In a trading update for the first quarter of 2020, the collagen products manufacturer reported a 2% volume increase in sales of edible product, which it attributed to growth initiatives and elevated demand driven by the coronavirus pandemic.
The update added that it was seeing growth in emerging markets (up 13%) led by strong growth in Latin America, Russia and East and South East Asia. This growth more than offset the 3% decline seen in mature markets due to ongoing distributor destocking in Continental EU & West and a weaker demand environment during January and February in the UK and Ireland. It added that collagen sales in North America “continued to grow”.
The business did report some disruption due to the coronavirus but was maintaining the supply chain.
“Our people are working hard to service customers in the food supply chain and all sites are currently operating. We continue to closely monitor Covid-19 developments with the key risks being preserving supply chain continuity and employee well-being, together with the potential for the nature and duration of global containment measures to affect demand. In recent weeks some suppliers have experienced disruption in their end markets. We acted decisively to secure supply, but this has resulted in some raw material inflation, which we are working to mitigate through targeted cost savings.”
It added that it has instigated cash mitigation actions in response to Covid-19, including cutting all discretionary capital and operating expenditure and that the company is currently not taking advantage of any Covid-19 UK government support schemes.
Looking ahead, the Devro board added: “Despite our good volume growth performance in Q1, we do not envisage any change to prior volume guidance for 2020. As such, and absent any negative Covid-19 impact, the Board's expectation for good progress in 2020 is unchanged.
“Devro is a global business, integrated into the crucial food supply chain and has a robust balance sheet leaving it well positioned to succeed in these uncertain times.”