Devro plc, the world's leading manufacturer of collagen products for the food industry, will today provide the following Interim Management Statement, for the period from 1 January 2008 to date, at its Annual General Meeting.
Current trading
This year has continued the encouraging improvements seen in the second half of 2007, with both revenue and profit ahead of the corresponding period last year. Overall sales volumes are higher than prior year.
Edible collagen sales have shown good growth, with gains in Europe and the Asia/Pacific region more than compensating for the expected reduction in the US following a switch to co-extrusion technology by one major account in the third quarter of 2007. Sales in the UK, in particular, were strong, continuing the uplift in this market that was seen in the fourth quarter of 2007. Also, collagen gel sales in the US are ahead, reflecting the change to co-extrusion mentioned above.
Overall sales revenues have benefited from translational exchange gains, with sterling being weaker, and this is compensating for the adverse impact on Cutisin's export sales resulting from the stronger Czech crown. Average selling prices are marginally higher than the corresponding period last year.
Manufacturing performance has been satisfactory, with the stability reported in the Scottish plants at the end of 2007 continuing into the current year.
Financial position
As was generally expected, there are considerable increases in raw material and energy prices, which are a challenge to the business. Good operational management and continuing attention to pricing will, however, enable the group's overall financial position to remain strong. Cash flows have contributed to a better than expected net debt position.
Market developments
In April, Devro completed the establishment of a Representative Office in Moscow and successfully recruited a local citizen with good qualifications and experience to work as sales manager in Russia.
Board
As previously announced, Peter Williams joins today as Devro's new Finance Director, following John Neilson's retirement at the Annual General Meeting.
Outlook
We continue to see good demand in most of our markets and stability in our manufacturing operations. The Board's expectations for profit for the year remain unchanged, and the Board continues to have confidence in the future prospects of the business.