DEVRO chief executive Peter Page guided the sausage skin manufacturer back to volume growth last year as it began to benefit from major investment in its manufacturing capability.
Mr Page, who steps down today after leading the company for more than 10 years, unveiled a seven percent hike in both revenue to £256.9 million in 2017, with sales volumes also up 7%. Statutory profit before tax climbed to £21.6m from £6.2m as exceptional costs relating to its restructuring programme tumbled compared with 2016.
Devro has two factories in the Glasgow area, in Moodiesburn and Bellshill, as well as in China, Australia, the US, the Netherlands and the Czech Republic.
Mr Page, who will be succeeded by former finance director Rutger Helbing, hailed Devro’s volume growth of 69 per cent last year in China, where the company had its first full year of trading at is new factory. Major growth was also seen in South-East Asia, where volume grew by 29 per cent, and Russia (up 21 per cent), with Mr Page also highlighting Devro’s resilience in the UK. This came as UK food manufacturers came under pressure, with retailers “seeking sharp price points” against a backdrop of flagging consumer confidence.
“It was really good to see two per cent volume growth [in the UK], which is a mix of [winning] customers but also pricing, because we need to keep the pricing moving forward,” Mr Page said. “Over 10 years, even in the UK where we have had so much pressure on food manufacturers, Devro has achieved 25 percent increase in prices. So, customers are seeing the value, they like working with us and it does help overall growth for sure.”
Asked if the company has a view on Brexit, Mr Page said Devro “simply sees it as something which has to be managed”. With factories in Scotland and the Czech Republic, it has no imminent concerns about supplies for either the UK or EU markets. However, looking ahead, he flagged that Devro would like to continuing buying raw material from the Irish beef industry as seamlessly as possible after Brexit. The company would also like regulatory disruption to be kept to a minimum.
“It is not a big issue, but it is something that we are preparing for,” Mr Page noted.
Mr Page said the 2017 results reflected the fruits of the Devro 100 transformation programme, unveiled a year ago, which helped bring costs down across its global manufacturing base by £7 million against a target of £5m.
“It was great to see net debt come down from £154m to £135m,” he added. “It’s a really good set of numbers to show people what Devro can do.”
Mr Page said Devro’s Scottish business is in “very good shape” following its restructuring programme in 2014 and 2015, which hit profits and led to job losses in Moodiesburn and Bellshill. “The productivity and efficiencies at the plants are excellent,” he said. “The Scottish team were absolutely key to helping the £60m investment in China not just built, but training people.”
He added: “That phase is really all behind us.”
Shares closed down 5p at 195p.
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