Analysts forecast strong first half for Devro
Collagen casing manufacturer Devro is on track to report good progress in the current financial year, despite operational and currency-led challenges, analysts have said.
Investec Securities said they anticipated good revenue in the company’s first-half results, which are due to be released at the end of the month, with the first-half profit before tax progressing by around 5%.
It said the group was working “flat out” to match strong demand, in an expanding market, where developing and emerging markets are playing a key role in driving the global growth of edible collagen casings. It pointed out that the company was currently expanding, having added capacity to its Scottish operations at Bellshill and its US plant. Work is also due to begin in the Czech Republic, which is set to boost capacity by around 8% a year.
It said: “This year’s focus is on installing new capacity to give the group headroom for growth in the coming years – and it is making good progress in this respect.”
“Against a backdrop of the domestic food operators, where consumers’ tightening purse strings have been driving fast-moving consumer goods volumes lower, Devro’s global reach has a definite appeal. The group’s more mature markets, such as the UK and USA, may be producing more pedestrian growth, but the developing and emerging markets are driving global growth in edible collagen in excess of 5%, and closer to 10% if China is included – although Devro is not a significant player in China at this time.”