Devro profits hit by restructuring and job cuts
Devro has released its six month trading results showing slipping profits as a result of its site restructuring and job cuts.
The sausage casings manufacturer reported a 23% decline in profit from last year, at £13.4m, for the six months ended June 2014. Profit before tax tumbled significantly from £16.2m last year to £1.6m, this has been attributed to the restructure of its Moodiesburn and Bellshill plants in Scotland which will include 130 confirmed job losses.
The company confirmed the job cuts in its trading statement: “Significant progress has also been made in the restructuring of our operations in Scotland, which was announced in April 2014. The decommissioning of older, less efficient technology has commenced. One hundred and thirty redundancies have now been agreed, with the first stage to be completed in August 2014 and the second stage in the first quarter of 2015.”
The results also showed an 8% fall in sales compared with last year, from £118,9m to £109.7m.
Peter Page, chief executive of Devro, commented: “Stronger sales in the second quarter have resulted in volumes and constant currency revenues in line with prior year for the first half.
“In order to add capacity, align products with market opportunities and reduce unit costs, all our manufacturing operations are in the midst of a significant transformation process which is impacting current year profits but will enhance earnings in the future.
“Our expectations for the full year trading results remain unchanged.”
Analyst firm Investec said Devro’s results were in-line with expectations.
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- last year
- second quarter
- job cuts
- trading results
- constant currency
- commented “stronger sales
- significant transformation process
- reduce unit costs
- capacity align products
- constant currency revenues