Devro shares lose their sizzle amid ‘flat’ volumes

Shares of Glasgow-based sausage skin and collagen products firm Devro fell about 2% on Friday after it issued a mixed trading update for the year ended December 31, 2019.

“Full year edible collagen volumes were flat, with the group delivering overall volume growth of 1% in the second half,” said Devro.

“Slightly lower than anticipated H2 volumes, less favourable country mix combined with a smaller than expected FX benefit due to the strengthening of sterling means we now expect to report underlying operating profit for the year in the range of £39 – £40 million …

“After a slower start in the first half of 2019 overall volumes in emerging markets grew 13% in the second half and 7% for the full year.

“Whilst overall volumes in North America grew 7%, growth during Q4 was not as strong as expected, specifically impacted by a longer than anticipated Christmas shutdown at a key customer.

“Market conditions in Japan and Europe continued to be challenging as previously guided.

“In Europe, we saw weak market sentiment, with lower promotional activity due to higher pork prices and the impact of de-stocking by some of our distributor partners, which we expect to continue into H1 2020.

“As a result, overall sales in mature markets declined 3% in the year …

“Our proposed plans for the closure of the Bellshill site in Scotland remain on track.

“In 2020 we expect to achieve strong volume growth in emerging markets.

“In our mature markets we expect good volume growth in the North American snacking market and, whilst we anticipate a continuation of the challenging market conditions in Europe (particularly in the first half of 2020), we expect overall group volumes to be ahead of 2019.”

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