Devro plc
HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2021
Growth accelerating ,
momentum set to continue
Devro plc (“Devro” or the “Group”), one of the world's leading manufacturers of collagen products for the food industry, announces its unaudited half year results for the six months ended 30 June 2021.
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Underlying results* |
Statutory results |
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H1 2021 |
H1 2020 (restated) |
H1 2021 |
H1 2020 |
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Revenue (£m) |
119.9 |
119.0 |
119.9 |
119.0 |
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Operating profit (£m) |
20.3 |
18.5 |
21.0 |
17.2 |
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Operating profit margin Profit before tax (£m) |
16.9% 17.7 |
15.5% 14.8 |
17.5% 18.4 |
14.5% 13.5 |
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Basic earnings per share (pence) |
8.7p |
7.2p |
9.3p |
6.6p |
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Interim dividend per share (pence) |
2.8p |
2.7p |
2.8p |
2.7p |
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Final dividend per share (pence) |
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6.3p |
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6.3p |
* Underlying figures are stated before exceptional items (see Alternative Performance Measures section of the Half Year Financial Results Update for definitions, reconciliation to equivalent statutory measures and explanation of restatement). Restatement of prior period results relates to net finance cost on pensions, previously included within the non-underlying, now included within the underlying results.
Financial Highlights
· Group constant currency revenue up 3.1% to £122.7m on the prior year primarily driven by market share gains and improving pricing discipline reflecting the continued success in the execution of our growth strategy. Reported revenue marginally higher reflecting foreign exchange headwinds.
· Volumes of edible collagen casings up 4.2%.
· Emerging market volume up 10% driven by South East Asia, China and Latin America.
· Mature markets volume up 1% driven by strong growth in North America offset by weaker market conditions in UK & Ireland and Australia.
· Underlying operating profit of £20.3m, up 9.7%, and operating margin increased to 16.9% (H1 2020: 15.5%) benefiting from revenue growth, improving price/mix and ongoing cost savings which were partially offset by inflationary pressures.
· Underlying basic earnings per share up 20.8% to 8.7p.
· Improved free cash flow generation of £9.4m (H1 2020: £7.2m).
· Covenant net debt i of £103.1m (H1 2020: £121.5m, FY 2020: £109.5m), representing net debt to EBITDA ii of 1.6x (H1 2020: 1.9x, FY 2020: 1.8x). Further progress expected in H2 2021.
· Given the Group's financial position, trading performance and outlook, the Board has declared a modestly increased interim dividend of 2.8p.
Strategic Highlights
Continued progress on 3Cs strategy including:
· Targeted sales initiatives delivering profitable growth.
· Bellshill anticipated savings being realised.
· New product development pipeline building and now focused on both core and alternative technologies and products.
· ESG targets in place, inaugural CDP submission and new purpose launched internally.
· Planning for an investor seminar in late September focused on purpose, values and sustainability.
Commenting on the outlook Rutger Helbing, Chief Executive Officer of Devro, said:
“Devro's constant currency revenue growth has accelerated and has driven significant profit growth in the first half, demonstrating the successful execution of the strategy, and we enter the second half with good momentum across the business, and confidence in our future prospects. In the shorter term, for the second half we expect the strong underlying performance to continue, however reflecting the uncertainties relating to COVID-19 pandemic and foreign exchange headwinds, the Board's full year expectations are unchanged . The Board's confidence in the Group's prospects and the continued strengthening of the balance sheet has resulted in an increase in the dividend for the first time in four years , as well as an incremental increase in investments required to facilitate the sustainable growth we foresee based on underlying market dynamics, as well as our targeted sales actions.”