Devro PLC Trading Update (0947A)
January 17 2020 - 2:00AM
UK Regulatory
TIDMDVO
RNS Number : 0947A
Devro PLC
17 January 2020
For immediate release 17 January 2020
Devro plc
Trading update
Devro plc ("Devro" or the "Group"), one of the world's leading
manufacturers of collagen products for the food industry, issues
the following trading update for the year ended 31 December
2019.
Full year edible collagen volumes were flat, with the Group
delivering overall volume growth of 1% in the second half ("H2").
Slightly lower than anticipated H2 volumes, less favourable country
mix combined with a smaller than expected FX benefit due to the
strengthening of sterling means we now expect to report underlying
operating profit for the year in the range of GBP39 - GBP40
million1.
Devro continues to execute its growth plans as set out in its
"3Cs strategy", defending and building upon its strong market
positions in mature markets2 and targeting to increase its share in
emerging markets3. After a slower start in the first half of 2019
overall volumes in emerging markets grew 13% in the second half and
7% for the full year. Whilst overall volumes in North America grew
7%, growth during Q4 was not as strong as expected, specifically
impacted by a longer than anticipated Christmas shutdown at a key
customer. Market conditions in Japan and Europe continued to be
challenging as previously guided. In Europe, we saw weak market
sentiment, with lower promotional activity due to higher pork
prices and the impact of de-stocking by some of our distributor
partners, which we expect to continue into H1 2020. As a result,
overall sales in mature markets declined 3% in the year.
Cost saving initiatives continued to deliver well and we will
achieve GBP7m savings in FY 2019. Leverage at the year-end improved
following positive working capital movements and we expect to
report covenant net debt / covenant EBITDA of less than 2x as at 31
December 2019.
Our proposed plans for the closure of the Bellshill site in
Scotland remain on track.
In 2020 we expect to achieve strong volume growth in emerging
markets. In our mature markets we expect good volume growth in the
North American snacking market and, whilst we anticipate a
continuation of the challenging market conditions in Europe
(particularly in the first half of 2020), we expect overall Group
volumes to be ahead of 2019.
Devro will announce its results for the year ended 31 December
2019 on 4 March 2020.
Contacts:
Devro plc
Rutger Helbing Chief Executive Tel: 020 3865 7637
Officer
Jackie Callaway Chief Financial
Officer
FTI Consulting
Richard Mountain / Tel: 020 3727 1340
Nick Hasell
1 Unaudited
2 Devro mature markets include: North America, Continental EU,
UK & Ireland, Japan, Australia & NZ
3 Devro emerging markets include: Latin America, Russia &
East, Middle East & Africa, South East Asia, China
ENDS
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END
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