UK's Croda to pass on tariff-related costs to customers through surcharge

-Croda International said on Wednesday it plans to pass on any additional costs from the U.S. tariffs to its customers, as the chemical company looks to shore up its profit amid a high-inflation environment.

"Although our well-balanced local manufacturing and procurement model helps to mitigate our direct exposure to tariffs, we are assessing the likely impact and intend to apply a tariff surcharge to cover any associated incremental costs," Croda said while reporting its first-quarter results.

WHY IT MATTERS

The century-old company, which makes specialty chemicals, reported a fall in annual sales and profit in 2024. It had also announced plans to hit 25 million pounds ($33.31 million) in cost-saving measures in 2025 to help offset rising costs.

With alternative sources of supply limited in many cases, Croda's plans to pass on any incremental costs to customers may be something clients will have to accept, analysts at Hargreaves Lansdown said in a note.

CONTEXT

Companies worldwide are assessing the impact of the global trade war sparked by U.S. President Donald Trump's extensive tariffs, which has fueled fears of a recession.

Croda's sales from North America accounted for almost 24% of its annual revenue in 2024.

The company supplies ingredients used in the beauty, agriculture and pharmaceutical industries, which have been hit by tariff uncertainty.

BY THE NUMBERS

Croda's first-quarter sales rose 9% to 442 million pounds on a constant currency basis from a year ago.

It left its forecast for 2025 adjusted pre-tax profit unchanged.

Analysts on average are expecting Croda's annual profit to be 209.8 million pounds, according to a company poll.

MARKET REACTION

The company's shares rose as much as 10% on Wednesday after the first-quarter update, but are down about 20% this year as of the previous close.

Given the prevailing macro-economic confusion, Croda's reaffirmed forecast is a relief to investors, analysts at Hargreaves Lansdown said.

($1 = 0.7506 pounds)

(Reporting by Raechel Thankam Job and Chandini Monnappa in Bengaluru; Editing by Shreya Biswas)