DEVRO, the sausage skin maker, has seen a surge in sales in the UK in the first half of the year as shoppers trade down from premium products.
The Lanarkshire-based company said yesterday that after several years of falling demand in the UK, its largest market, sales rose 6.1 per cent in the six months to 30 June.
Chief executive Peter Page said the reason for the boost was a move by co
nsumers from sausages that use gut to the slightly cheaper collagen skinned products.
Page said he believed the change was a result of the spending squeeze, citing research that found the average family's shopping costs £1,000 more than last year.
He added: "Unless shoppers are earning more than that extra they're going to have to change their product selection."
Devro's UK growth has also been aided by a jump in the price of gut, which has increased by as much as 200 per cent amid falling supply.
"What some of our customers are telling us is that they're interested in using collagen products instead of gut because of price. The gut market is notoriously cyclical but once a manufacturer converts to collagen they're likely to stay," Page said.
Devro said revenue rose by more than £9 million in the first half to £82.7m, boosted by extra volumes, currency movements and a price increase to customers. Operating profits rose by 16 per cent to £9.2m, although pre-tax profits fell as it wrote off £3.1m from its balance sheet as it closed one of its Czech factories.
Devro warned that its energy bill in the second half could increase by as much as £2m, which could hit margins. Shares rose 1p to 78.75p.
The full article contains 297 words and appears in The Scotsman newspaper.
