Higher input costs and temporary manufacturing issues in the US meant half-year operating profit at sausage-casing maker Devro (DVO) fell 13 per cent year on year to £17.9m.
But this came as no surprise - raw material cost inflation and manufacturing glitches at Devro's ageing plant in South Carolina during the first four months of the year had already been flagged. Now, prices are stabilising and the manufacturing problems have been resolved.
Group sales still grew, with volumes up 1 per cent and prices up 2 per cent. There was steady growth across most of Devro's emerging markets as well, although volumes fell in Europe, the UK Australia and New Zealand. Sales of premium select casings now represent 8.5 per cent of total revenue and volumes grew 4.4 per cent globally, with particularly strong trading in Germany and Japan.
Devro's £25m expansion of its Czech factory is nearly complete, too, and will come on stream in August - one month ahead of schedule - boosting capacity by 9 per cent. The company has also decided to upgrade its US factory, which will slash production costs - currently the highest in the group (margins here are 10 per cent compared with 30 per cent in Europe).
N+1 Singer expects adjusted pre-tax profit of £44.3m for the full year, giving EPS of 21.5p (from £42.4m and 20.5p in 2012).
| DEVRO (DVO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 311p | MARKET VALUE: | £518m | |
| TOUCH: | 311-312p | 12-MONTH HIGH: | 382p | LOW: 289p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 94p | NET DEBT: | 26% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012* | 115 | 18.9 | 9.20 | 2.65 |
| 2013 | 119 | 16.2 | 8.20 | 2.70 |
| % change | +3 | -14 | -11 | +2 |
Ex-div: 28 Aug Payment: 4 Oct *Restated | ||||
