Higher costs force sausage skin maker Devro to warn on profits

SAUSAGE skin maker Devro yesterday sounded a profit warning as a result of adverse currency swings and higher costs.

The British firm said in an interim management statement that sales volumes continued to grow in Japan, Europe and the Americas, and overall market demand had remained strong since 1 July.

However, it added that raw material prices had risen, and this was expected to continue into 2013, leading to its full-year operating profits being below original expectations, although they would be ahead of last year.

Devro added that it would invest around £35m to increase capacity and productivity at its manufacturing sites – including locations in Scotland, Australia, the US and the Czech Republic – over the next two years.

The FTSE 250 firm said it was looking forward to a “strong” end to the year, and the board remained confident in the “continuing growth” of the business.

Chief executive Peter Page said yesterday: “Our business is well positioned for the future, with good demand from a global customer base, an experienced management team, and a proven product portfolio.”

Its shares closed down 3.54 per cent yesterday.