healthcare?

And just a small follow-up on that would be, how do you account for FX pricing from the Argentinian Pesos? And if you could help us with the extent of that within the organic growth please, thank you.

Isha, hi. It's David here.

On the drug delivery platforms, the areas where we're seeing continued growth are in nuclear catheter delivery and protein delivery. So in line with what Steve said at the beginning, the areas of strategic focus for us are continuing to grow.

And the area that we've seen some sequential decline is in adjuvant systems because of the COVID normalisation and then in small molecules because of the de-stocking in consumer health. And I'll hand it to Louisa to talk a little bit about FX.

Just broadly on FX, we've got two drivers. Just in our general business, obviously we give you the framework around FX and what a movement in the dollar does.

We've had a little bit of adverse in the first quarter. Steve talked about a GBP4 million adverse impact at PBT level.

The rates are coming back in our favour. So we're still fairly neutral on that.

On the Argentinian piece, clearly a little bit more difficult to predict. We're still obviously managing some probably single digit million risk there for the year.

But the local team is moving to the degree that we haven't done it yet to dollar-based pricing. So we should come back into line with a more easy to predict framework and heuristic.

So Yes, dollar-based pricing where we can.

Good morning all. Thanks for taking my question.

The first one, could you just remind us what you expect for non-COVID LNC revenues for this year, please? The second one, companies like Unilever recently are stepping away or delaying their midterm ESG targets.

Could you just give us some flavour how that impacts the quota and your conversations with those customers, please? And then lastly, I know you don't guide for cash flow, but given the growth is improving, and Steve, what you mentioned earlier about improving utilization rates in the plant, what should we expect for inventory build for this year, please?

I'll start with the inventory question in cash. The cash flow in the quarter has been positive.

Obviously, we had that tailwind from the COVID-19 debtors in January, but our stock management continues to be good. We will be building stock as we go through the year, particularly as we try to balance the crop recovery, but our working capital guidance from the end of the year remains unchanged.

Yes, the non-carbon lipid revenue growth rates are high single digit. We think we'll be a bit below our sort of longer term run rate because the headwinds that we've described mid to high single digit is what we expect in the non-COVID pharma business.

Just your point on Unilever, I mean, we had our big cosmetics exhibition last week, so give us the opportunity, the exact committee to meet all of our senior customers. The themes are slightly different for each of them, as you'd expect, because their brands are positioned slightly differently as well.

But the big common theme is around sustainability. Everybody's moving to lower carbon in their products and trying to develop brands in that way, and that's given us a lot of reassurance that our strategy of moving to sustainable ingredients is the right one.

So we're on our way, if you like, with them, and I think each one has their own opportunities and their own challenges, so it's difficult to try and draw too many specific themes and come to around individual companies if that's okay.

Yes, no, I think it's -- thanks for the questions, everybody. And Yes, I mean, quarter one's been gone.

We'll guide you through each of the subsequent quarters, but encouraging start in some of our businesses, particularly consumer care and IS, but we've still got challenges with life sciences with crop and in consumer health primarily. So we'll monitor all of that with you and I will update you again in the middle of the year more fully.

So thanks, everybody, and we'll see you then.