DEVRO PLC — Management Reports 2013

Nov 14, 2013

National Storage Mechanism | Additional information

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RNS Number : 9770S

Devro PLC

14 November 2013

For immediate release	14 November 2013

Devro plc

("the Group")

Interim Management Statement

Devro plc, one of the world's leading manufacturers of collagen products for the food industry, today provides an Interim Management Statement covering the period from 1 July 2013 to date.

Revenue continued to grow helped by the full impact of price increases implemented in the first half with sales volumes unchanged against the same period last year. Trading profits and margins have improved in the second half as new capacity at the Czech plant has come on stream.

Sales have been strong in emerging markets, most notably Latin America, China and South East Asia. Germany and Japan continued to grow volumes across all major product categories. Developed markets such as the UK, continental Europe, Australia and North America traded more slowly than prior year and below our expectations.

Select, the innovative thin walled casing introduced in 2010 to replace top quality sheep gut, continues to make a significant contribution to sales. In the year to date Select accounts for 8% of all sales in the Group. There continue to be good opportunities for new sales.

Manufacturing operations ran well with the investment at the Czech plant now complete and production at full capacity.

The Board has approved capital expenditure to construct a new manufacturing hall at our site in South Carolina, USA. This £40m project, which will be funded from the Group's existing facilities and future cash flow, will enable the business to reduce manufacturing costs by c.£8m pa from 2016 onwards, with full benefits expected in 2017. This investment is part of our continuing manufacturing improvement programme which will further enhance profits for sales into the Americas.

As mentioned at the interims, the Group is actively evaluating options for expansion of capacity through an investment in China and we expect to report on this in early 2014.

Hide prices are higher than the prior year although the rate of increase has significantly slowed compared with the increases experienced in the last 18 months.

The Japanese yen has devalued by 20% against prior year although the impact on 2013 has been minimised through forward hedging. In 2014, based on current exchange rates, we estimate that profits will be adversely affected by approximately £3m as current hedging arrangements unwind.  

Gross debt is broadly in line with the level at the half year and continues to be well within the banking facilities.

Outlook

In light of unchanged sales volumes and weakness in some developed markets since 1st July, the Board now expects the outcome for 2013 to be towards the lower end of market expectations.

The Board remains confident in the longer term opportunities for supplying a dynamic and growing global market for edible casings.

For further information, please contact:

Devro plc Peter Page, Chief Executive Simon Webb, Group Finance Director	Tel No: 0207 182 4960
Buchanan Charles Ryland / Sophie McNulty / Clare Akhurst	Tel No: 020 7466 5000

Further information on Devro can be found on the company's website: www.devro.com

As previously announced, Devro will be holding an investor presentation to provide an update on the Group's investment programme today at 4.00pm.  The presentation will be available on the company's website shortly thereafter.  No new material information will be disclosed during the presentation.

This information is provided by RNS

The company news service from the London Stock Exchange

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