(Alliance News) - Devro PLC said Tuesday third-quarter volume growth improved on the first half of the year, with the firm expecting more improvement over the last three months of 2019.
Meanwhile, Devro announced plans to close a manufacturing site in Scotland as part of a cost efficiency and production review.
For the three months ended September, sales momentum "improved" with volume growth rising to 1% on the year prior. This was after the sausage-casings maker reported volumes in the first six months of 2019 had fallen 1%.
"During the period we saw good trading in North America, where we benefited from continued growth in snacking categories, and also in China, due to continued strong growth albeit at margins below the average for the group," Devro said in a statement.
"These positive performances were offset by a further deterioration in market conditions in Continental Europe and weaker than expected sales in Japan," Devro added. "As anticipated, UK & Ireland and Australia saw similar trends to the first half of 2019."
In the fourth quarter of 2019, Devro anticipates a further "modest" acceleration in volume growth.
Consequently, for 2019 as a whole, Devro expects volumes to close around 1% higher on the year prior. Meanwhile, Devro remains confident it can achieve guidance of GBP7 million in cost savings during the year.
"Our expectations for the full year remain broadly unchanged as growth in underlying operating profit through higher volumes, delivery of costs savings and positive FX [foreign exchange] will be offset by adverse country/product mix, lower revenues from other products and energy and wage inflation which was highlighted in previous announcements," Devro said.
In addition, Devro proposed to close its Bellshill manufacturing site in Scotland and expanding the products made at its Moodiesburn site about twelve miles away. The firm expects to close Bellshill in 2020, with the loss of 90 employees and an exceptional cost of GBP15 million.
Devro made the proposal following a review of its global manufacturing footprint. The firm was looking at means to both improve cost efficiency of its operations whilst also align available capacity to its growth ambitions.
Shares in Moodiesburn-based Devro were 1.7% lower at 165.89 pence in London on Tuesday.
By Ahren Lester; ahrenlester@alliancenews.com
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