SAUSAGE skin maker Devro cheered investors with a return to dividends and said tighter cost controls and higher volumes in emerging markets were helping it offset the impact of Covid-19.

The shares rose more than seven per cent in morning trading as the company declared both an interim dividend, as well as its postponed 2019 final dividend.

“I would like to express my gratitude to all my colleagues who, in these challenging circumstances, have ensured that our sites continued to operate, servicing our customers and fulfilling our role in the food supply chain,” said Devro chief executive Rutger Helbing.

The company, which is based in Moodiesburn near Glasgow, said all its sites had continued to operate throughout the pandemic. It employs more than 2,000 people across sites in the US, the Netherlands, China, Czech Republic, Australia and the UK, where it manufactures collagen casings for foods such as salami. In Scotland it has 413 employees.

“With the robust nature of our business and our strong financial position we decided not to take advantage of any Covid-19 UK Government support schemes,” Mr Helbing said in his half-year review.

On an underlying basis – stripping out the effect of exceptional items and finance costs related to pensions – pre-tax profits for the six months to end June 2020 were up 4.7% at £15.6 million on revenues of £119m, slightly down from £119.2m in the first half of 2019.

Volumes of edible collagen casings were up 1.4%, with Latin America, Russia and South East Asia driving 19% growth in emerging markets.

A surge in sausage sales at the end of the first quarter stabilised in the second quarter, when global lockdowns also depressed demand in the food service sector.

Cost savings for the half year were ahead of expectations at £4.7m, “more than offsetting” inflationary pressures and temporary additional Covid-19 related costs.

Exceptional costs included the closure of Devro’s Bellshill factory, which involved 90 redundancies and closed on track at the end of June. Cost savings for the full year are now expected to be £7m, up from £4m.

The company said it had resolved to declare the postponed 2019 final dividend of 6.3p a share in form of an interim dividend in addition to the 2020 interim dividend of 2.7p.

Devro also announced that Jackie Callaway, its chief financial officer since May 2018, was leaving to take up the same position at industrial thread manufacturer Coats Group.

"I would like to add my thanks to Jackie for her hard work and commitment," Mr Helbing said.