Devro plc
AUDITED FULL YEAR RESULTS FOR THE YEAR ENDED 31 DECEMBER 2021
Significant financial and strategic progress
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 2021.
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Underlying results i |
Statutory results |
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2021 |
2020 (restated) |
2021 |
2020 |
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Revenue (£m) |
252.4 |
247.6 |
252.4 |
247.6 |
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Operating profit (£m) |
42.0 |
40.8 |
42.7 |
36.2 |
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Operating profit margin (%) Profit before tax (£m) |
16.6% 36.9 |
16.5% 34.0 |
16.9% 37.6 |
14.6% 29.4 |
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Basic earnings per share (pence) |
18.1p |
15.8p |
18.6p |
13.8p |
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Total dividend per share (pence) |
9.3p |
9.0p |
9.3p |
9.0p |
Financial Highlights
Group revenue increased 5.5% on a constant currency basis (1.9% as reported) reflecting H2 2021 growth of 7.6%. Positive pricing achieved
Volume of edible collagen casings rose 4.9%
- Emerging markets up 7.1%: driven by Latin America and South East Asia, reflecting positive momentum in our targeted growth agenda
- Mature markets up 3.7%: driven by 20% growth in North America due to strength in the snacking category and improving trends in most other markets
Underlying operating profit of £42.0m, up 2.9% on prior year and 12.7% at constant currency
Operating margin increased 10 bps to 16.6%, despite inflationary pressures, notably in H2, and on a constant currency basis rose 110 bps to 17.6%
Underlying basic earnings per share up 14.6% to 18.1p (2020: 15.8p)
Strong free cash flow generation of £35.6m leading to covenant net debt ii of £88.6m (2020: £109.5m), representing covenant net debt to EBITDA iii of 1.4x (2020: 1.8x), better than expectations
ROCE increased to 16.9% from 15.7% in 2020
Proposed final dividend of 6.5p. Total dividend of 9.3p, growth of 3.3% on the prior year, first increase since 2018
Strategic and Commercial Highlights – updated 3Cs strategy for continued growth
Good customer wins in targeted growth markets
Increased investment in new product development: new applications for collagen and alternative technologies
Newly launched Purpose, Vision, Mission and Values: embedded internally and communicated externally
ESG is at the heart of the Purpose: new sustainability priorities, targets and commitments outlined in September
Transfer of production lines from Bellshill, Scotland, to our Czech site completed on time and on budget
Outlook
The Group expects an inflation headwind, mainly driven by energy and raw material costs. To mitigate impact, in H2 2021 and early in 2022 the Group has enacted inflation-led price rises. Pricing action successful to date.
The Group has started 2022 well and expects to make good full year progress based on current market conditions and the robust order book and pipeline. This is despite the £3.1m hedging gain from 2021 not repeating in 2022 giving a foreign exchange headwind.
We expect another strong year of cash generation, despite higher capital investment to meet future growth.
Rutger Helbing, Chief Executive Officer, commented:
“We made significant strategic and financial progress in the year. Our improved performance was achieved despite ongoing challenging market conditions, including inflationary headwinds. We are also pleased with our free cash flow performance which provides us with increasing optionality to invest in new products, to increase manufacturing capacity and to grow the dividend.
“The Group has started the year well and, despite ongoing macro-economic headwinds including inflationary pressures and based on current exchange rates , we expect to make good progress in 2022.”