Devro Plc - Half Year Results

Devro plc

HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2019

 

H1 results in line with Board's expectations, good progress on strategic priorities and full year outlook unchanged

 

Devro plc ("Devro" or the "group"), one of the world's leading manufacturers of collagen products for the food industry, announces its half year results for the six months ended 30 June 2019.

 

 

Underlying results*

Statutory results

 

H1 2019**

H1 2018

H1 2019**

H1 2018

 

Unaudited

Unaudited

Unaudited

Unaudited

Revenue

£119.2m

£120.2m

£119.2m

£120.2m

Operating profit

before non-recurring items***

-

£17.8m

-

£18.8m

£17.4m

-

£16.2m

-

Operating profit margin

before non-recurring items***

Profit before tax

-

14.9%

£14.9m

-

15.6%

£14.3m

14.6%

-

£13.6m

13.5%

-

£10.9m

Basic earnings per share

7.0p

6.6p

6.5p

4.7p

Interim dividend per share

2.7p

2.7p

2.7p

2.7p

 

*     Underlying figures are stated before exceptional items and net finance cost on pensions (see Alternative Performance Measures section of the Half Year Results Update for definition, explanation and reconciliation to equivalent statutory measures).

**    The group adopted IFRS 16 (leases) on 1 January 2019, as disclosed in note 3 to the condensed interim consolidated financial statements and comparative financial measures have not been restated.

 

***  Non-recurring items relate to Board change costs of £nil (H1 2018: £0.4m); after non-recurring items underlying operating profit was £17.8m for H1 2019 (H1 2018: £18.4m); see Alternative Performance Measures section of the Half Year Results Update for definition and explanation.

 

Highlights

 

·      H1 results in line with Board's expectations:

o  Volumes of edible collagen casings decreased by 1% impacted by a slow start to the year, however gaining momentum with growth (+1%) for the remainder of the first half (February to June)

o  Strong volume growth in China (+19%) and North America (+10%) offset by expected weaker performances in Japan (-3%), Russia & East (-9%) and Latin America (-30%)

o  Revenue from edible collagen casings flat (impacted by volume and mix offset by FX); group revenue impacted by lower revenue from other products

o  Underlying operating profit before non-recurring items of £17.8m (H1 2018: £18.8m)

o  Underlying profit before tax up 4% to £14.9m (H1 2018: £14.3m) and underlying basic earnings per share increased to 7.0p (H1 2018: 6.6p).

o  Statutory profit before tax up 25% to £13.6m (H1 2018: £10.9m)

o  Improved free cash flow generation £4.3m (H1 2018: £-0.2m)

·      Good progress on strategic priorities:

o  US plant speed improvement

o  Pilot project for phased capacity increases in North America on track

o  Fine Ultra product platform rollout progressing well

·      Full year outlook unchanged

 

Rutger Helbing, Chief Executive Officer of Devro, commented:

 

"We continued to make good progress on our strategic priorities in the first half. We delivered manufacturing efficiency improvements, in particular with increased speeds at our US plant. Our commercial and product development teams continue to establish the building blocks to accelerate future growth through the rollout of our new Fine Ultra product platform and developing new categories in China.

"For the full year, we continue to expect volume and revenue growth to be weighted towards the second half, supported by a number of commercial initiatives to accelerate growth and the continued rollout of our Fine Ultra product platform. We also now expect our total cost savings programme to exceed our previously stated target. At current FX rates operating profit will benefit from foreign exchange gains in the second half.

"Despite weaker market sentiment in some mature markets and ongoing pressures from input cost inflation, the Board believes that Devro continues to be well placed to make good progress in 2019 and the full year outlook remains unchanged."