Devro enjoys strong second half - UPDATE

Shares in sausage skin maker Devro fell on Tuesday despite the firm seeing a strong rise in adjusted pre-tax profits and saying that underlying growth prospects for its global markets remain encouraging.Reported pre-tax profit fell to £43m in the year ended December 31st compared to £54m the year before. However, the prior-year figure benefitted from a one-off exceptional gain of £18.9m due to change to the UK pension scheme. Therefore, profit before tax and exceptionals, which appears to represent a more accurate underlying trading position, rose by 22.4% from £35.2m to £43m. Panmure Gordon was expecting a figure of £41.6m.Revenue also increased to £227.7m during the period from £213.6m previously, slightly ahead of market expectations of £226.6m. The firm - which disposed of its German distribution business, Devro GmbH, at the end of September - said sales volumes continue to grow strongly in South East Asia, Russia and Eastern Europe. The success of its Select range in Japan and Europe particularly contributed to sales, the group said. However, shares were down 3.57% at 283.5p in afternoon trading today, with Reuters highlighting the recent strong share price performance prior to the results and concerns over increasing energy and raw materials costs.Panmure Gordon said that despite the results beating its own forecasts, "a tougher competitive environment and a headwind from higher utility costs prevents us from increasing our forecasts."Looking ahead Chairman Steve Hannam said the outlook for 2012 was favourable. "With our evolving product range and strategic capital investment programme, we are well placed to take advantage of this opportunity. The strong performance in the second half of 2011 and the continuing strength of the balance sheet give us confidence for the future."Underlining its confidence in future trading the board is to recommend a final dividend of 5.5p per share, bringing the full year dividend to 80 per share, up 14.3%.