Devro enjoys strong first-half performance
The company has shown a revenue of £115.3m, which is up 7.7% on the same time last year. And despite higher input costs, an operating profit of £20.7m was achieved, which Devro said was up 6.5% on H1 of 2011.
Devro chief executive Peter Page highlighted the “continued growth of global business” as a major factor in the company’s success. He said: “There has been growth in both developing and emerging markets, such as Latin America and south-east Asia. It’s sales growth all round – a 7.7% increase on the same period last year.”
Devro chairman Steve Hannam commented on the sales of the company’s premium Select range, which he said was designed to replicate the quality of sheep-gut in Devro’s developed markets. Hannam also said the product had continued to grow in Japan and Europe and Select now accounted for 8% of the company’s total sales, which was on target.
According to Devro the global collagen casing market has continued to expand, due to economic growth and increased meat consumption in emerging markets. It said the high price of sheep-gut and its limited supply had provided a good opportunity in developing markets for collagen casing.
Edible collagen sales were up in both Europe and the Americas but sales have been affected by euro difficulties, which had an impact on demand and sales. Collagen gel sales in the Americas remained close to their 2011 levels, but the company said this was due to one large customer reverting to collagen casings in 2011.
Devro will make a series of improvements to increase capacity and enhance productivity, with a £35m investment package – £10.2m of which has already been spent in H1. Lines recently installed in Scotland are now in full production and a new line in the USA is still being commissioned. Plans for the Czech Republic will also see a small number of lines being temporarily decommissioned to help with upgrades, which Devro said will continue into 2013 and will show a return by the end of 2013.
A net debt of £31.4m was also highlighted by the company. However, the debt is higher than the £22.7m disclosed at the end of December 2011, which the company said reflected the cash outlay of £15.8m on fixed assets.
Hannam said: “The outlook for the remainder of the year is for continued volume growth, particularly of sales of differentiated products such as Select, supported by further manufacturing improvements arising from our capital programme.”