In line with good practice and commencing today, Devro intends providing shareholders with trading updates in advance of the start of its close periods. Interim results are scheduled for 6 September 2006.
As reported at the AGM, the first half has seen weaker than expected sales in the US and in some South East Asian markets, while the strength of the Czech currency continues to have an adverse effect on the value of Cutisin's export business.
Manufacturing continues to face pressure from significantly increased energy prices while variability in the quality of part of our collagen raw material has led to a period of reduced production efficiency in our Australian and US operations. The financial effect of this latter issue, which has been addressed, is expected to be confined entirely to the first half.
Our investment activity in Cutisin is well advanced and the new plant is scheduled to begin producing commercial product during the third quarter. Productivity from the new manufacturing process is expected to be significantly higher than originally anticipated and, as a consequence, substantial additional volume will be available in 2007 to meet the strong demand for Cutisin products, particularly in Eastern European markets.
Overall, while the first half has been weaker, the outlook for the latter stages of 2006 into 2007 and beyond, continues to be very encouraging.