Welcome to the Croda Q3 2026 sales update conference call. My name is Alan and I will be your coordinator for today's event. Please note this call is being recorded and for the duration your lines will be on listen only. However, you'll have the opportunity to ask questions at the end. This can be done by pressing star 1. Pressing *1 on your telephone keypad. If you require assistance at any time, please press *0 and you'll be connected to an operator. I will now hand you over to your host, Steve Foots, CEO, to begin today's conference. Thank you. Good morning, everyone. Thanks for joining. I'm here with Stephen and David, and a few highlights from me on today's trading update, and then we'll take your questions. So overall, Q3 sales were up 6.6% on an organic basis. Keeping us firmly on track to deliver both our full year '26 outlook and our financial framework for full year '28. Growth was led by Consumer Care, with Beauty exceptionally strong alongside good growth in Pharma and Seed. Breaking this performance down across each of our businesses, sales were up 11% organically in Consumer Care, with volume, price, and mix all positive, supported by our increased innovation activity. Beauty Actives had another exceptional quarter, up 19%. With Beauty Care also up 13%. This reflects a concentration of customer product launches continuing from Q2, ongoing strength in premium categories, stronger demand for innovation, and increased growth in affordable categories. Home Care was also strong, up 10%, and F&F grew 4%. against a strong prior-year comparator, and despite ongoing Middle East-related disruption and some temporary interruptions in China as we completed the transfer of production to our new facility. Life Sciences were up 2% organically, and absolute sales improved again sequentially. Pharma grew 5%, with continued growth in Pharma Ingredients, as we scale innovation in advanced excipients, and Pharma Solutions improved sequentially with more favourable phasing of project-driven revenues. This, together with 12% growth in Seed Enhancement, more than offset continued weaker demand in Crop Protection, where sales were down 9% against a very strong quarter last year, with farm incomes continuing to be under pressure. Industrial Specialties were down 1% organically, with growth in core sales offset by the anticipated reduction in the supply agreement sales. So on a regional basis, growth was strongest in Asia, where every business unit delivered organic sales growth. Beauty Active sales were particularly strong in North America as well as Asia. And Crop Protection was the main drag on performance, particularly in the Americas. So another quarter of innovation-led growth, we're seeing clear evidence that the actions we're taking are working. We're successfully refocusing our innovation, we're leveraging customer proximity, reinvigorating Beauty, we're rebalancing Pharma, and we're maximizing the returns from recent investments. Customer spending on innovation has increased as well, and that's coming through in our pipeline and in our projects with customers. So finally, our improving financial performance is being supported by our transformation programme, which is enhancing both growth and efficiency. We delivered $46 million of cumulative savings to the end of June, and we remain on track to deliver $100 million of annualized benefits and a $50 million reduction in working capital for full year '28. We expect further incremental savings in the second half and in '27, so particularly as we optimize our supply chain. Our outlook for full year '26 remains unchanged despite the ongoing geopolitical and macroeconomic uncertainty. We expect the demand trends that we've seen in Q3 to continue in Q4. And as usual, absolute sales are expected to be seasonally lower in Q4 than in Q3, as some customers manage their working capital into the year-end in line with previous years. So for full year '26, we continue to expect organic sales growth within our 3% to 6% range and a further increase in group adjusted operating margin. Our expectations for full year adjusted operating profit remain unchanged, and we remain on track to deliver our financial framework for 2028. Let me stop there and let me pass back to the operator to take your questions. Over to you. Thank you. If you'd like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, please press star 2. You will be advised when to ask your question. We will take our next question from Lisa De Neve. MS, your line is open. Please go ahead. potentially over the next 12 months? Thank you. Okay. Well, let's start with exit rates of Q3 and Q4 sales, and then we'll come to capital allocation with Stephen. I mean, Just a few points. Exit rates in Q3 are consistent with the entry rates in Q3, and we're seeing similar trends in October. We would say that customer inventories are broadly similar to the beginning of the year. And as we know, some customers manage their working capital into the year-end in line with previous years, but we're not seeing anything different from previous years. Hi. Good morning, and thank you for taking my questions. I'll start with 2. You delivered a very strong 3rd quarter. Can you share what you're seeing in terms of the order book? Going forward? And also, can you contextualize a little bit the comments you made around the 4th quarter in terms of the customer networking capital adjustments that could take place? Are you making a reference to history, or are you seeing anything of that in the markets? That's my first question. And then secondly, could you please give us a sort of update or reiteration of your capital allocation policy and your view on considering some special returns I think looking at Q4 sales, We would say expect demand trends in the business to continue. You know, it's positive in Beauty, particularly premium and demand for innovation. It's more stable in Pharma. It's challenging in Agriculture with farm incomes under pressure. So, the— expect the trends that we're seeing to continue as is. And I'll pass to Stephen on capital allocation. Morning, Lisa. Just on capital, I mean, we've obviously set out very clearly our capital allocation policy that we review regularly with the board. I mean, this is obviously a sales update, so we'll update on capital allocation when we get to the full year. I think a few points. We remain committed to maintaining the dividend, obviously. And we note that the current dividend payout is above our policy of 40% to 50%, but that we'll maintain that. We obviously want to maintain balance sheet strength. Leverage is only around 1.2, 1.3 times. And we've said consistently that we will not delever below 1x. So let's see where we get to at year-end, and we'll update you in February. Thank you very much. We will take our next question from Katie Richards, Barclays. Your line is open, please go ahead. Hi, good morning. 2 questions from me, please. Firstly, could you just give us some more information on the decline in crop sales? Was there a particular region that was responsible for this decline? And should we interpret this as a one-quarter event or something that might continue into next year? And secondly, if you could give us any color on the volumes and the price mix effects. Particularly in consumer care for this quarter. If you can get any respective product mix, that would be useful, please. Okay, well, let's start with crop and I'll pass to Stephen for the volume-price mix. Look, I mean, the way you should look at crop is the performance reflects a strong Q3 '25. It was up 19% in that period. And crop minus 9% continues to be impacted. You know, all of that is by weak farm economics. So we expect the crop performance to be down year on year following that strong '25. And overall, '25 versus '24 was up 14%. So, Ag commodity prices, though, have inflected recently, and that's continued through the year. So we should— that should provide some support for farmer economics in '27, but unlikely to see that in Q4. So in terms of the regions, it's mainly the Americas, which is particularly negative. Latin America through Brazil and North America. And you can probably see that aligned to many of our customers that are out there at the moment. So, so it reflects that. Over to Stephen. Yeah, hi. Just on volumes. So look, Consumer Care was very healthy with volume increases, which was great. And in fact, price and mix also was very positive. Life Sciences volumes were understandably lower, and that was driven by crop. So where that leaves us overall on a group basis is that volumes again were positive except for crop. So I think no surprises there. Very useful. Thank you. We will take our next question from Chetan Udeshi, JPMorgan. Your line is open, please go ahead. what Croda is delivering in terms of innovation. Like, it's sometimes hard for us to fully separate out the two given it seems like some sort of a broad-based improvement in the beauty trajectory for you but also some of your peers. The second question I had was I'm a bit puzzled by your fragrance number of +4% because we've seen much higher numbers from from other fragrance companies. I know you have relatively high exposure to Middle East as a region in that business, but it feels like for others, Middle East has ceased to be a material headwind in Q3. So what is holding back Croda's growth in fragrances? Yeah. Hi, morning. Thanks for taking my questions. First question. On the strong beauty growth, Steve, maybe you can help us understand how much of this is rising tide lifting all boats versus Thank you. Yeah, sure. Well, let's take them in turn. I mean, beauty, we're just seeing, you know, you're seeing some outperformance on beauty actives and beauty care. And in actives, we've got this 19% sales growth, which is exceptional. And it's aided by some concentration of customer product launches that's continued from Q2 into Q3. But demand is being driven largely by this ongoing strength in moving to premium. You know, we benefit from the move to premium. It's increasing innovation from us through our framework and also through our customers. You know, our customers are innovating more, and that's led by the multinationals developing their brands. But it's also, you know, it's a high level of growth coming from local and regional. And we like formulation churn. When multinationals develop their brands, they're changing their formulation, which helps Croda. So, you know, we're very pleased with that. The actions we're taking to grow market share in more affordable categories are having a benefit as well. And I think when you look at actives, it's 5th consecutive quarter of double-digit organic sales growth. But clearly, we've got tougher comparisons into next year. So, you know, we're not expecting anybody to pencil in 19% for every quarter. But overall, you know, the innovation mojo in Croda is well back in beauty, and that will continue. In F&F, yeah, I mean, look, it's one quarter we've had, I mean, 3 years of outstanding performance. It was a strong comparator, 13% in, in Q3 '25. Full year to date is up 7%. The 2 areas that were impacted in Q3, which are Tempria It's adversely impacted by Middle East-related disruption in a small part of the business and some temporary interruptions to China sales as production was transferred to a new facility. But we expect a stronger Q4 with the new China facility fully online. So we're very happy with the performance in F&F. Can I maybe follow up? It seems your top line is sort of trending pretty well in terms of organic growth, but yet you are not raising your EBIT forecast. I'm just curious what is holding back or what's the forecast or guidance on EBIT already incorporating this trend on top line? Yeah, hi, Chetan. I'll pick that up. So look, we're obviously pleased with the trends of progress in the year and the quarter, and we've been very clear that we expect those demand trends to continue into Q4. But look, there's a number of puts and takes across the business, isn't there? Very, very happy with Beauty, but the crop environment is tough and it remains a headwind. And I'd say that the macros, the geopolitical situation kind of remains. So look, overall, we're confident with the guidance and we obviously look forward to updating you further when we get to year-end. Thank you. We will take our next question from Sebastian Bray, Berenberg. Your line is open, please go ahead. Hello, good morning, and thank you for taking my questions. Can I probe a little on the pharma and crop protection growth? In crop protection, were both prices and volumes down? I ask this because to Chetan's comment about not necessarily— about, let's say, good mix in the rest of the business and no guidance raise on the margin side. It could make a bit of a difference if Croda ended up cutting prices in addition to volumes. And on pharmaceuticals, is the— the way the press release phrases the improvement in the vaccine and lipids business is very much to the tune of, well, phasing was good in Q3. and we see what happens. Are there any signs that the underlying growth rate is starting to pick up either in the core excipients business or in the vaccine adjuvants and lipids business? Thank you. Okay, well, let's start with pharma, and I'll pass to Stephen on crop mix. Yeah, I mean, look, I mean, the way to look at pharma is we've seen continued good growth in pharma, driven largely by pharma ingredients. And with Project Flagship, which we have as our sort of our overall main project to deliver innovation in that area, that's working well. So, for the core ingredients, you're seeing growth coming through, scaled particularly by the advanced excipients, the advanced excipient growth coming through well. Pharma Solutions showed a sequential improvement versus Q2 '26, and with more to come in Q4. So, you know, there's more favorable phasing of the project-driven revenue starting to come through. So, you know, pharma becoming more stable than it was, and innovation-led, particularly in, well, in both businesses. In crop— Yeah, Sebastian, I'll pick up crop. And just a reminder, we're lapping Q3 '25, as Steve said, 19% growth. So, you know, that's the— that's what we're comparing against. Just in terms of volumes and price, Price is actually up in crop. It's the volume that we're seeing and that the sector is seeing. So, yeah, that's where we've ended up. Thank you. We will take our next question from Miles Alsup, UBS. Your line is open, please go ahead. Great, thank you. You kind of obviously are around a year into the transformational plan. As you kind of get into it, are you seeing more opportunities? I mean, could we start thinking about Yeah, that 20% 2028 margin being kind of risk to the upside. And then maybe just on 2027, what do you see as the the key risks to your business, the different areas? Thank you. Miles, morning. Thank you. Look, we remain obviously confident on the full year, but also the '28 framework that we're working to. As you say, that's margin, you know, back to 20%, and we've said that that would just be a sequential improvement. We're on track, as you can hear. The margin is always driven by a combination of growth and those transformation benefits. We're on track with those, and we'll just continue to deliver. In terms of the risks for '27, I think, you know, when we're looking at the top of the company and with the board, clearly it's macro risks that are so prominent. And, you know, who knows what's going to happen next year, but we tend to look at the geopolitics of that. But I think, you know, in the businesses, we've got a high level of innovation coming through. And, and I think the only business that we want to see, you know, significant improvement in is obviously in crop, and that's going to be a macro driver that allows us to do that. So, we're encouraged with the commodity prices and the inflection there coming through, which should help farmer incomes next year. Well, thank you. We will take our next question from Artem Chubarov, Rothschild & Co Redburn. Your line is open, please go ahead. Thanks. Good morning, everyone. Thanks for taking my question. I'd like to ask about supply agreement. I believe you mentioned that you've seen sales declining, which we've seen happening for several years now. So would you remind us what the plan is when your agreement comes to an end? I believe from memory it's something like mid towards end '27. Are you planning to gradually phase the sales out and replace them as you done before, or is there a risk that we see more of an abrupt drop of sales? Yeah, I mean, a couple of points. I think, you know, that the core part of that Industrial Specialties business is growing well. For Croda, and it has good margins, and it pays its way in the factories that they supply. In terms of supply agreement, I mean, it comes to an end in the middle of next year. But I mean, we'll expect to continue supply beyond that. I think what you should see with the, you know, the Cargill sales at the moment is it's moderating, but it would moderate to a level which will be stable, and we're not far away from that. So, you know, it's not going to go down to nothing, and we're not far away of it. Just stabilizing. But the core business in there is growing pretty well for Croda. Understood. Thank you. We will take our next question from Jens Lindqvist, Investec. Your line is open, please go ahead. Yes, good morning, all. Just one question left from me. In spite of the China facility migration, Asia was again very strong, up 12%. How much of that was China? And is that regional growth primarily beauty, or is it broad-based across pharma and agri? Thank you. I mean, the Asian growth is broad-based. It's across all categories, and it's innovation-led. And it's— You know, China plays its part. India does. Japan, Korea. You know, we've got good growth, well-balanced growth across the region. So, you know, healthy growth, we would say. Okay, thank you. As a final reminder, if you'd like to ask a question, please press star 1 on your telephone keypad now. We will take our next question from Martin Rudiger, Kepler Cheereux. Your line is open, please go ahead. Yes, thanks for taking my 2 questions. First of all, just a clarification question from an earlier question because I had some connection problems to understand what you said about the organic sales growth of 6.6% and splitting in volumes and pricing. I just understood that crops were here, volumes were down, prices up. But on a group basis, is this 6.6%— is that equally split into volumes and pricing? That is my first one. And secondly, can you reveal your full-year energy cost bill How are you protected against rising energy costs? And is there any time lag in passing them on because of the contract duration for your products? Okay, should I pick up? So we'll do the volume-price mix. Yeah, just to reiterate if you missed that, Jens. So what I'll start with is consumer. So just to repeat, the consumer care volume growth was very healthy, as was price and mix. So all very positive. It's obviously Life Sciences where we've got volumes down, as I mentioned, and that is Croda. Price and mix in Life Sciences are both positive. So where does that leave us overall with the kind of the group volumes and the shared service sites? So we're positive except for crop. And as a result, group price mix is positive, and the growth is coming through from both business and product mix, but particularly the business mix, obviously. Just on hedging, which we've covered before, there's no change there. You should understand that energy represents a relatively small proportion of our input costs. It's around 3% of sales, and we obviously do buy forward and we hedge it, lock in So typically, we start each year with 40% to 60% of energy inputs hedged. And look, as we've said continually, we seek to pass on increases in prices— in input prices, I should say, immediately, and that practice has continued. Thank you. We will take our next question from Nicola Tang, BNP Paribas. Your line is open, please go ahead. Hi, everyone. Linked to a similar topic, I was wondering if you could give us an update on what you're seeing across your raw material basket, and also thinking about into next year, being mindful of weather disruptions related to El Niño and so on. And then a second question, just in terms of sort of exit rate from '26 as we go into 2027. Is it fair to say that it's mainly the crop side and to some extent F&F which is perhaps underperforming where you'd like to be? But the other sort of end markets are now kind of, I guess, aligned with your midterm ambitions. Thank you. Yeah, I mean, just on raw materials, I mean, there's nothing big in the basket that we're worried about. If anything, there might be some modest increases going into next year, but it's still difficult to say, but we're not expecting significant raw material inflation. In terms— and the second question was more around exit rates into Q1. Yeah, I mean, the way to look at it, I think we just said that, you know, Q4 demand trends to continue as they are. So, you know, we project forward, you know, beauty very strong, stable in pharma, and it's the agriculture really which is in crop protection, which is the area that we want to see upside. You know, that's— you know, we've got to see that come through with farmer income increases. F&F, we're fine with. Maybe, Nicola, just to add on the raw materials. So raw materials in Q3, they're up around 2.5% year on year, and that's obviously mainly petro-driven, and that's really sort of consistent with the full-year number. But we are seeking, as I said earlier, to pass on those costs to customers. As I think about raws going into Q4, we're kind of expecting them to be broadly flat off Q3, but obviously higher year on year. And it's particularly the petro EO/PO prices that for us are elevated. There are no further questions on the line, so I will now hand you back to your host for closing remarks. Yeah, thanks, everybody. Yeah, another quarter of healthy growth for the company and delivering on our promises as well. I think 3 points to call out from the release. The portfolio is delivering, and we're getting consistent revenue growth coming from that. Secondly, innovation is definitely stepping up. The Croda Innovation module coming back strongly, and the transformation remains on track. So, thanks very much for the questions, and we'll see you again in February. Thank you for joining today's call. You may now disconnect.