Devro's interim profit surges on strong demand

Collagen product manufacturer Devro posted a sharp increase in interim profit after reporting a strong hike in demand.

In the six months to 30 June, the London-listed company saw pre-tax profit surge from £1.6m to £9.6m, as exceptional costs were slashed 62.9% year-on-year to £4m.

Revenue rose 2.7% to £112.7m on the back of strong market demand in China, Japan and South East Asia and steady growth in North America, which offset a decline in sales in Russia and Latin America.

Meanwhile, Devro indicated that its three-year overhaul plan, which aims to add capacity and reduce unit costs, was on track and is expected to be completed in 2016 as originally anticipated.

Devro has already completed the restructuring of its operations in Scotland and Australia, which is expected to generate £5m in savings this year, while investment projects in China and in the US remain on target to begin production in 2016.

However, the investments will result in exceptional costs of £16m and £18m for the full year.

“We have made good progress in transforming our manufacturing facilities to support future growth and manage costs, with restructuring completed and the major investment projects on track for completion in 2016,” said group chief executive Peter Page.

“Market demand is strong, input costs are stable and productivity improving, giving confidence for the future.”

Devro shares were up 4.85% to 313.25p at 1002 BST on Wednesday.