Devro swings to £12m loss after hits from Bellshill plant closure and African Swine Fever

Sausage skin and food casings maker Devro has swung to a £21.8 million statutory pre-tax loss after taking a hit from its Bellshill plant closure and overseas write-offs.

Devro noted an increase in pork prices due to African Swine Fever. Picture: Getty Images

The Lanarkshire group faced costs associated with the winding down of its Bellshill facility, which comes with the loss of around 90 jobs, and a £45.9m non-cash impairment charge primarily related to operations in US and China.

Devro also pointed to "challenging" markets in the UK, Ireland, western Europe, Australia and New Zealand, primarily driven by an increase in pork prices due to African Swine Fever.

The pre-tax deficit compares with a profit of £17.5m in 2018.

The Moodiesburn-headquartered group, which is one of the world’s top manufacturers of collagen products for the food industry, recorded revenues of £250m in 2019, dipping from £253.4m in the previous year.

However, Devro hailed an improved performance in emerging markets, with volumes up 7 per cent throughout the year. Sales gained particular momentum in China, increasing 33 per cent.

The group added that it expected group sales for the coming year to beat 2019's result, providing it experienced no adverse side-effects from the outbreak of coronavirus.

Chief executive Rutger Helbing said: "Once again, and in line with our strategy, we increased our sales in emerging markets as a percentage of group volumes. 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.

"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.

"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."