Devro invests in China

The Chinese facility will come onstream in 2015, giving Devro a foothold in the world's biggest collagen-casings market. Another £40m is being spent on a new manufacturing plant in the US, which will significantly slash production costs from 2016.

Until then, however, the short-term headwinds seen last year might persist. Sales volumes in developed markets, with the notable exception of Germany, fell 5 per cent in 2013, offsetting a 6 per cent increase in emerging markets, which accounted for 41 per cent of group revenue. Manufacturing problems in the US sliced £2m off profit, while higher prices for raw hide, used to make casings, added £4m to costs. However, this was somewhat recouped later in the year by price increases, leaving the underlying operating profit down just 1 per cent at £42.1m.

The outlook for 2014 is uncertain for developed markets, and Devro faces fiercer currency headwinds. But management still expects sales growth overall, driven by emerging economies. Investec has cut its pre-tax profit forecasts for 2014 by 12 per cent to £38.1m (from £41m in 2013), but expects growth to resume in 2015.