Devro reports improved performance
Manufacturer of collagen products Devro has said it continues to demonstrate an improved performance, with most areas on or ahead of target.
It added that its board was confident that its financial performance for the year will meet its expectations.
Devro said recent trading has continued the encouraging improvements seen in the first half of the year. Demand for edible collagen remained strong despite economic difficulties worldwide and sales were showing good growth, particularly in Europe and the Asia/Pacific region. Collagen gel sales in the US were also strong.
Overall sales revenues have benefited from translational exchange gains, with sterling being weaker and the US dollar stronger, partly offset by a weaker Australian dollar. In addition, average selling prices were higher than the corresponding period last year, and continuing to show a positive trend.
"We indicated at the announcement of the half year results that energy would be costing around £2m more than last year in the second half. Energy costs have fallen since we made that estimate, but we expect only a marginal improvement in the second half, because of the contracts we have in place," Devro said in a press statement. "We also indicated that hide supplies were subject to a degree of uncertainty; these have now been secured well into 2009, albeit at higher prices."
Manufacturing performance was showing considerable improvement compared with previous years, with output in all plants contributing to better factory efficiencies.
"We continue to see good demand in most of our markets and stability in our manufacturing operations. In order to take advantage of the continuing growth in demand for collagen casings, we are likely to be increasing investment in capacity during 2009," added the collagen casing producer.
"The group's overall financial position remains strong and we are operating comfortably within our banking facilities. Net debt has decreased since 30 June as a result of the Group's strong cash generation."
Devro said it expects to report its preliminary results in mid February 2009.