Devro’s profits suffer following restructuring
Profits for sausage casings manufacturer Devro have dropped by 94% for the 2014 financial year, following a year of restructuring.
The Glasgow-based company posted its financial results for the year ending 31 December 2014, showing profits before tax had fallen from £37.5m to £2.2m.
Revenue also fell by £10.4m to £232.3m on the previous year.
Devro has undergone a restructuring programme in Scotland and Australia, which has seen 130 jobs lost at its Moodiesburn and Bellshill sites. Financial analyst Investec said the company’s profits should benefit from this action.
However, total sales volumes of edible collagen grew by 3% and revenues, in constant currency, were 2% ahead of 2013, with sales increasing mostly in developing countries and Germany, where they increased 40%.
But Devro reported that demand within the UK and Ireland was weaker.
Meanwhile, a temporary shortage of raw materials in Russia contributed to a 10% decline in sales volumes in Eastern Europe and Russia.
Peter Page, chief executive of Devro, commented: “Devro has started 2015 with good order levels and momentum in sales growth. Cost reductions from the restructuring programmes in Scotland and Australia will be achieved at the same time as a slowing of input cost increases compared with recent years.”
Page said the upcoming year was important for the company, as it will include the completion of two plants in the US and China and the creation of 200 jobs outside the UK.
“These developments will enable Devro to take advantage of the considerable opportunities worldwide for long-term growth in demand for collagen casing.”
Shares in the company fell 7% yesterday morning.
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