Sausage skin-maker Devro says first half profit will be £3m lower

 
Kasmira Jefford
Follow Kasmira
SAUSAGE skin-maker Devro said yesterday that a slow start to the year meant first half profits would be around £3m lower than last year, despite a recent pick-up in trading.

The company, which issued a profit warning in February, said it now expects to report operating profits of around £17m, blaming rising raw material costs.

Sales volumes of its edible collagen are expected to be up one per cent year-on-year, although this is slower than analysts had forecast, after the company suffered manufacturing problems in the US.

The average price per unit increased around two per cent, as it passed input costs onto customers.

Devro said sales of its premium product range Select increased by 13 per cent globally, driven by strong growth in Germany and Japan.

Sales in Europe and Russia were flat, despite general retail sales volumes of food being lower, while in the UK sales fell, which Devro blamed on the tough consumer environment.

The cold weather across Europe also prompted a decline in demand for processed meats as consumers put off plans for barbecues.

Devro said sales recovered in June and the market for animal hides, used to make sausage casings, was “stable”. As a result it expects a strong second half of the year.