By Karen Rebelo
(Reuters) - Specialty chemicals maker Croda International Plc, feeling the effects of a strong British pound, warned on Tuesday that this year's pretax profit would be lower than last year's.
However, the company, which makes chemicals used in cosmetics, pesticides and detergents, said it expected to achieve "progress" in its underlying profit.
Croda, whose customers include Unilever Plc, L'Oreal SA and Procter & Gamble Co, generates only about 5 percent of revenue in the UK but reports in pounds.
"At the moment we've got a perfect storm," Finance Director Sean Christie told Reuters. "Sterling is about the strongest currency in the world and we make a lot in Europe as well, and (the euro) is the second-strongest currency in the world."
The pound has risen about 11 percent against the dollar and 8 percent against the euro over the past year.
Croda's adjusted pretax profit fell 6 percent to 125.3 million pounds in the first half ended June 30 from 133.2 million pounds a year earlier.
Sales fell 4.5 percent to 537.4 million pounds as revenue fell in all three of its divisions - consumer care, performance technologies and industrial chemicals.
Currency translation reduced sales by 38.3 million pounds, the company said.
Analysts on average had expected a pretax profit of 125.2 million pounds on revenue of 540.8 million pounds, according to Thomson Reuters I/B/E/S.
The company, whose chemicals are used in anti-ageing and anti-wrinkle creams, said sales of its core consumer care business, which generates over half of overall revenue, were also hurt by weak demand for mass market cosmetics in Europe.
Croda, which raised its interim dividend to 29.5 pence per share from 29 a year earlier, reported a pretax profit of 250.1 million pounds in 2013.
"We believe Croda now needs some currency relief and a return to underlying growth in consumer care," JPMorgan Cazenove analyst Martin Evans wrote in a note.
Croda's shares were down 1 percent at 2193 pence at 0950 BST on the London Stock Exchange. Up to Monday's close, the stock had fallen about 10 percent this year.
(Reporting by Karen Rebelo; Editing by Ted Kerr)