Good strategic progress, improved profitability and robust cash delivery
Devro plc (“Devro” or the “Group”), one of the world's leading manufacturers of collagen products for the food industry, announces its results for the year ended 31 December 2020.
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Underlying results * |
Statutory results |
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2020 |
2019 |
2020 |
2019 |
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Revenue (£m) |
247.6 |
250.0 |
247.6 |
250.0 |
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Operating profit/(loss) (£m) |
40.8 |
39.1 |
36.2 |
(14.0) |
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Operating profit margin (%) Profit/(loss) before tax (£m) |
16.5% 35.4 |
15.6% 33.1 |
14.6% 29.4 |
(5.6)% (21.8) |
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Basic earnings per share (pence) |
16.5p |
15.2p |
13.8p |
(24.8)p |
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Total dividend per share (pence) |
9.0p |
9.0p |
9.0p |
9.0p |
* Underlying figures are stated before exceptional items and net finance cost on pensions (see Alternative Performance Measures section of the Financial Review for definitions, explanation, and reconciliation to equivalent statutory measures).
Financial Highlights
· Volume of edible collagen casings increased 1%
o Emerging markets up 13%: driven by Latin America, Russia and South East Asia, reflecting our targeted growth agenda
o Mature markets down 5%: growth of 9% in North America offset by COVID-19 related decline in food services sector and distributor destocking in Europe
o COVID-19 negative impact estimated at 2%
· Group revenue marginally lower than prior year due to adverse mix and other products declining
· Underlying operating profit of £40.8m, up 4% on prior year, and operating margin increased 90 bps to 16.5% benefiting from cost savings
· Underlying basic earnings per share up 9% to 16.5p (2019: 15.2p)
· Robust free cash flow generation leading to covenant net debt i of £109.5m (2019: £123.8m), representing net debt to EBITDA ii of 1.8x (2019: 1.9x)
· Proposed final dividend of 6.3p. Total dividend of 9.0p, flat on the prior year
Strategic Highlights – good progress on 3Cs strategy
· Structured process to identify and convert sales pipeline delivering:
o High conversion rate achieved in 2020
o Strong pipeline of opportunities for 2021
o 10% increase in commercial headcount to drive growth – mainly focused on emerging markets
· Bellshill closed, delivering substantial annualised cost savings
· Continued delivery of operational cost savings through efficiencies in maintenance and automation
· ESG agenda progressing: Defined new Purpose and Sustainability agenda focused on Climate, Water, Waste and People & Our Communities. Actions to be accelerated in 2021.
Rutger Helbing, Chief Executive Officer of Devro, commented:
“I am proud that in a year where we had to deal with the impact of COVID-19 we continued to make good progress with both our trading performance and strategic priorities. This progress in such challenging circumstances highlights the considerable efforts of the whole Devro team and I would like to put on record my gratitude for this; it's been a huge effort.
“The progress we made in all areas of our 3Cs strategy in 2020 provides a strong foundation for further strategic and trading performance improvements in 2021. We also expect another year of good free cash generation.
“Encouragingly, the year has started positively, although caution remains as many of the COVID-19 related challenges experienced in 2020 are still evident. Despite this we expect to make further progress in 2021 driven by our sales pipeline actions, solid underlying demand and the ongoing benefits of operational improvements. Devro is well positioned for the future.”