Management at sausage skin maker Devro (DVO) went into 2017 with two main goals: improve sales growth and cut costs. It ended last year with progress on both objectives. Revenue rose, with 8 per cent growth in sales volumes of edible collagen casings, driven mainly by strong performances in Russia and China. The manufacturing cost base was cut by £7m, comfortably exceeding the £6m goal set at the half-year stage.
Fulfilment of these goals, along with a foreign-exchange tailwind from weaker sterling, meant that operating profit more than doubled to £33m. This was despite a 4.3 per cent fall in the average selling price. New plants in China and the US – which were completed in 2016 but only became operational last year – led to some associated development costs, pushing underlying operating margins down 1 per cent to 14.8 per cent.
Analysts at Investec expect pre-tax profits of £33.5m in 2018, giving EPS of 15.5p, compared with £29.5m and 13.7p in 2017.
| DEVRO (DVO) | ||||
| ORD PRICE: | 198p | MARKET VALUE: | £330m | |
| TOUCH: | 198-201p | 12-MONTH HIGH: | 247p | LOW: 175p |
| DIVIDEND YIELD: | 4.5% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 76p | NET DEBT: | 106% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 243 | 37.5 | 20.1 | 8.8 |
| 2014 | 232 | 2.2 | 2.6 | 8.8 |
| 2015 | 230 | 15.1 | 8.8 | 8.8 |
| 2016 | 241 | 6.2 | 1.3 | 8.8 |
| 2017 | 257 | 21.6 | 9.3 | 8.8 |
| % change | +7 | +248 | +615 | - |
| Ex-div: | 2 Apr | |||
| Payment: | 11 May |
