Scotland business

Profits slump at sausage-skin maker Devro

Lanarkshire-based sausage-skin maker Devro has announced a massive drop in profits last year as it underwent a major restructure.

The firm, which has factories in Moodiesburn and Bellshill, posted a pre-tax profit of £2.2m for 2014, down 94% from £37.5m in the previous year.

The accounts showed £23.9m was spent on "exceptional items" linked to its "transformation drive".

Devro announced last May that it was planning to cut 130 staff in Scotland.

Salami and chorizo

The Lanarkshire plants had employed about 520 people between them.

The annual results also showed that the company had shed 200 jobs in the USA and 20 in Australia.

At the same time about 200 staff were recruited in China.

The firm, which makes edible collagen casings for bratwurst, salami and chorizo, said the "exceptional items primarily relate to our operations in Scotland, where older, less efficient lines are being permanently shut down".

It said output at the two factories in Scotland was reduced by 18% through a programme of redundancies and decommissioning capacity of the oldest technology.

Less efficient

The firm's chairman Gerard Hoetmer said: "In early 2014 we took the decision to accelerate the restructuring of our existing manufacturing footprint.

"This included taking out production of older, less efficient technology at one of our factories in Scotland.

"This step change in production capacity had an adverse impact on our profits for 2014 but was a critical step in aligning our product portfolio with the market opportunities and will improve our manufacturing efficiency from 2015."

He said the firm would start to see the "benefits of the restructuring actions" this year.

Mr Hoetmer said: "We have made good progress on the construction of the new plants in China and the USA, and are now entering a critical period of transition as we integrate these new operations into our global manufacturing footprint."

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