Devro sees underlying profits rise by 4% in 2020

For the year ended 31 December 2020, the firm’s operating profit margin increased to 16.5% from 15.6% in 2019. The firm’s profit before tax also rose to £35.4m from £33.1m the year before.

However, annual revenues at Devro dropped slightly from £250m in 2019 to £247.6m this year. Nevertheless, chief executive Rutger Helbing said the new financial year had started positively and the group was ‘well-positioned for the future.’

The firm noted that the group revenue figure was slightly lower due to an adverse mix and other products declining.

In January last year, Devro issued a profit warning after it saw lower than expected second-half sales.

However, the firm has now declared a final dividend of 6.3p per share, bringing the total payout to 9p per share – flat on the previous year.

Devro revealed that the volume of edible collagen casings increased by 1%, underpinned by strong overseas sales. Emerging markets were up 13%, driven by Latin America, Russia and South East Asia.

However, “mature markets” have dropped by 5% and growth of 9 per cent in North America was offset by a pandemic related decline in the food services sector and “distributor destocking” in Europe.  The firm has estimated that the negative impact from COVID-19 was at 2%.

Commenting on the results, Mr Helbing said: “I am proud that in a year where we had to deal with the impact of COVID-19 we continued to make good progress with both our trading performance and strategic priorities.

“This progress in such challenging circumstances highlights the considerable efforts of the whole Devro team and I would like to put on record my gratitude for this; it’s been a huge effort.

“The progress we made in all areas of our 3Cs strategy in 2020 provides a strong foundation for further strategic and trading performance improvements in 2021. We also expect another year of good free cash generation.”

He added: “Encouragingly, the year has started positively, although caution remains as many of the Covid-19 related challenges experienced in 2020 are still evident.

“Despite this we expect to make further progress in 2021 driven by our sales pipeline actions, solid underlying demand and the ongoing benefits of operational improvements.”