Devro warns of sales slowdown in China

SAUSAGE skin maker Devro yesterday warned that sales were "slightly behind last year" after solid growth in eastern Europe, Russia and south-east Asia was offset by "more challenging" conditions in lower-priced markets, including China.

At the firm's AGM in Glasgow, chairman Steve Hannam told shareholders that UK sales were being hit by tough comparisons with the early part of 2010, when retailers had ordered extra casings for promotions.

But he added: "Margins continue to improve, with better sales mix and increasing prices. The company is on track to meet the board's expectations for the full year."

House broker Investec pencilled in pre-tax profits for 2011 of 40.5 million, up from 37.5m in 2010, with sales forecast to rise to 252.6m from 237m.

Investec increased its target price on Devro from 295p to 315p and reiterated its "buy" recommendation.

Hannam added that the earthquakes and tsunami in Japan - which accounts for only about 5 per cent of Devro's sales - had not had a significant affect on the business.

The Moodiesburn-based firm yesterday appointed Paul Withers as a non-executive director.

Withers already has seats on the boards of electronics firm Premier Farnell and engineering specialist Hyder Consulting.

He spent 20 years at plasterboard firm BPB, where he was the board director responsible for emerging markets, a key growth area for Devro.