Scotland business

Sausage-skin maker Devro issues profit warning

Devro factory worker Image copyright Devro
Image caption Devro operates five factories across the globe, including two in North Lanarkshire

Devro, the Lanarkshire-based sausage skin maker, has warned its profits will be hit by a projected fall in sales over the next year.

The company, which operates sites in Moodieburn and Bellshill, provides products for markets across the world.

The trading update led to the company's share price falling more than 20%.

The firm, which has seen its market valuation drop 44% since March, said it now planned to introduce new products and drive "production efficiencies".

Devro has grown with the rising demand for meat-based food from developing countries.

Grow sales

It makes collagen-based casings, mainly for sausages, with plants in Australia, the USA, China, the Czech Republic, and in North Lanarkshire.

Despite reporting improvements to sales in Russia and south-east Asia, the company said it had suffered problems with the transition to a new manufacturing plant in South Carolina.

In August, the firm reported problems with the transfer of customers onto new products and capacity constraints during the transition to the new factory.

As a result, revenue in South America fell 9% in the first half of the year.

With its trading update, the company announced plans to grow sales through "improved commercial capabilities", introducing new products and driving production efficiencies.

Those changes are expected to offset the fall in the volume of sales - partially in 2017 and fully in 2018.

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