Scots sausage skin maker Devro upbeat for full year

Devro, the Scottish sausage-skin and food casings producer, has served up stronger half-year profits despite revenues cooling slightly.

The firm is one of the world's leading manufacturers of collagen food casings. Picture: Contributed

The Moodiesburn-based group said it had seen strong volume growth in China (up 19 per cent) and North America (up 10 per cent) offset by expected weaker performances in Japan (-3 per cent), its Russia & East region (-9 per cent) and Latin America (-30 per cent).

Unveiling results for the six months to the end of June, the firm said underlying revenues had slipped to £119.2m from £120.2m a year earlier.

Despite that, underlying profit before tax rose 4 per cent to £14.9m and basic earnings per share increased to 7p from 6.6p.

Statutory profit before tax was up 25 per cent at £13.6m, while the interim dividend has been maintained at 2.7p.

Devro, which employs hundreds of staff across its global sites, said its full-year outlook was unchanged and added that it was making good progress on a number of strategic priorities including plans to step up production in North America.

Chief executive Rutger Helbing told investors: “We continued to make good progress on our strategic priorities in the first half. We delivered manufacturing efficiency improvements, in particular with increased speeds at our US plant.

“Our commercial and product development teams continue to establish the building blocks to accelerate future growth through the rollout of our new Fine Ultra product platform and developing new categories in China.

“For the full year, we continue to expect volume and revenue growth to be weighted towards the second half, supported by a number of commercial initiatives to accelerate growth and the continued rollout of our Fine Ultra product platform. We also now expect our total cost savings programme to exceed our previously stated target.”

He added: “Despite weaker market sentiment in some mature markets and ongoing pressures from input cost inflation, the board believes that Devro continues to be well placed to make good progress in 2019 and the full-year outlook remains unchanged.”

The group noted that at current foreign exchange rates, operating profit should benefit from currency gains in the second half.