26th Feb 2019 09:35
LONDON (Alliance News) - Sausage casings manufacturer Devro PLC on Tuesday said exceptional costs relating to a cost savings and business restructuring programme resulted in decline in 2018 pretax profit.
The company also said that it remains well placed to make good progress in 2019 despite ongoing pressures from input cost inflation, principally salary and utility costs and exchange rate volatility.
For 2018, the company recorded pretax profit of GBP17.5 million, down from GBP21.6 million in 2017, on revenue of GBP253.4 million and GBP256.9 million, respectively.
Stripping out exceptional items, pretax profit increased to GBP32.1 million from GBP29.5 million.
The drop in reported pretax profit was attributed to higher exceptional costs of GBP12.3 million versus GBP5.1 million, relating to the 'Devro 100' cost savings and restructuring programme. The Devro 100 programme achieved cost reductions ahead of plan of GBP4.5 million.
The 1.4% revenue decline was blamed primarily on foreign exchange headwinds. It said revenue from edible collagen casings increased by 2% at constant currency, while volumes were maintained.
Devro noted strong growth in North America, Latin America and South East Asia, where volumes were up 8%, 9% and 6%, respectively. However, it said it faced market challenges in Russia and Japan, down 12% and 7%. In China, Devro said an 8% decline in volume was due to discontinuing imports of legacy products. Excluding these, volume was up 5% in China.
For 2019, the company predicts revenue to be second half weighted and grow due to an overall growing market and continued rollout of the company's new fine ultra product.
Devro declared a final dividend of 6.3 pence per share, up from 6.1p, bringing total payout for the year to 9.0p, up 2.3% from 8.8p.
Shares in the company were up 5.4% at 180.20 pence each on Tuesday morning.
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