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28 Apr 2014 07:00
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For immediate release 28 April 2014
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Devro plc
(the "Group")
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Interim Management Statement
Devro plc, one of the world's leading manufacturers of collagen products for the food industry, today issues the following Interim Management Statement for the period from 1 January 2014 to date.
Devro's sales were strong in certain key markets such as Germany, Japan and China and the USA, but in some other markets were weaker. In total, volumes were behind last year for the period. Sales were affected by a variety of factors such as currency restrictions and devaluations in Latin America, European retail markets, the EU pork meat import ban in Russia and the impact of prior year price increases in Europe.
Currency against prior year remains at Β£5 million adverse on operating profits, as previously indicated, and Β£13 million on revenue.
Trading in the first quarter was below prior year but March showed signs of improvement, which have continued into April. On account of the current market situation, the Board has taken a more prudent view such that volumes and prices in 2014 are currently expected to be flat and, for that reason, has decided to bring forward immediately strategic plans to streamline Devro's manufacturing footprint. Over the next year, Devro will move from older, higher cost production lines to a greater proportion of manufacturing being on our most cost efficient technology. This decision, coupled with the revised expectation for sales for the year, is expected to reduce profits for 2014 by approximately Β£8 million.
Exceptional cash costs over the next two years relating to these changes are expected to total approximately Β£6 million together with non-cash costs of approximately Β£10 million.
Going forward, these actions are expected to reduce manufacturing costs by Β£4 million in 2015, giving Devro a lower cost and higher quality manufacturing base, better placed to meet the demands of its markets.
Our investment projects in the USA and China are progressing according to plan which will help reduce the group unit cost of manufacture still further from 2016. A US private placement was successfully completed on 17 April 2014 for a total of US$100 million of which US$50 million has been received and the remainder is due in June 2014. This will ensure long term funding is in place to support these two projects.
The Board remains confident that with a low cost manufacturing base and a world class product range Devro will be in a strong position to benefit from the growing demand for collagen casing driven by protein consumption worldwide.
ENDS
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For further information, please contact:
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Devro plc Peter Page, Chief Executive Simon Webb, Group Finance Director Β | Β Β Tel No: 020 7182 4960 Β |
Buchanan Charles Ryland / Sophie McNulty/ Clare Akhurst Β | Β Β Tel No: 020 7466 5000 |
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Notes to Editors
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FTSE 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 five manufacturing sites based in Scotland, Australia, the Czech Republic and the USA. Devro reported sales of Β£242.7 million and profit before tax (before exceptional items) of Β£38.8 million for the year ended 31 December 2013. Devro is a constituent of the FTSE4Good Index Series which recognises that the company's performance meets globally recognised corporate responsibility standards.
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Further information on Devro can be found on the company's website: www.devro.com
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