Croda International Plc

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Croda International Plc

Cowick Hall, Snaith, Goole
East Yorkshire DN14 9AA
United Kingdom
Telephone: ( + 44) 1405-860-551
Fax: ( + 44) 1405-861-767
Web site: http://www.croda.co.uk

Public Company
Incorporated: 1925
Employees: 4,000
Sales: £365.9 million ($546.2 million) (2000)
Stock Exchanges: London
Ticker Symbol: CRDA
NAIC: 32519 Other Basic Organic Chemical Manufacturing

Croda International Plc is the world’s leading specialist manufacturer of oleo-chemical ingredients and products for the beauty, hair care, healthcare, and household products industries. The company’s oil-based products, developed for the most part from natural sources, are used in a variety of applications, ranging from shampoos and cosmetics to treatments for asthma and varicose veins. The company remains largely unknown by consumers who nonetheless most likely use Croda’s products on a daily basis—yet the company has also gained some fame as the maker of “Lorenzo’s Oil,” as the company’s synthesized rapeseed extract was called in a major motion picture. Croda has decided to focus entirely on its core specialty products and therefore eliminate its industrial chemicals and coatings divisions. In 2000, the company sold off its adhesives business, and in early 2001, Croda sold off its resins operations. Croda’s focus on its core oleo-chemical products reflects the strong demand and high margin for these products, which are essential to such globally operating businesses as Unilever, Procter & Gamble, Avon, and Revlon. Croda itself is a multinational corporation, with headquarters in East Yorkshire, England, guiding the operations of its production facilities in Europe, North and South America, Asia, Africa, and Australia. One of the last of the United Kingdom’s independent publicly listed chemicals companies, Croda has joined in the worldwide chemicals industry consolidation, while remaining itself a potential takeover target by one of its far larger competitors.

Manufacturer of Grease in the 1920s

George Crowe launched Croda as a maker of lanolin—a grease derived from sheep’s wool—at a former waterworks near Rawcliffe Bridge, England. George Crowe, who had previously operated as a shipper, was pursuing an idea for producing lanolin introduced to him by an acquaintance, one Mr. Dawe. At the time, lanolin was becoming an important product for its many applications, which ranged from serving as a base for cosmetics to functioning as a waterproofing agent for rope and textiles, and as a dressing for leather goods. A number of extraction processes had been developed on the European continent for producing lanolin, but the United Kingdom, with no domestic lanolin production, was forced to rely on imports of lanolin.

Crowe purchased the Rawcliffe Bridge site in 1925 for £7 and installed his nephew, Philip Wood, then 22 years old, as manager of the new business. Crowe’s optimism was reflected in the choice of the company’s name—combining “Cro” from Crowe and “da” from Dawe—yet Dawe’s process quickly proved flawed. Dawe disappeared, having at least given Croda part of its name. Wood did not give up, however. With the help of a chemist brought over from Belgium, Wood went to work developing a new extraction process. By the end of the year, Croda had succeeded in producing its first lot of lanolin—three barrels’ worth.

Despite this success, the company barely kept afloat through the end of the decade. If lanolin had found a variety of uses, the company was unable to profit from the as yet small market, and its losses began to mount. By 1930, the company had gone through all of its funds. Croda might have gone under, if not for the release of a report from the National Physical Laboratory that revealed another attribute of lanolin, that of its ability to prevent the formation of rust. This newly discovered property gave the lanolin market a boost and before long Croda had recovered financially.

Croda continued to grow through the 1930s, despite the worldwide depression, and by the end of the decade had gained a foothold not only in its domestic market, but also in the export market. Yet the outbreak of World War II forced the company to turn its production to the manufacture of camouflage paints, gun cleaning oils, insect repellents, and other products needed for the British war effort. The company’s government contracts, however, provided no profits.

Following the war, Croda converted its production back to its original interests. In 1949, the company met with a new setback when Philip Wood died at the age of 46. With no ready successor—Wood’s son, Frederick, was only 23 at the time—the company restructured its direction into a management committee. Frederick was given the job of sales director. Then, in 1950, the younger Wood was sent to the United States to establish a new subsidiary operation there. The company’s presence in the United States was to prove a key component to its later success. The timing was certainly right, as the cosmetics and personal care market was just beginning to grow into one of the world’s most lucrative markets.

International Chemicals Group in the 1960s

Wood opened an office in New York City and hired his first employee, Kurt Neulinger, who had formerly worked for the company’s U.K. office. Wood and Neulinger began touting Croda Inc.’s first products, lanolin oil and lanolin alcohol, to the companies in the emerging personal care sector. When Wood was called back to head the parent company in England in 1953, he was replaced as president by Michael Cannon, who was the son of a former assistant to Philip Wood. Cannon, with Neulinger as vice-president, began to expand Croda Inc.’s customer base, built around three of its parent company’s core products—Lanolin, Hartolan, and Polawax. All three were to help Croda build a leading position for itself in the burgeoning cosmetics and personal care products industries. But it was especially Polawax, a nonionic self-emulsifying wax particularly used for hair care products, that helped Croda’s early U.S. sales. A large-scale order for Polawax from one of the largest American cosmetics companies helped establish Croda as a major ingredients supplier to that market.

In the United Kingdom, under Frederick Wood, Croda was enjoying a period of rapid growth as the company expanded into the production of a variety of oleo-chemical products (i.e., oil-based), while also developing an international presence. By the early 1960s, the company had launched subsidiaries in Italy and Germany, and then, farther abroad, in Japan. Each of these ventures proved successful as the company’s fortunes rose on the booming cosmetics and hair care industries. By then, too, Croda had outgrown its original facilities—while production continued at Rawcliffe Bridge, the company’s headquarters had moved to Snaith and then, in 1956, to Cowick Hall.

The following year, Croda, which had been growing organically by extending its product range and its sales both at home and overseas, made an important acquisition. In 1957, the company purchased, through its Croda Inc. subsidiary, the lanolin business from Hummel Chemical Company, based in Brooklyn, New York. That acquisition gave Croda the financial backing to build its first production facilities in the United States. The following year, the company’s new subsidiary, called Hummel Lanolin Corporation, began production from its own facility in Newark, New Jersey.

The 1960s saw the company undergo a dramatic expansion beyond its lanolin and personal care products base to become a diversified specialty chemicals business with interests in a variety of industries. After going public in 1964, Croda went on an acquisition spree, launching a series of takeovers—not all of which were welcomed—and adding such large-scale competitors as United Premier and Midland Yorkshire Holdings. In 1968, Croda acquired British Glues & Chemicals, giving Croda that company’s Toronto, Canada-based WH Harris & Co., which became a key component of Croda’s specialty chemicals production. Meanwhile, in the United States, the company’s Croda Inc. subsidiary continued to boost the parent company’s fortunes with its own successes. One of these was the launch of a men’s hair dressing called Score, which helped establish the company as a leading provider of ingredients and products for the rapidly growing ethnic hair care sector.

Croda International lived up to its name as the company expanded worldwide, establishing subsidiaries and partnerships in Spain, Austria, Australia, Canada, South Africa, Mexico, New Zealand, and Zimbabwe. The company was also expanding in the United States, with the acquisition of the Bald Eagle Corporation, based in Pennsylvania, in 1965. In 1976, the company formed a joint venture, Croda-Carson, with the Carson Chemicals division of Quad Chemical Corp. and began producing ingredients for the laundry products market. After acquiring full control of the partnership in 1981, Croda changed that subsidiary’s name to Croda Surfactants. In 1987, the company merged its four U.S. subsidiaries—Hummel Lanolin, Bald Eagle, Croda Surfactants, and Croda Inc.—into a single unit, Croda Inc. The company then shut down its Newark plant and moved much of its operations to a new site in Edison, New Jersey.

Company Perspectives:

Croda. You may not recognise our name. We’re not a household name. You won’t find our products in the shops. But Croda helps to create household names. We sell to industry, not to the consumer, so our products form part of other people’s products and it is these, which are promoted and recognised by the general public.

You may not know us but our products play an important role in all our everyday lives.

Croda remained largely unknown to the consumer market, despite its position as a leading supplier of ingredients to many of the world’s largest cosmetics and other personal care and household products groups. In the mid-1980s, the company nonetheless achieved a degree of recognition as the developer of a fatty acid derived from rapeseed oil that proved successful in treating a rare disease, adrenoleukodystrophy. That product helped save the life of a young Italian boy. The story was turned into a successful film, and the Croda oil became known as “Lorenzo’s Oil,” after the name of the film. The company had also gained the attention of a competitor, which had launched a takeover attempt of Croda in the early 1980s. Yet Croda clung to its independence.

Oleo-Chemicals Specialist in the 21st Century

Despite its brief bout of consumer popularity, Croda remained focused on serving its corporate customers. Croda also retained an interest in new product categories. In 1988, the company added a new line of products when it acquired John Kerr & Co. Based in Manchester, England, the Kerr company was founded in 1905 as a supplier of fire extinguisher products before becoming, in the 1930s, a producer of fire extinguishing foams and liquids.

In the 1990s, the company’s business was organized into three primary divisions, those of Oleo-chemicals, Industrial Chemicals, and Coatings. During the early 1990s, the company focused on expanding its coatings business, making a number of acquisitions that also brought it into the manufacture of ingredients for paints. Yet by the late 1990s, Croda decided to streamline its business. The rapid consolidation of the worldwide chemicals industry—which saw the creation of a number of massive, globally operating companies—was making it more and more difficult for the company to compete in a number of its markets.

At the end of the decade, Croda restructured its operations to focus on two core components, Oleo-Chemicals and Industrial Chemicals. The company moved to sell off much of its newly non-core operations, including its soap manufacturing wing and its paints and dyes operations. By the year 2000, Croda was prepared to go still further in its restructuring. The company now decided to concentrate entirely on its high-margin oleo-chemicals division and begin exiting from its industrial chemicals production. This process was begun with the sale of its entire adhesives business to Sovereign Specialty Chemicals Inc., based in the United States. In February 2001, the company unloaded its resins operations to Cray Valley Ltd. The company expected to sell off its remaining industrial holdings in the early years of the new century.

The company’s focus on oleo-chemicals was at the same time strengthened by a number of acquisitions, including the 1998 purchase of Westbrook Lanolin, based in the United Kingdom, which specialized in developing lanolin-based products for the medical market. Croda’s presence in the healthcare market was further enhanced by the development of natural oil-based treatments for such conditions as varicose veins and asthma. Meanwhile, Croda’s beauty products and cosmetics activities were given a boost by its 1997 purchase of France’s Sederma. That company had become an important ingredients supplier through its development of ceramides—complex lipid molecules designed to adhere to the skin and provide waterproofing and moisture-loss protection. Croda also entered the fast-growing dietary supplements field, using its capacity to produce highly purified ingredients. Croda had successfully made the transition to the world’s leading independent specialty oleo-chemicals group. Yet, as the company competed in a market increasingly dominated by global mega-corporations, some observers began to question just how long into the new century Croda will be able to maintain its independence.

Key Dates:

1925:: George Crowe buys abandoned waterworks at Rawcliffe Bridge, creates Croda, and places nephew Philip Wood in charge of producing lanolin.
1930:: National Physical Laboratory attributes rust-prevention properties to lanolin, opening new markets for Croda and rescuing the company from bankruptcy.
1949:: Philip Wood dies; Croda’s management is reformed under a management committee.
1950:: Frederick Wood, son of Philip, is sent to New York to found company’s U.S. subsidiary, Croda Inc.
1953:: Wood is called back to United Kingdom to take over leadership of company.
1957:: Croda Inc. acquires Hummel Lanolin and begins manufacturing in newly built Newark facility.
1964:: Croda goes public on the London Stock Exchange and begins aggressive expansion drive.
1965:: Croda Inc. acquires Bald Eagle Corporation in Pennsylvania.
1968:: Croda acquires British Glues & Chemicals, which also gives it operations in Canada.
1976:: Croda Inc. begins Croda-Carson joint venture with Carson Chemicals.
1981:: Croda takes over full control of Croda-Carson, which is renamed Croda Surfactants.
1987:: Croda Surfactants, Hummel Lanolin, and Bald Eagle are merged into Croda Inc.
1988:: Croda acquires John Kerr & Co. and enters production of fire extinguisher chemicals.
1997:: Croda acquires Sederma of France, a maker of cer-amides for cosmetics and skincare applications.
1998:: The company begins restructuring to focus on core oleo-chemicals market; sells off its paints, dyes, and soap operations; and acquires Westbrook Lanolin, a maker of medical-grade lanolin-based products.
2000:: Croda continues its reorientation with the sale of adhesives business to Sovereign Specialty Chemicals Inc.
2001:: Croda sells off its resins operations to Cray Valley Ltd. and plans a full exit from its industrial chemicals business.

Principal Subsidiaries

Croda Chemicals Ltd; Croda Colloids Ltd; Croda Food Services Ltd; Croda Universal Ltd;Westbrook Lanolin Company; Croda Argentina SA; Croda Surfactants (Australia); Croda do Brasil Ltda (Brazil); Croda Canada Ltd; Croda spol s.r.o. (Czech Republic); Croda Food Services Ltd (Ireland); Croda France SA; Sederma SA (France); Crodarom SA; Croda GmbH (Germany); Croda Hong Kong; Croda Magyaroszág Kft (Hungary ); Croda Chemicals (Pvt) Ltd (India); Croda Italiana SpA (Italy); Croda Japan KK; Croda Mexico SA de CV; Croda Poland Sp z o o; Croda Singapore Pte Ltd; Croda Chemicals (SA) Pty Ltd (South Africa); Croda Korea (South Korea); Croda Oleochemicals Ibérica SA (Spain); Croda Nordica AB (Sweden); Croda Inc (U.S.A.); Croda Universal Inc (U.S.A.); Croda Zimbabwe (Pvt) Ltd; Croda Chemicals International Ltd; Croda Cosmetics & Toiletries Ltd; Croda Overseas Holdings Ltd; Croda World Traders Ltd; Croda Investments BV Industrial Chemicals (Netherlands); Croda Application Chemicals Ltd; Baxenden Chemicals Ltd; Croda Distillates Ltd; Croda Fire Fighting Chemicals Ltd; John L Seaton & Co Ltd; Celtite Pty Ltd (Australia); Croda Uniser SA (France).

Principal Competitors

ATOFINA; BASF Aktiengesellschaft; Ciba Specialty Chemicals Holding Inc.; Clariant Ltd; The Dow Chemical Company; E.I. du Pont de Nemours and Company; Henkel KGaA; Hercules Incorporated; Imperial Chemical Industries PLC; Mitsubishi Chemical Corporation; Rhodia SA; Sumitomo Chemical Company, Limited; Union Carbide Corporation.