Devro cites emerging markets as growth driver in 2019

By Aidan Fortune

- Last updated on GMT

Devro cites emerging markets as growth driver in 2019

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Growth in emerging markets has helped collagen producer Devro to maintain profits during 2019 however it warned that future success could be impacted by the Coronavirus.

In its audited full year results for the year ended 31 December 2019, Devro posted a slight drop in revenue from £253m in 2018 to £250m while its profit before tax rose by £1m to £33.1m.

The business attributed successes to strong growth in emerging markets, with sales volumes up 7% year-on-year. This is in stark contrast to weak demand seen in the UK, Japan and Europe, resulting in sales volumes to mature markets ​declining 3% for the full year.

Devro chief executive officer Rutger Helbing said: “We continued to focus on our growth plans throughout the year, defending and building upon our strong market positions in mature markets and targeting to increase our share in emerging markets. Once again, and in line with our strategy, we increased our sales in emerging markets as a percentage of Group volumes. Emerging markets growth for the year was 7%, markedly different from the decline of 3% in mature markets where the demand environment was weaker. After a slow start to the year, we saw modest edible collagen volume growth from the second quarter onwards, resulting in Group volumes for the year being flat.

“The 2019 progress in executing our 3Cs strategy further underpinned the Devro difference, with our focus on collagen, customer intimacy, technical expertise and as a globally integrated player. We are confident that our growth plans, combined with a continued focus on cost savings and ability to provide the capacity required for growth utilising our current footprint, further support the strong cash generative nature of the business and our attractive margins.

Helbing added that the business has a positive outlook for 2020 with opportunities present in the snacking market however he did warn that Coronavirus (Covid-19) may have an impact on results.

“In 2020 we expect to achieve good volume growth in emerging markets. In our mature markets we expect volume growth in the North American snacking market and, whilst we anticipate a continuation of the challenging market conditions in the UK and Europe (particularly in the first half), we expect Group volumes to be ahead of 2019. In addition, cost savings are expected to more than offset inflationary cost pressures. Absent any material adverse impact of Covid-19, the Board expects good progress in 2020.”

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