Strong growth for Devro
Devro has reported strong global sales growth for the first half of 2012 following capital investment, despite the currency blowing against its course.
Revenues in the Scotland-based collagen manufacturer were up 7.7% to £115.4m, compared to £107.1m in the same period last year. Operating profit also rose by 6.5% to £20.7m despite higher input costs. Profit before tax was £20.2m, compared to £19.1m in 2011.
The company highlighted the strong sales growth, which follows capacity expansion investments, with a significant ongoing capital programme set to deliver further capacity increases in 2013. It noted particularly strong sales in Japan, South East Asia, Eastern Europe and Latin America, and said that select market increases in Europe and Japan now account for around 8.1% of the total group sales.
Devro chairman Steve Hannam said: “Sales have increased across a wide range of markets and the good momentum from the second half of 2011 has continued into 2012.
“The outlook for the remainder of the year is for continued volume growth, particularly of sales of differentiated products such as Select, supported by further manufacturing improvements arising from our capital programme.
“We remain on track to meet the Board’s expectations for the full year.”
City analyst Investec said that the results were in line with expectations and showed good progress despite “some currency and inflationary headwinds”, which it said may have a slight impact across the financial year, leading it trim expectations of profit before tax by 1% to £43.5m.
It said: “Volume growth was the key driver, with strong progress across the developing regions, and also from Select, which is now 8% of group revenue and helping to drive strong growth from some of the group’s more mature markets.
“The medium-term outlook is encouraging as capacity expansion plans run on track.”
In the medium term, it said the new capacity, which will be operational in 2013, should support top-line growth and it forecast the 2013 profit before tax would rise by £1m to £47.5m.