Devro plc
HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2022
Revenue 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 2022.
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Underlying results i |
Statutory results |
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H1 2022 |
H1 2021 |
H1 2022 |
H1 2021 |
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Revenue (£m) |
129.8 |
119.9 |
129.8 |
119.9 |
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Operating profit (£m) |
18.6 |
20.3 |
18.6 |
21.0 |
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Operating profit margin |
14.3% |
16.9% |
14.3% |
17.5% |
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Profit before tax (£m) |
15.9 |
17.7 |
15.9 |
18.4 |
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Basic earnings per share (pence) |
7.5p |
8.7p |
7.5p |
9.3p |
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Interim dividend per share (pence) |
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2.9p |
2.8p |
Financial Highlights
· Group revenue up 8.3% to £129.8m on prior year and constant currency up by 8.8%, primarily driven by growth in mature markets reflecting continued success of our strategy, as we take market share, and the initial benefits of our pricing actions
· Volume of edible collagen casings up 4.5%:
· Mature markets volume up 7.6% driven by strong growth in Continental Europe & West, North America and UK & Ireland offset by weaker market conditions in Japan and Australia
· Emerging market volume down 0.9%, against a strong comparator and due to temporary manufacturing constraints, mainly affecting China and Latin America
· Underlying operating profit of £18.6m, down 8.4%, with constant currency at £20.4m, up 0.5%. The underlying operating margin decreased to 14.3% (H1 2021: 16.9%) but on a constant currency basis was 15.6%. Operating profit reflects good operating leverage offset by inflationary pressure, which will be fully offset, mainly by higher selling prices in the full year, and higher costs to drive growth including new product development.
· Underlying basic earnings per share down 13.8% to 7.5p
· Free cash flow generation of £3.2m (H1 2021: £9.4m) reflecting good underlying cash generation, our normal seasonal increase in working capital and slightly higher capital expenditure to support our ambitious growth plans.
· Covenant net debt ii of £95.3m (H1 2021: £103.1m, FY 2021: £88.6m), representing net debt to EBITDA iii of 1.6x (H1 2021: 1.6x, FY 2021: 1.4x). £5.1m of the year-on-year increase relates to a revaluation of the Group's US dollar borrowings. We continue to expect year-on-year progress for the full year.
· Given the Group's financial position, trading performance and outlook, the Board has declared an interim dividend of 2.9p.
Strategic Highlights
· Group achieving significant and targeted price increases. Expect to fully recover inflation in full year. For 2023 further inflationary pressures, mainly energy related, and the Group is working hard to mitigate these.
· New operating capacity installed and performing well, increased output available during H2 2022 in China and Czech Republic. Based on strong demand and our planning cycle, additional capacity to be added in 2023.
· Increased investment to broaden the product offering. Strong technological and commercial progress made in the period.
· Positive ESG progress made, Group committed to SBTi.
Commenting on the outlook Rutger Helbing, Chief Executive Officer of Devro, said:
“ The Group performed well in the first half, building upon the track record of recent years, and reflecting our strong and improving growth platform. The results are particularly pleasing given the challenging macroeconomic backdrop with the Group continuing to ably respond. Whilst we remain alert to global supply chain challenges and inflation, the Board's expectations for the full year are unchanged. The Group's robust first half performance, solid order books, pricing action and ongoing momentum gives us confidence in the full year outturn. Current foreign exchange rates could provide upside if they prevail throughout the second half.”