Devro reports lower collagen sales in UK

Collagen casings have not sold well in the UK, a Devro interim report for the six months ended 30 June has shown.

According to the man-made edible casing company, both its Australian and UK businesses have experienced lower year-on-year sales – “in both cases reflecting a change in the general market and particularly challenging trading conditions for our own customers”, it said.

However, Devro noted that the UK sausage market was seeing a “resurgence” in regional brands and that these were maintaining their own margins as they were a unique product.

Overall, the company said, its sales of edible collagen were 1% higher than last year, boosted by price increases to help “recover” a rise in input costs. This, it said, made the company 2% more in revenue in the first half of the year.

Meanwhile, operating profits for the company are down 12.8% on last year, while profit before tax, excluding net interest on pensions, was down 13.1%.

Revenue for the company was up more than 3% on last year and Devro chairman Steve Hannam said: “Despite the first-half challenges, Devro has succeeded in growing sales and adding production capacity, which will position it well for the future.”

Of the interim report, Shore Capital city analyst Darren Shirley said the challenges Devro has faced in the first half of 2013 were no surprise and had been “well documented”. He said rising input costs and operational issues in a US site were also a challenge for the company.

About Devro’s future, Shirley added: “Looking into H2, management has confirmed that operations are performing well on all sites. Management remains confident of a strong second half and growth in full-year earnings.”


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