Devro serves up £12m investment in plant as profits set to rise 47%

SAUSAGE skin maker Devro will today announce plans to invest £12 million in its Bellshill factory as it unveils an expected boost in its profits for the year.

The factory upgrade will increase the plant's manufacturing capabilities and take advantage of "encouraging" growth in the global market for Devro's products.

Analysts expect to see the Lanarkshire firm reveal a 47 per cent increase in annual profits for 2010 to 36.8 million, although the firm's own brokers, Investec, expect an even better pre-tax profit of 37.4m.

It is also expected that revenues for the firm, which makes sausage skins from collagen, will be up 10 per cent to 243.2m.

The investment in the factory will pay for technology that will enable high-speed manufacture of casings used in the making of continental European-style wiener sausages.

Alan Kilpatrick, managing director of Devro Scotland, said: "This is a substantial investment, which will have a real impact on the manufacturing capability of the Bellshill plant and our operations in Scotland, ensuring that we continue to play a key role in Devro's global supply chain as the business continues to grow and reinforcing the importance we place on the highest quality of manufacturing in Scotland.

"The investment is a great boost for all the staff at Bellshill, which is a key employer in the area."

He added that work on the installation of the new production lines would commence shortly and would be complete by the end of the year.

He said: "2011 will be an exciting year for our employees and we look forward to working even more closely with our customers, offering an enhanced product range as a result of our greater technology capability."

Devro Scotland has been in operation since 1964 and currently employs 479 people across its two manufacturing plants in Bellshill and Moodiesburn. The firm also has factories in the Czech Republic, the US and Australia.

Two years ago it invested in high-speed lines at its Czech and Australian facilities.

Last year Devro sold casings into 50 countries worldwide, from Azerbaijan to Venezuela and Albania to Vietnam.

Although both profits and turnover are likely to have risen substantially on 2009, the second half of this year will not have seen the "excellent" 86 per cent boost in profits enjoyed in the first half.

Investec said that sales in the UK were expected to be slower in the second half, while the firm also faced tougher comparatives in the US market after winning major clients in the second half of last year.The broker added that the firm would still see solid growth in developing markets such as Latin America, Eastern Europe and the Far East.

Damian McNeela, an analyst with Panmure Gordon, wrote: "We believe Devro remains well-positioned to deliver growth from conversions and expansion into new markets and we expect the ongoing investment in capacity and efficiency to underpin steady operating profit margin expansion."

Last month Devro said Simon Webb, a former finance director of bank note printer De la Rue, would become group finance director in April following the retirement of incumbent Peter Williams.