DEVRO PLC 
By
Devro plc, one of the world's leading manufacturers of collagen products for the food industry,
today issues the following trading update ahead of announcing its interim results on 31 July
2013.
Sales volumes of edible collagen are expected to be approximately 1% ahead of the same period in the prior year and the average price per unit sold has increased around 2%, equivalent to recent input cost increases.
Volumes of Select, our premium product range, have increased by 13% globally, with particularly strong growth in Germany and Japan where the opportunity has been more actively developed in 2013.
There has been steady volume growth in the USA & Canada, SE Asia, and China, reflecting success in continuing efforts to grow volumes of Devro casings whilst maintaining margins.
Sales in Continental Europe and Russia are at the same level as prior year, despite general retail sales volumes of food being lower. In some countries sales of processed meats have declined temporarily due to various factors including colder weather and lower levels of consumer spending.
As indicated in our first quarter interim management statement, Devro's Australasia and UK businesses have realised lower sales volumes than prior year, in both cases reflecting a slight decline in the general market and particularly challenging trading conditions for our customers.
Overall, as a result of slower than expected sales, particularly in April and May, combined with the raw material cost increases and temporary manufacturing issues in the USA mentioned in our first quarter interim management statement, operating profits for the first half are expected to be approximately £3 million below last year. June is seeing a recovery in sales and this improvement is expected to continue into the second half of the year.
Operations are running well at all manufacturing sites, with a particularly notable improvement in the USA, following a strengthening of our management team there.
The capacity expansion programme in our Czech plant is near completion and will be fully- commissioned in August, one month ahead of schedule and on budget.
The market for cattle hides is now more stable, so raw material costs, which had risen during the first half, are more predictable.
The prospects for the business remain attractive with continuing growth in global demand. Successful product testing and commercialisation on the development line in the USA has enabled management to progress plans for reinvestment in our plant there over the next three years.
We expect further growth in sales during the second half, as additional capacity becomes available in Europe, manufacturing output has increased in our USA plant and sufficient inventory is now in place for China, SE Asia and Japan.
The Board remains confident of a strong second half and growth in full year earnings.
Devro plc Peter Page, Chief Executive Simon Webb, Group Finance Director | Tel No: 020 7182 4960 |
Buchanan Diane Stewart/ Carrie Clement/ Charles Ryland | Tel No: 020 7466 5000/0131 226 6150 |
FTSE 250 listed Devro is one of the world's leading providers of collagen casings to the food industry supplying a wide range of products and technical support to manufacturers of sausages, salamis, hams and other cooked meats. The Group employs 2,200 staff across the world and produces its casings from 5 manufacturing sites based in Scotland, Australia, the Czech Republic and the USA. Devro reported sales of £241.1 million and profit before tax (excluding pension interest) of £42.2 million for the year ended 31 December 2012. Devro is a constituent of the FTSE4Good Index Series which recognises that the company's performance meets globally recognised corporate responsibility standards.
Further information on Devro can be found on the company's website: www.devro.com
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