Efforts to overhaul manufacturing hampered first-half profits at the sausage-skin maker Devro, new figures have revealed.
The Moodiesburn-based edible collagen group which in March announced its intention to build a new £50 million factory in China in addition to a £40m project under development in the US reported interim pre-tax profits of £1.6m for the six months to the end of June as it invested abroad and restructured at home.
The company had previously complained about weak sales during the first quarter of the year but yesterday said things had improved in the following weeks, with half-year sales dipping a total of 8% to record a performance “similar” to 2013, at £109.7m.
Currency conversion had a further £2.2m impact, it said.
Exceptional charges of £10.8m, including an estimated £6.3m in redundancy costs for the 130 employees expected to lose their jobs, contributed to a 90% fall in earnings on the previous year’s £16.2m haul.
“In order to add capacity, align products with market opportunities and reduce unit costs, all our manufacturing operations are in the midst of a significant transformation process which is impacting current year profits but will enhance earnings in the future,” said chief executive Peter Page.