Collagen casing producer Devro (DVO) had a sluggish start to the year, with a 1.3 per cent decline in volumes sold. However, the contraction was confined to January, as sales through the remainder of the period were in positive territory. Fine Ultra, a thinner version of the collagen casing launched in continental EU, but its success was offset by weakening market sentiment, lower promotional activity due to higher pork prices, the reversal of some Brexit-related stockpiling, and poor weather. “Modest growth” is expected in the second half.
Encouragingly, the Devro 100 cost savings programme is delivering ahead of target. It’s now expected to save around £5.5m in annual costs by the end of the current financial year, compared to the original target of £4.5m. These cost savings, combined with a reduction in operating expenses following the implementation of a more efficient global operating model, are expected to boost full-year operating profit by around £7m. At the interim, underlying operating profit was 7.4 per cent higher at £17.4m.
Analysts at Numis expect pre-tax profits of £34.8m during 2019, giving EPS of 17.1p, increasing to £37.5m and 18.8p next year.
DEVRO (DVO) | ||||
ORD PRICE: | 209p | MARKET VALUE: | £ 348m | |
TOUCH: | 203-209p | 12-MONTH HIGH: | 222p | LOW: 151p |
DIVIDEND YIELD: | 3.3% | PE RATIO: | 31 | |
NET ASSET VALUE: | 87p | NET DEBT: | 103% |
Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2018 | 120 | 10.9 | 4.7 | 2.7 |
2019 | 119 | 13.6 | 6.5 | 2.7 |
% change | -1 | +25 | +38 | - |
Ex-div: | 22 Aug | |||
Payment: | 04 Oct |