Scottish sausage skin maker Devro passes on price hikes in face of 'inflationary headwinds'

Devro, the Scottish sausage-skin and food ­casings maker, said it was raising prices in the face of “inflationary headwinds”.

In a trading update to coincide with its annual shareholder meeting, the firm said it had achieved high single-digit constant currency revenue growth in the first quarter of 2022, compared to the prior year, driven by a combination of volume, price and product mix.

Revenue growth was said to be good in both emerging and mature markets, supported by “positive underlying demand”, with North America and continental Europe producing the strongest volume growth in the quarter.

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Bosses told investors: “The group is experiencing further inflationary headwinds and in response continues to achieve targeted price increases and to maintain tight cost management.

“The group has started the year well and, despite ongoing macro-economic headwinds including inflationary pressures, we expect to continue to make good progress in 2022.”

The Moodiesburn-based group noted that its full-year profits will be more second half weighted than normal due to the effects of foreign currency hedging.

As expected, net debt at the end of March has risen to about £100 million, Devro added. The firm continues to expect strong cash generation for the full year with further progress on reducing net debt compared to full year 2021, which stood at £88.6m.

Analysts at brokerage Shore Capital issued a “buy” note after the trading update, saying: “Devro is now demonstrating encouraging multi-year revenue growth in our view, supported by a more commercial and structured approach across its geographically diverse operating sites.”

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