Devro to complete Scottish restructuring early next year

Announcing its results for the third quarter (Q3) of this year (from July 1), the international collagen-based casings group, which is striving to return group profitability, reported the first phase of its restructuring had been completed on schedule.

Devro’s investments in the US and China, at £40M and £50M respectively, were also said to be “proceeding to plan”.​

£8M savings ​

In the US, the transfer to new manufacturing operations had begun, with the replacement facility for its old Carolina plant scheduled to start full production in Q1 of 2016 and delivering around £8M in savings.

The new facility in China will be built and commissioned through 2014–15 and is expected to be operational in 2016.

Devro reported trading had been “in line with expectations”,​ with two quarters of growing sales volumes, driven by China, Japan and Germany, with the latter two markets the home of Devro’s Select Fresh brand.

The results were cautiously received by Shore Capital analysts Darren Shirley and Clive Black. They said the restructuring needed to proceed with “close to perfect execution”​, if the company’s financial goals were to be met.

Commenting on Devro’s results for Q3, Shirley and Black said: “In the UK from a low base Devro has introduced Select Fresh as it seeks to offer an alternative for sausage makers in the growing premium market, which is subject to strong growth.”​

Strategic initiatives​

They added: “To recover group profitability back to previous levels​ (and those baked into financial year 2016 consensus expectations) will require close to perfect execution by Devro of the strategic initiatives.”​

Devro reported sales of £242.7M and profit before tax of £38.8M for the year ended December 31 2013.