Devro set for an increase in pre-tax profits

Manufacturer of collagen meat casings, Devro, is set to report an increase in pre-tax profits at the end of the financial year, according to Investec. 

Providers of financial products and services, Investec, said the Scotland-based company will enjoy success for the next three years. Claiming to be the world leader in the production and distribution of collagen sausage casings, Devro has been tipped to post “strong profit growth” for 2015, 2016 and 2017.

This positive news comes in the face of headwind in the foreign exchange market which has seen depreciations in the Chinese yuan, the euro and, more recently, the pound.

Investec claimed that Devro will post pre-tax profits of £30.5m. In 2014, the company reported gross profit of £28m.

Devro’s pre-tax profits for 2013 were in excess of £41m, before falling to £13m in 2014.

Since then, the company has been active internationally, driving forward the construction of two projects in China and the US which are now close to completion. Trial production runs are already under way at the US plant. Devro aims to close its outdated plant in the country during the first half of 2016, according to Investec.

Once both plants are fully operating, Investec anticipates a profit contribution from the American plant towards the end of 2016, with China not bringing in profit until the end of 2017.

Both projects are expected to deliver an above-average growth for the company. “The China project should also provide capacity to allow business to more aggressively grow its top line in this globally expanding market,” said the Investec report.

To further benefit business, capacity restrictions for Devro will begin to fall away this year. With its international plants soon to be operational, Investec said the company should be able to “make more of the structural growth opportunities” in the sausage and cooked meat casing market.

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