Devro on a healthy roll as profits surge 86%

SHARES in Devro rose yesterday after the sausage-skin maker reported a healthy increase in margins and a sizzling surge in profits, which jumped by 86 per cent in the first half.

Peter Page, chief executive of the company, which is headquartered in Moodiesburn near Glasgow, said the results highlighted a "story of growth" as Devro posted an increase in sales, earnings and its dividend payment. He added that this good performance was expected to continue for the rest of the year.

An 11 per cent rise in turnover to 116.1 million was helped by a surprisingly strong performance in mature markets such as the UK, the US and Japan. In terms of volume, sales into the emerging markets of south-east Asia, Latin America and Russia made a strong contribution.

Operating profit before the effects of exceptional items in the previous half-year rose 73 per cent, while pre-tax profits leapt 86 per cent to 17.1m. Page said this was the beginning of the pay-off from a three-year drive to improve profit margins through the "pricing takes precedent" programme launched after his appointment to the helm of Devro.

"We have really started to see the benefits of that," he said, adding that it accounted for about half of the increase in margins.

The company plans to spend at least 28m in the current year on improving facilities in Scotland, the US and Australia in a bid to boost global volumes by between 5 and 7 per cent. Devro raised its interim dividend by 40 per cent to 2p a share. The stock closed 4.5 per cent up at 214.75p.