Devro

Meat casing maker Devro grew profits 56% to £17.1m in the first half to June, as turnover fattened up to £116.1m (2009: £105m).

Devro, which manufactures specialist collagen coatings for meats including salami, hams and sausages and whose brands include Ralex, Edicol, Coria and Cutisin, saw profits grow on the back of both reduced manufacturing costs and burgeoning sales to emerging markets.

Finance director Peter Williams told Growth Company Investor the profit improvement reflected 'underlying growth in meat consumption in the developing world’, drawing particular attention to China and Brazil, as well as 'the continuing trend away from using gut casing to collagen'. Margins, added Williams, benefited from the installation of new production lines at Devro's Czech operation, which 'saved us money on both energy and labour costs', in addition to the resolution of earlier problems related to raw material supplies at the group's US plant.

Williams, previously CFO at Norwegian salmon farming outfit Cermaq ASA, says that 'with more and more people in emerging markets consuming meat, we want to strengthen our growth in the BRIC economies', whilst also 'taking even more market share away from gut casing companies'.

Originally recommended by Growth Company Investor at 91.5p in March 2009, Devro shares have cooked up stellar gains since and now trade on 13.6 times forecast earnings of 16.4p. With a cash-generative business model, progressive dividend policy and a clear strategy to drive growth from emerging markets, Devro is well worth holding onto for the long-term.