UNDERLYING profits at Lanarkshire sausage-skin manufacturer Devro were up by nine per cent in the year to December 2018 although when the effects of a cost-saving and restructuring programme were factored in pre-tax profits fell by 19%.
Revenues at the business were down by 1.4% to £253.4 million, with chairman Gerard Hoetmer noting that despite the firm experiencing growth in North America, Latin America and South East Asia, that was offset by declines in Russia and Japan.
Its Russian sales had been hit by the weakening rouble against the euro while in Japan the business was affected by “ongoing challenging market conditions” he said.
This fed through to the firm’s bottom line, which increased from £29.5m to £32.1m on an underlying basis but fell from £21.6m to £17.5m on a statutory basis.
This was in part because the firm incurred costs of £12.3m as it transitioned from a regional to a global operating model. The shift delivered cost savings of £4.5m for the year.
The firm’s chief executive Rutger Helbing, who replaced Peter Page last year, said that “despite ongoing pressures from input cost inflation” relating salary and utility costs and exchange rate volatility the business is “well placed to make good progress in 2019”.
“Looking ahead, we expect to grow revenue - weighted towards the second half - supported by an overall growing market and the continued rollout of the Fine Ultra product across a number of markets; to leverage our leading position in the fast-growing protein sticks market; and to continue to convert customers from gut to collagen,” he said. “We will also focus on delivering margin expansion and generating cash to reduce net debt.”
Devro operates factories in Moodiesburn and Bellshill. It also has plants in the Netherlands and Czech Republic.
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