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Annual Results

Devro underlying operating profits up

06 March 2017 07:34

Devro - one of the world's leading manufacturers of collagen products for the food industry - posts underlying operating profits of £38.1m for the year to the end of December, up from £33.2m last time.

The group said it benefited from currency movements and lower input prices, which more than offset the effects of lower sales volumes.

After including exceptional items, operating profit was £15.4 million (2015: £19.2 million).

Revenues rose to £241.1m from £230.2m as exchange rate benefits offset lower sales volumes and the total dividend of 8.8p per share is unchanged from 2015.

Chief executive Peter Page said: "Whilst volumes declined by 6.6% year-on-year, underlying operating profit increased due to lower input prices and exchange rate benefits.

"The decline in sales volumes in 2016 was due to a series of region-specific factors.

"We have taken actions to ensure a return to growth in 2017 and beyond.

"Following the significant capital investments we have made in recent years, we are now focused on using our high-technology assets to supply a growing global market.

"Overall demand remains strong and we continue to see many attractive opportunities to grow the business.

"In 2017, we will focus on increasing revenue to regain market share, achieving cost savings across our global operations and commencing the launch of new, differentiated products, as part of the Devro 100 programme.

"The further exceptional costs of this programme are expected to be between £10-12 million over the next two years, plus capital investments of between £7-8 million, with expected benefits of between £13-16 million per annum by 2019.

"Over this period there will also be a focus on reducing net debt levels.

"Combined with our upgraded global manufacturing asset base, we are confident this will deliver long term growth." Devro also announced that senior independent director Paul Neep will not seek re-election to the board at the annual general meeting on 26 April.

Paul Withers will take over from Neep as SID and as chairman of the executive directors' remuneration committee and Malcolm Swift will take over from Withers as chairman of the health and safety committee.

Withers will remain a member of this committee.

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