(Reuters) -Croda, which supplies ingredients to global cosmetic majors such as Estee Lauder (NYSE:EL), cut its annual profit outlook on Monday, hurt by destocking and weak demand, mainly in key beauty care business in North America.
Shares in the FTSE 100-listed UK speciality chemical group slid as much as 11.5% to 4,242 pence - their lowest since April 2020 - in early trading.
Retailers selling beauty products globally have been battling weak demand for much of the year, amid a slow recovery at duty-free and travel destinations and especially in the key China market.
At the same time, consumers have been spending less on non-essential items due to high inflation, while companies struggle to protect profit margins as costs surge.
"Customers have continued to reduce their ingredient inventories in consumer care, crop and industrial end markets, due to a combination of destocking and a weaker demand environment," Croda, which also counts Unilever (LON:ULVR) and Procter & Gamble among its customers, said in a statement.
The company now expects 2023 group adjusted profit before tax of 300 million pounds to 320 million pounds ($366-$391 million), compared with company-compiled analysts' average estimate of 369.6 million pounds. It had previously expected 370 million-400 million pounds.
Croda's consumer division, its biggest, serves the beauty, fragrance and home care markets, and makes up half its annual revenues.
Third-quarter sales volume in its beauty care business was lower than expected in July and August, with the North American market not recovering from weakness in the previous quarter.
Croda, headquartered in Yorkshire, said it had implemented several cost-cutting measures since June, including optimising production through plant shutdowns and reduced shift patterns.
It has been shifting focus to its life sciences and consumer divisions, after completing the sale of most of its performance technologies and industrial chemicals division to commodities group Cargill Inc last year.
Shares of its rival Synthomer (LON:SYNTS) were down 1.3%, and the broader FTSE 100 dipped 0.1%.
($1 = 0.8193 pounds)