Solid growth for Devro’s UK and Ireland sales

Sausage casings manufacturer Devro saw UK and Ireland volume sales growth for the first six months of the year. 

In its half-year results to 30 June 2017, the business posted an 11% rise in revenue, driven by a 7% rise in volume sales during the period. It also benefited from exchange rate fluctuations, although rising costs did affect the growth in revenue.

Devro’s UK and Ireland volume sales grew 6% on the first half of 2016, due to market share gains for the business and its customers.

The overall business saw a benefit from the “significant weakening” of sterling in H2 2016, following the EU Referendum vote on 23 June 2016. This led to a translational exchange benefit to underlying operating profit for H1 2017 of £2.8m.

It reported that sterling did strengthen towards the end of H1 2017, and warned that if current rates were sustained for the remainder of the year, it would expect a partial reversal of this translation benefit in H2 2017.

The business saw volume growth in China, south-east Asia and Russia, but experienced declines in Latin America (-35%) due to supply shifts between plants in that region. This Latin American decline had been anticipated by the board.

Its volume sales in China grew 125% aided by the completion of a new plant in the region, while Russia experienced a 19% volume sales growth, building on sales success in the second half of 2016 with an extended product range.

Peter Page, chief executive, said: “Devro has made good progress with its principal objectives of growing revenue, volumes and market share in a range of markets, whilst reducing unit costs in operations. The Devro 100 programme to accelerate achievement of these objectives has progressed well during the first half of 2017.  New products will be introduced during H2 as planned.

“The board’s expectations for the full year remain unchanged and the business continues to generate strong cash flow from the underlying operations, which will enable net debt covenant ratios to be returned to historic levels over time.”

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