July 30, 2014 / 11:31 AM / 3 years ago

UPDATE 1-Sausage-skin maker Devro focuses on US, China to boost profit

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July 30 (Reuters) - Devro Plc, which makes edible collagen casings for sausages, said it would cut jobs and lower its capacity in Scotland as it focuses on the United States and China to boost profit.

The company’s shares rose as much as 6.3 percent on Wednesday, making the stock one of the top percentage gainers on the London Stock Exchange.

Devro, which says it makes enough collagen casings a year to stretch to the moon and back several times, has plants in Scotland, the United States, Australia and the Czech Republic.

The sausage maker plans to cut 130 jobs in Scotland and said it would invest about 90 million pounds ($152 million) in new plants in the United States and China to take advantage of rising demand for its products in those countries.

The company reported a 7.7 percent drop in first-half revenue to 109.7 million pounds, almost entirely due to the strength of the pound against various currencies, but said overall revenue was unchanged at constant currency rates.

Devro makes sales in euros, U.S. dollars and the yen, and incurs manufacturing costs in Australian and U.S. dollars and the Czech koruna, as well as the pound.

The stronger pound reduced operating profit by 2.2 million pounds in the period, the company said.

Devro’s pretax profit plunged 90 percent to 1.6 million pounds, mainly due to restructuring costs.

The company’s manufacturing operations are undergoing a “significant transformation process”, which is impacting current year profits but will add to earnings in the future, the company said.

Devro announced an interim dividend of 2.70 pence per share.

Shares in the company, which is based in Moodiesburn, near Glasgow, were up 5.5 percent to 256.50 pence at 1110 GMT on the London Stock Exchange.

($1 = 0.5904 British Pounds)

Reporting by Aastha Agnihotri and Noor Zainab Hussain in Bangalore; Editing by Robin Paxton and Simon Jennings

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