Devro upbeat despite dip in first-half profits

Sausage skin maker Devro today said it was confident of delivering a strong second-half result after its profits for the first six months of the year were dented by higher raw material prices.

The Moodiesburn-based firm also said earnings had been hit by “temporary manufacturing issues” in the US, which have now been resolved.

Pre-tax profits for the six months to 30 June fell to £17.3 million, from £19.9m a year earlier, as higher raw material costs offset a 3.1 per cent rise in revenues to £118.9m.

With demand for sausages in China expected to continue growing “for many years” on the back of rising disposable incomes, Devro chairman Steve Hannam said the firm was eyeing the possibility of setting up its own manufacturing plant in the country.

He added: “Despite the first-half challenges Devro has succeeded in growing sales and adding production capacity which will position it well for the future.

“With operations performing well at all manufacturing sites and the new Czech capacity due on stream in August the board remains confident of a strong second half and growth in full-year earnings.”

Shareholders will receive an interim dividend of 2.7p a share, up 1,9 per cent from a year ago.