By Kristy Dorsey
Meat casings manufacturer Devro is delaying payment of its final dividend for 2019 and has cut all discretionary spending to shore up its business against any ill effects from the Covid-19 outbreak.
In what the Glasgow-headquartered company described as a “precautionary” measure, Devro said it is withdrawing the proposal for a 6.3p per share final dividend from the resolutions being put forward at its annual general meeting on April 30. This will result in cash savings of approximately £10.5 million.
“Based on the board’s current knowledge, it intends to pay an additional interim dividend of the same amount in the second half of 2020,” the company said in its latest trading statement. “The board will keep this under review as the Covid-19 pandemic unfolds.”
READ MORE: 90 jobs at risk as sausage skin maker Devro announces Bellshill factory closure
The company – which employs more than 2,000 people at locations across the Netherlands, Czech Republic, Australia, China, the US and the UK – said all of its sites remain in operation as it strives to service customers in the global food supply chain. Devro also noted that it is not currently taking advantage of any coronavirus Government support schemes in the UK.
Some of the company’s suppliers have in recent weeks experienced disruption in their end markets, leading Devro to act “decisively” to secure raw materials. This resulted in some price inflation which it is trying to mitigate through cost savings.
Additionally, Devro is cutting all discretionary capital and operating expenditure in response to Covid-19.
Despite these difficulties, the company said its balance sheet remains strong, with approximately £59m of cash and undrawn borrowing facilities. Net debt currently stands at £130m.
READ MORE: Investors lift Devro after £45.9m charge leads firm to heavy loss
Sausage casing and similar edible collagen volumes rose by 2% in the first quarter of 2020 compared to the same period a year earlier. This was led by an increase of 13% in emerging markets, with strong growth in Latin America, Russia, East and South-East Asia.
North America continued to grow, but mature markets as a whole were down by 3%. This was due to destocking by distributors in Europe, plus weaker demand in the UK and Ireland during January and February.
Absent any negative impact from Covid-19, Devro said its previous guidance for good progress in 2020 remains unchanged.
News from trusted and credible sources is essential at all times, but especially now as the coronavirus pandemic impacts on all aspects of our lives. To make sure you stay informed during this difficult time our coverage of the crisis is free.
However, producing The Herald's unrivalled analysis, insight and opinion on a daily basis still costs money and, as our traditional revenue streams collapse, we need your support to sustain our quality journalism.
To help us get through this, we’re asking readers to take a digital subscription to The Herald. You can sign up now for just £2 for two months.
If you choose to sign up, we’ll offer a faster loading, advert-light experience – and deliver a digital version of the print product to your device every day. Click here to help The Herald: https://www.heraldscotland.com/subscribe/
Thank you, and stay safe.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel